10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___ 

Commission File Number 001-31792

CNO Financial Group, Inc.

Delaware	75-3108137
State of Incorporation	IRS Employer Identification No.
11825 N. Pennsylvania Street
Carmel, Indiana  46032	(317) 817-6100
Address of principal executive offices	Telephone

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days:  Yes [ X ]  No [   ]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [ X ]  No [   ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.  Large accelerated filer [ X ]  Accelerated filer [   ] Non-accelerated filer [   ] Smaller reporting company [   ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):  Yes [   ] No [ X ]

Shares of common stock outstanding as of July 22, 2014:  212,674,485

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		Page
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheet as of June 30, 2014 and December 31, 2013	3
	Consolidated Statement of Operations for the three and six months ended June 30, 2014 and 2013	5
	Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2014 and 2013	6
	Consolidated Statement of Shareholders' Equity for the six months ended June 30, 2014 and 2013	7
	Consolidated Statement of Cash Flows for the six months ended June 30, 2014 and 2013	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations	58
	Cautionary Statement Regarding Forward-Looking Statements	58
	Overview	59
	Critical Accounting Policies	62
	Results of Operations	63
	Premium Collections	86
	Liquidity and Capital Resources	91
	Investments	99
	Investments in Variable Interest Entities	107
	New Accounting Standards	109
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	109
Item 4.	Controls and Procedures	109
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	110
Item 1A.	Risk Factors	110
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	110
Item 6.	Exhibits	111

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(Dollars in millions)

(unaudited)

ASSETS

	June 30, 2014		December 31, 2013
Investments:
Fixed maturities, available for sale, at fair value (amortized cost:  June 30, 2014 - $18,383.8; December 31, 2013 - $21,860.6)	$	20,533.6	$	23,178.3
Equity securities at fair value (cost: June 30, 2014 - $272.6; December 31, 2013 - $237.9)	287.5		249.3
Mortgage loans	1,595.9		1,729.5
Policy loans	99.7		277.0
Trading securities	227.4		247.6
Investments held by variable interest entities	1,241.1		1,046.7
Other invested assets	426.1		423.3
Total investments	24,411.3		27,151.7
Cash and cash equivalents - unrestricted	378.8		699.0
Cash and cash equivalents held by variable interest entities	101.8		104.3
Accrued investment income	238.2		286.9
Present value of future profits	512.3		679.3
Deferred acquisition costs	698.9		968.1
Reinsurance receivables	2,892.9		3,392.1
Income tax assets, net	730.5		1,147.2
Assets held in separate accounts	9.4		10.3
Other assets	421.3		341.7
Assets of subsidiary being sold	4,518.9		—
Total assets	$	34,914.3	$	34,780.6

(continued on next page)

The accompanying notes are an integral part

of the consolidated financial statements.

3

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET, continued

(Dollars in millions)

(unaudited)

LIABILITIES AND SHAREHOLDERS' EQUITY

	June 30, 2014			December 31, 2013
Liabilities:
Liabilities for insurance products:
Policyholder account balances	$	10,649.7		$	12,776.4
Future policy benefits	10,372.2			11,222.5
Liability for policy and contract claims	463.3			566.0
Unearned and advanced premiums	270.7			300.6
Liabilities related to separate accounts	9.4			10.3
Other liabilities	560.7			590.6
Payable to reinsurer	—			590.3
Investment borrowings	1,507.6			1,900.0
Borrowings related to variable interest entities	1,110.8			1,012.3
Notes payable – direct corporate obligations	827.3			856.4
Liabilities of subsidiary being sold	4,298.3			—
Total liabilities	30,070.0			29,825.4
Commitments and Contingencies
Shareholders' equity:
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding:  June 30, 2014 – 213,755,190; December 31, 2013 – 220,323,823)	2.1			2.2
Additional paid-in capital	3,963.9			4,092.8
Accumulated other comprehensive income	926.1			731.8
Retained earnings (accumulated deficit)	(47.8		)	128.4
Total shareholders' equity	4,844.3			4,955.2
Total liabilities and shareholders' equity	$	34,914.3		$	34,780.6

The accompanying notes are an integral part

of the consolidated financial statements.

4

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(Dollars in millions, except per share data)

(unaudited)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Revenues:
Insurance policy income	$	679.0		$	691.3		$	1,364.9		$	1,382.5
Net investment income (loss):
General account assets	347.4			348.8			695.5			700.7
Policyholder and reinsurer accounts and other special-purpose portfolios	47.2			31.8			68.1			109.5
Realized investment gains (losses):
Net realized investment gains, excluding impairment losses	12.4			3.8			47.7			19.1
Other-than-temporary impairment losses:
Total other-than-temporary impairment losses	—			(.6		)	(11.9		)	(.6		)
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income	—			—			—			—
Net impairment losses recognized	—			(.6		)	(11.9		)	(.6		)
Total realized gains	12.4			3.2			35.8			18.5
Fee revenue and other income	7.0			6.4			13.4			12.9
Total revenues	1,093.0			1,081.5			2,177.7			2,224.1
Benefits and expenses:
Insurance policy benefits	691.1			673.2			1,381.4			1,427.3
Loss on sale of subsidiary	—			—			278.6			—
Gain related to reinsurance transaction	(3.8		)	—			(3.8		)	—
Interest expense	24.3			26.9			48.9			54.2
Amortization	64.9			79.2			131.6			158.5
Loss on extinguishment or modification of debt	.6			7.7			.6			65.4
Other operating costs and expenses	201.5			179.8			395.6			369.4
Total benefits and expenses	978.6			966.8			2,232.9			2,074.8
Income (loss) before income taxes	114.4			114.7			(55.2		)	149.3
Income tax expense:
Tax expense on period income	40.3			42.6			79.3			75.8
Valuation allowance for deferred tax assets and other tax items	(4.0		)	(5.0		)	15.4			(15.5		)
Net income (loss)	$	78.1		$	77.1		$	(149.9	)	$	89.0
Earnings per common share:
Basic:
Weighted average shares outstanding	216,538,000			220,498,000			218,422,000			221,290,000
Net income (loss)	$	.36		$	.35		$	(.69	)	$	.40
Diluted:
Weighted average shares outstanding	222,108,000			230,893,000			218,422,000			237,180,000
Net income (loss)	$	.35		$	.34		$	(.69	)	$	.38

The accompanying notes are an integral part

of the consolidated financial statements.

5

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Dollars in millions)

(unaudited)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Net income (loss)	$	78.1		$	77.1		$	(149.9	)	$	89.0
Other comprehensive income, before tax:
Unrealized gains (losses) for the period	479.1			(1,179.7		)	872.9			(1,363.0		)
Amortization of present value of future profits and deferred acquisition costs	(42.0		)	113.4			(119.4		)	134.1
Amount related to premium deficiencies assuming the net unrealized gains had been realized	(180.1		)	342.7			(417.6		)	478.0
Reclassification adjustments:
For net realized investment gains included in net income (loss)	(9.7		)	(8.9		)	(35.7		)	(23.7		)
For amortization of the present value of future profits and deferred acquisition costs related to net realized investment gains included in net income (loss)	.1			.4			.5			1.2
Unrealized gains (losses) on investments	247.4			(732.1		)	300.7			(773.4		)
Change related to deferred compensation plan	.4			1.4			.7			2.4
Other comprehensive income (loss) before tax	247.8			(730.7		)	301.4			(771.0		)
Income tax (expense) benefit related to items of accumulated other comprehensive income	(87.9		)	258.1			(107.1		)	271.7
Other comprehensive income (loss), net of tax	159.9			(472.6		)	194.3			(499.3		)
Comprehensive income (loss)	$	238.0		$	(395.5	)	$	44.4		$	(410.3	)

The accompanying notes are an integral part

of the consolidated financial statements.

6

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(Dollars in millions)

(unaudited)

	Common stock and additional paid-in capital			Accumulated other  comprehensive income			Retained earnings (accumulated deficit)			Total
Balance, December 31, 2012	$	4,176.9		$	1,197.4		$	(325.0	)	$	5,049.3
Net income	—			—			89.0			89.0
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax benefit of $270.9)	—			(497.9		)	—			(497.9		)
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax benefit of $.8)	—			(1.4		)	—			(1.4		)
Extinguishment of beneficial conversion feature related to the repurchase of convertible debentures	(12.6		)	—			—			(12.6		)
Cost of shares acquired	(50.0		)	—			—			(50.0		)
Dividends on common stock	—			—			(11.1		)	(11.1		)
Stock options, restricted stock and performance units	16.1			—			—			16.1
Balance, June 30, 2013	$	4,130.4		$	698.1		$	(247.1	)	$	4,581.4
Balance, December 31, 2013	$	4,095.0		$	731.8		$	128.4		$	4,955.2
Net loss	—			—			(149.9		)	(149.9		)
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense of $106.8)	—			193.7			—			193.7
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense of $.3)	—			.6			—			.6
Cost of shares acquired	(136.6		)	—			—			(136.6		)
Dividends on common stock	—			—			(26.3		)	(26.3		)
Stock options, restricted stock and performance units	7.6			—			—			7.6
Balance, June 30, 2014	$	3,966.0		$	926.1		$	(47.8	)	$	4,844.3

The accompanying notes are an integral part

of the consolidated financial statements.

7

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)

(unaudited)

	Six months ended
	June 30,
	2014				2013
Cash flows from operating activities:
Insurance policy income	$	1,185.3			$	1,230.1
Net investment income	686.1				685.1
Fee revenue and other income	13.4				12.9
Insurance policy benefits	(1,049.1		)		(1,070.1		)
Payment to reinsurer pursuant to long-term care business reinsured	(590.3		)		—
Interest expense	(45.2		)		(48.9		)
Deferrable policy acquisition costs	(116.9		)		(107.2		)
Other operating costs	(396.2		)		(409.1		)
Taxes	(2.0		)		(2.9		)
Net cash from operating activities	(314.9		)	(a)	289.9
Cash flows from investing activities:
Sales of investments	1,377.2				943.5
Maturities and redemptions of investments	1,007.1				1,335.3
Purchases of investments	(2,072.4		)		(2,992.8		)
Net sales of trading securities	12.1				25.3
Change in cash and cash equivalents held by variable interest entities	2.5				(156.5		)
Cash and cash equivalents held by subsidiary being sold	(164.7		)		—
Other	(15.0		)		(10.6		)
Net cash provided (used) by investing activities	146.8				(855.8		)
Cash flows from financing activities:
Payments on notes payable	(29.5		)		(101.9		)
Expenses related to extinguishment or modification of debt	(.5		)		(61.3		)
Amount paid to extinguish the beneficial conversion feature associated with repurchase of convertible debentures	—				(12.6		)
Issuance of common stock	3.6				12.7
Payments to repurchase common stock	(133.6		)		(50.0		)
Common stock dividends paid	(26.3		)		(11.1		)
Amounts received for deposit products	677.7				634.0
Withdrawals from deposit products	(732.5		)		(749.9		)
Issuance of investment borrowings:
Federal Home Loan Bank	300.0				400.0
Related to variable interest entities	141.6				376.3
Payments on investment borrowings:
Federal Home Loan Bank	(317.4		)		(200.2		)
Related to variable interest entities and other	(43.6		)		(.2		)
Investment borrowings - repurchase agreements, net	8.4				27.6
Net cash provided (used) by financing activities	(152.1		)		263.4
Net decrease in cash and cash equivalents	(320.2		)		(302.5		)
Cash and cash equivalents, beginning of period	699.0				582.5
Cash and cash equivalents, end of period	$	378.8			$	280.0

______________________

(a) Cash flows from operating activities reflect outflows in the 2014 period due to the payment to reinsurer to transfer certain long-term care business.

The accompanying notes are an integral part

of the consolidated financial statements.

8

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

BUSINESS AND BASIS OF PRESENTATION

The following notes should be read together with the notes to the consolidated financial statements included in our 2013 Annual Report on Form 10-K.

CNO Financial Group, Inc., a Delaware corporation ("CNO"), is a holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance products.  The terms "CNO Financial Group, Inc.", "CNO", the "Company", "we", "us", and "our" as used in these financial statements refer to CNO and its subsidiaries.  Such terms, when used to describe insurance business and products, refer to the insurance business and products of CNO's insurance subsidiaries.

We focus on serving middle-income pre-retiree and retired Americans, which we believe are attractive, underserved, high growth markets.  We sell our products through three distribution channels: career agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing.

Our unaudited consolidated financial statements reflect normal recurring adjustments that, in the opinion of management, are necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented.  As permitted by rules and regulations of the Securities and Exchange Commission (the "SEC") applicable to quarterly reports on Form 10-Q, we have condensed or omitted certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").  We have reclassified certain amounts from the prior periods to conform to the 2014 presentation.  These reclassifications have no effect on net income or shareholders' equity.  Results for interim periods are not necessarily indicative of the results that may be expected for a full year.

The balance sheet at December 31, 2013, presented herein, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

When we prepare financial statements in conformity with GAAP, we are required to make estimates and assumptions that significantly affect reported amounts of various assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods.  For example, we use significant estimates and assumptions to calculate values for deferred acquisition costs, the present value of future profits, fair value measurements of certain investments (including derivatives), other-than-temporary impairments of investments, assets and liabilities related to income taxes, liabilities for insurance products, liabilities related to litigation and guaranty fund assessment accruals.  If our future experience differs from these estimates and assumptions, our financial statements would be materially affected.

The accompanying financial statements include the accounts of the Company and its subsidiaries. Our consolidated financial statements exclude transactions between us and our consolidated affiliates, or among our consolidated affiliates.

AGREEMENT TO SELL SUBSIDIARY

On March 2, 2014, CNO entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with Wilton Reassurance Company ("Wilton Re"), pursuant to which CNO agreed to sell to Wilton Re all of the issued and outstanding shares of Conseco Life Insurance Company ("CLIC"), an indirect wholly owned subsidiary of CNO. The transaction, which closed on July 1, 2014, was subject to receipt of insurance regulatory approvals and satisfaction of other customary closing conditions. The transaction resulted in net proceeds of approximately $216 million based upon an estimated balance sheet of CLIC as of June 30, 2014 and after anticipated transaction costs and intercompany transactions completed in connection with the closing.

In connection with the closing of the transaction, CNO Services, LLC ("CNO Services"), an indirect wholly owned subsidiary of CNO, entered into a transition services agreement and a special support services agreement with Wilton Re, pursuant to which CNO Services will make available to Wilton Re and its affiliates, for a limited period of time, certain services required for the operation of CLIC's business following the closing. The costs of the services provided to Wilton Re are expected to approximate the fees received under the agreements.

9

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

We have accounted for the sale of CLIC as held for sale. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less costs to sell. As the carrying amount of the CLIC business being sold exceeded its costs to sell, we have recognized a loss on the sale of CLIC in the six months ended June 30, 2014, as summarized below (dollars in millions):

Net cash proceeds	$	216.0
Net assets being sold:
Investments	3,863.8
Cash and cash equivalents	164.7
Accrued investment income	42.7
Present value of future profits	15.5
Deferred acquisition costs	37.6
Reinsurance receivables	307.4
Income tax assets, net	84.4
Other assets	2.8
Liabilities for insurance products	(3,201.3		)
Other liabilities	(199.1		)
Investment borrowings	(383.4		)
Accumulated other comprehensive income	(240.5		)
Net assets being sold	494.6
Loss before taxes	(278.6		)
Tax expense related to tax gain on sale	21.6
Previously unrecognized tax benefit now recognized as a result of the gain	(7.4		)
Valuation allowance release related to the gain	(14.2		)
Valuation allowance increase related to the decrease in projected future taxable income	19.4
Net loss	$	(298.0	)

Because the tax basis of CLIC is lower than the estimated cash proceeds, the transaction will generate a taxable gain and estimated tax expense of $21.6 million (subject to further adjustment based on the determination of the final sales price and net proceeds from the sale). Fully offsetting the tax is $7.4 million of previously unrecognized tax benefits (pertaining to a corporate matter unrelated to the sale of CLIC) which may now be recognized and $14.2 million of a valuation allowance release pertaining to net operating loss carryforwards ("NOLs") which may now be utilized. However, the disposition of CLIC is expected to result in a net reduction to CNO's taxable income in future periods which also requires us to establish a valuation allowance of $19.4 million.

10

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The assets and liabilities of the CLIC business being sold have been segregated in the consolidated balance sheet as of June 30, 2014. The following summarizes the assets and liabilities held for sale as of June 30, 2014 (dollars in millions):

	June 30, 2014
Investments	$	3,863.8
Cash and cash equivalents - unrestricted	164.7
Accrued investment income	42.7
Present value of future profits	15.5
Deferred acquisition costs	37.6
Reinsurance receivables	307.4
Income tax assets, net	84.4
Other assets	2.8
Assets of subsidiary being sold	$	4,518.9
Liabilities for insurance products	$	3,201.3
Other liabilities	199.1
Investment borrowings	383.4
Loss accrual	514.5
Liabilities of subsidiary being sold	$	4,298.3

The Stock Purchase Agreement also provided that, at the closing, Bankers Life and Casualty Company ("Bankers Life"), an indirect wholly owned subsidiary of CNO, would recapture the life insurance business written by Bankers Life that was reinsured by Wilton Re.  The recapture agreement was conditioned on the concurrent consummation of the closing. On July 1, 2014, Bankers Life paid $28.0 million to recapture the life insurance business from Wilton Re and will recognize a gain (net of income taxes) of approximately $4.5 million in the third quarter of 2014 as a result of the recapture.

11

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

OUT-OF-PERIOD ADJUSTMENTS

In the six months ended June 30, 2014, we recorded the net effect of an out-of-period adjustment related to the calculation of incentive compensation accruals which increased other operating costs and expenses by $2.4 million, decreased tax expense by $.8 million and increased our net loss by $1.6 million (or 1 cent per diluted share). In the six months ended June 30, 2013, we recorded the net effect of an out-of-period adjustment which increased our insurance policy benefits by $6.7 million, increased amortization expense by $2.5 million, decreased tax expense by $3.2 million and decreased our net income by $6.0 million (or 3 cents per diluted share), none of which was recognized in the second quarter of 2013. We evaluated these adjustments taking into account both qualitative and quantitative factors and considered the impact of these adjustments in relation to each period, as well as the periods in which they originated. The impact of recognizing these adjustments in prior years was not significant to any individual period. Management believes these adjustments are immaterial to the consolidated financial statements and all previously issued financial statements.

INVESTMENTS

We classify our fixed maturity securities into one of two categories: (i) "available for sale" (which we carry at estimated fair value with any unrealized gain or loss, net of tax and related adjustments, recorded as a component of shareholders' equity); or (ii) "trading" (which we carry at estimated fair value with changes in such value recognized as net investment income (classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios)).

Ourtrading securities include: (i) investments purchased with the intent of selling in the near term to generate income; and (ii) investments supporting certain insurance liabilities (including investments backing the market strategies of our multibucket annuity products) and certain reinsurance agreements. The change in fair value of these securities is recognized in income from policyholder and reinsurer accounts and other special-purpose portfolios (a component of net investment income). Investment income from trading securities backing certain insurance liabilities and certain reinsurance agreements is substantially offset by the change in insurance policy benefits related to certain products and agreements.  The trading account also includes certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in value of these securities is recognized in realized investment gains (losses).  Our trading securities totaled $227.4 million and $247.6 million at June 30, 2014 and December 31, 2013, respectively.

Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments.  These amounts, included in shareholders' equity as of June 30, 2014 and December 31, 2013, were as follows (dollars in millions):

	June 30, 2014			December 31, 2013
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized	$	8.5		$	6.5
Net unrealized gains on all other investments	2,157.8			1,322.6
Adjustment to present value of future profits (a)	(157.6		)	(47.7		)
Adjustment to deferred acquisition costs	(395.5		)	(137.0		)
Adjustment to insurance liabilities	(168.1		)	—
Unrecognized net loss related to deferred compensation plan	(6.4		)	(7.1		)
Deferred income tax liabilities	(512.6		)	(405.5		)
Accumulated other comprehensive income	$	926.1		$	731.8

________

(a) The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003 (the date Conseco, Inc., an Indiana corporation (our "Predecessor"), emerged from bankruptcy.

At June 30, 2014, adjustments to the present value of future profits, deferred acquisition costs, insurance liabilities and deferred tax assets included $(134.0) million, $(143.3) million, $(168.1) million and $158.3 million, respectively, for premium deficiencies that would exist on certain long-term health products if unrealized gains on the assets backing such products had been realized and the proceeds from the sales of such assets were invested at then current yields.

12

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

At June 30, 2014, the amortized cost, gross unrealized gains and losses, estimated fair value, other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, were as follows (dollars in millions):

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Other-than-temporary impairments included in accumulated other comprehensive income
Corporate securities	$	12,217.4	$	1,688.0	$	(23.8	)	$	13,881.6	$	—
United States Treasury securities and obligations of United States government corporations and agencies	149.6		10.7		(.2		)	160.1		—
States and political subdivisions	1,944.3		212.9		(6.3		)	2,150.9		—
Asset-backed securities	1,244.5		84.2		(2.6		)	1,326.1		—
Collateralized debt obligations	319.9		5.2		(.9		)	324.2		—
Commercial mortgage-backed securities	1,173.9		92.5		(.2		)	1,266.2		—
Mortgage pass-through securities	8.4		.5		—			8.9		—
Collateralized mortgage obligations	1,325.8		90.7		(.9		)	1,415.6		(3.7		)
Total fixed maturities, available for sale	$	18,383.8	$	2,184.7	$	(34.9	)	$	20,533.6	$	(3.7	)
Fixed maturities of CLIC being sold	$	3,470.7	$	—	$	—		$	3,470.7	$	—

The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at June 30, 2014, by contractual maturity.  Actual maturities will differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties.  In addition, structured securities (such as asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments.

	Amortized cost		Estimated fair value
	(Dollars in millions)
Due in one year or less	$	164.7	$	169.5
Due after one year through five years	1,762.1		1,957.6
Due after five years through ten years	2,906.4		3,192.2
Due after ten years	9,478.1		10,873.3
Subtotal	14,311.3		16,192.6
Structured securities	4,072.5		4,341.0
Total fixed maturities, available for sale	$	18,383.8	$	20,533.6

13

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

Net Realized Investment Gains (Losses)

The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Fixed maturity securities, available for sale:
Gross realized gains on sale	$	4.9		$	10.8		$	46.4		$	27.4
Gross realized losses on sale	(3.0		)	(1.4		)	(8.5		)	(3.4		)
Impairments:
Total other-than-temporary impairment losses	—			—			—			—
Other-than-temporary impairment losses recognized in accumulated other comprehensive income	—			—			—			—
Net impairment losses recognized	—			—			—			—
Net realized investment gains from fixed maturities	1.9			9.4			37.9			24.0
Equity securities	7.9			—			7.9			—
Commercial mortgage loans	1.1			—			1.1			.7
Impairments of mortgage loans and other investments	—			(.6		)	(11.9		)	(.6		)
Other	1.5			(5.6		)	.8			(5.6		)
Net realized investment gains	$	12.4		$	3.2		$	35.8		$	18.5

During the first six months of 2014, we recognized net realized investment gains of $35.8 million, which were comprised of $41.8 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $1.4 billion, the increase in fair value of certain fixed maturity investments with embedded derivatives of $5.9 million and $11.9 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

During the first six months of 2013, we recognized net realized investment gains of $18.5 million, which were comprised of $29.6 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $.9 billion and the decrease in fair value of certain fixed maturity investments with embedded derivatives of $10.5 million and $.6 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

Our fixed maturity investments are generally purchased in the context of various long-term strategies, including funding insurance liabilities, so we do not generally seek to generate short-term realized gains through the purchase and sale of such securities.  In certain circumstances, including those in which securities are selling at prices which exceed our view of their underlying economic value, or when it is possible to reinvest the proceeds to better meet our long-term asset-liability objectives, we may sell certain securities.

During the first six months of 2014, the $8.5 million of realized losses on sales of $156.9 million of fixed maturity securities, available for sale, included:  (i) $.5 million of losses related to the sales of securities issued by state and political subdivisions; and (ii) $8.0 million of additional losses related to various corporate securities.  Securities are generally sold at a loss following unforeseen issue-specific events or conditions or shifts in perceived risks.  These reasons include but are not limited to:  (i) changes in the investment environment; (ii) expectation that the market value could deteriorate further; (iii) desire to reduce our exposure to an asset class, an issuer or an industry; (iv) prospective or actual changes in credit quality; or (v) changes in expected cash flows.

During the first six months of 2014, we recognized $11.9 million of impairment losses recorded in earnings which included: (i) a $3.9 million writedown of a commercial mortgage loan related to a property with expected occupancy challenges; and (ii) an $8.0 million impairment related to two legacy private company investments where earnings and cash flows have not met the expectations assumed in our previous valuations.

14

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

We regularly evaluate all of our investments with unrealized losses for possible impairment.  Our assessment of whether unrealized losses are "other than temporary" requires significant judgment.  Factors considered include:  (i) the extent to which fair value is less than the cost basis; (ii) the length of time that the fair value has been less than cost; (iii) whether the unrealized loss is event driven, credit-driven or a result of changes in market interest rates or risk premium; (iv) the near-term prospects for specific events, developments or circumstances likely to affect the value of the investment; (v) the investment's rating and whether the investment is investment-grade and/or has been downgraded since its purchase; (vi) whether the issuer is current on all payments in accordance with the contractual terms of the investment and is expected to meet all of its obligations under the terms of the investment; (vii) whether we intend to sell the investment or it is more likely than not that circumstances will require us to sell the investment before recovery occurs; (viii) the underlying current and prospective asset and enterprise values of the issuer and the extent to which the recoverability of the carrying value of our investment may be affected by changes in such values; (ix) projections of, and unfavorable changes in, cash flows on structured securities including mortgage-backed and asset-backed securities; (x) our best estimate of the value of any collateral; and (xi) other objective and subjective factors.

Future events may occur, or additional information may become available, which may necessitate future realized losses in our portfolio.  Significant losses could have a material adverse effect on our consolidated financial statements in future periods.

Impairment losses on equity securities are recognized in net income.  The manner in which impairment losses on fixed maturity securities, available for sale, are recognized in the financial statements is dependent on the facts and circumstances related to the specific security.  If we intend to sell a security or it is more likely than not that we would be required to sell a security before the recovery of its amortized cost, the security is other-than-temporarily impaired and the full amount of the impairment is recognized as a loss through earnings.  If we do not expect to recover the amortized cost basis, we do not plan to sell the security, and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, less any current period credit loss, the recognition of the other-than-temporary impairment is bifurcated.  We recognize the credit loss portion in net income and the noncredit loss portion in accumulated other comprehensive income.

We estimate the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security.  The present value is determined using the best estimate of future cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security.  The methodology and assumptions for establishing the best estimate of future cash flows vary depending on the type of security.

For most structured securities, cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity, prepayment speeds and structural support, including excess spread, subordination and guarantees.  For corporate bonds, cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or the disposition of assets using bond specific facts and circumstances. The previous amortized cost basis less the impairment recognized in net income becomes the security's new cost basis.  We accrete the new cost basis to the estimated future cash flows over the expected remaining life of the security, except when the security is in default or considered nonperforming.

The remaining noncredit impairment, which is recorded in accumulated other comprehensive income, is the difference between the security's estimated fair value and our best estimate of future cash flows discounted at the effective interest rate prior to impairment.  The remaining noncredit impairment typically represents changes in the market interest rates, current market liquidity and risk premiums.  As of June 30, 2014, other-than-temporary impairments included in accumulated other comprehensive income of $3.7 million (before taxes and related amortization) related to structured securities.

15

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The following table summarizes the amount of credit losses recognized in earnings on fixed maturity securities, available for sale, held at the beginning of the period, for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income for the three and six months ended June 30, 2014, and 2013 (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Credit losses on fixed maturity securities, available for sale, beginning of period	$	(1.3	)	$	(1.5	)	$	(1.3	)	$	(1.6	)
Add:  credit losses on other-than-temporary impairments not previously recognized	—			—			—			—
Less:  credit losses on securities sold	.1			—			.1			.1
Less:  credit losses on securities impaired due to intent to sell (a)	—			—			—			—
Add:  credit losses on previously impaired securities	—			—			—			—
Less:  increases in cash flows expected on previously impaired securities	—			—			—			—
Credit losses on fixed maturity securities, available for sale, end of period	$	(1.2	)	$	(1.5	)	$	(1.2	)	$	(1.5	)

__________

(a) Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis.

Gross Unrealized Investment Losses

Our investment strategy is to maximize, over a sustained period and within acceptable parameters of quality and risk, investment income and total investment return through active investment management. Accordingly, we may sell securities at a gain or a loss to enhance the projected total return of the portfolio as market opportunities change, to reflect changing perceptions of risk, or to better match certain characteristics of our investment portfolio with the corresponding characteristics of our insurance liabilities.

16

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at June 30, 2014 (dollars in millions):

	Less than 12 months					12 months or greater					Total
Description of securities	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
United States Treasury securities and obligations of United States government corporations and agencies	$	—	$	—		$	18.4	$	(.2	)	$	18.4	$	(.2	)
States and political subdivisions	15.6		(.6		)	124.1		(5.7		)	139.7		(6.3		)
Corporate securities	173.3		(1.1		)	423.2		(22.7		)	596.5		(23.8		)
Asset-backed securities	76.9		(.5		)	91.5		(2.1		)	168.4		(2.6		)
Collateralized debt obligations	64.2		(.7		)	11.7		(.2		)	75.9		(.9		)
Commercial mortgage-backed securities	14.8		—			19.2		(.2		)	34.0		(.2		)
Mortgage pass-through securities	1.2		—			.8		—			2.0		—
Collateralized mortgage obligations	82.4		(.4		)	20.6		(.5		)	103.0		(.9		)
Total fixed maturities, available for sale	$	428.4	$	(3.3	)	$	709.5	$	(31.6	)	$	1,137.9	$	(34.9	)
Preferred stock	$	34.3	$	(.4	)	$	20.3	$	(.9	)	$	54.6	$	(1.3	)

The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2013 (dollars in millions):

	Less than 12 months					12 months or greater					Total
Description of securities	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
United States Treasury securities and obligations of United States government corporations and agencies	$	23.8	$	(.6	)	$	—	$	—		$	23.8	$	(.6	)
States and political subdivisions	473.6		(30.3		)	79.2		(8.7		)	552.8		(39.0		)
Corporate securities	2,406.1		(132.8		)	170.3		(20.8		)	2,576.4		(153.6		)
Asset-backed securities	308.4		(6.5		)	32.5		(.7		)	340.9		(7.2		)
Collateralized debt obligations	46.7		(.5		)	—		—			46.7		(.5		)
Commercial mortgage-backed securities	161.8		(5.8		)	—		—			161.8		(5.8		)
Mortgage pass-through securities	1.6		—			1.6		—			3.2		—
Collateralized mortgage obligations	121.8		(1.6		)	2.2		—			124.0		(1.6		)
Total fixed maturities, available for sale	$	3,543.8	$	(178.1	)	$	285.8	$	(30.2	)	$	3,829.6	$	(208.3	)
Preferred stock	$	26.8	$	(4.9	)	$	—	$	—		$	26.8	$	(4.9	)

Based on management's current assessment of investments with unrealized losses at June 30, 2014, the Company believes the issuers of the securities will continue to meet their obligations (or with respect to equity-type securities, the investment value will recover to its cost basis).  While we do not have the intent to sell securities with unrealized losses and it is not more likely than not that we will be required to sell securities with unrealized losses prior to their anticipated recovery,

17

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

our intent on an individual security may change, based upon market or other unforeseen developments.  In such instances, if a loss is recognized from a sale subsequent to a balance sheet date due to these unexpected developments, the loss is recognized in the period in which we had the intent to sell the security before its anticipated recovery.

EARNINGS PER SHARE

A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands):

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014			2013
Net income (loss) for basic earnings per share	$	78.1	$	77.1	$	(149.9	)	$	89.0
Add:  interest expense on 7.0% Senior Debentures due 2016 (the "7.0% Debentures"), net of income taxes	—		.4		—			1.6
Net income (loss) for diluted earnings per share	$	78.1	$	77.5	$	(149.9	)	$	90.6
Shares:
Weighted average shares outstanding for basic earnings per share	216,538		220,498		218,422			221,290
Effect of dilutive securities on weighted average shares:
7.0% Debentures	—		5,692		—			11,141
Stock options, restricted stock and performance units	2,390		2,412		—			2,620
Warrants	3,180		2,291		—			2,129
Dilutive potential common shares	5,570		10,395		—			15,890
Weighted average shares outstanding for diluted earnings per share	222,108		230,893		218,422			237,180

In the six months ended June 30, 2014, 5,687,000 equivalent common shares (comprised of 2,464,000 shares related to stock options, restricted stock and performance units and 3,223,000 shares related to warrants) were not included in the diluted weighted average shares outstanding, because their inclusion would have been antidilutive in such period due to the net loss recognized by the Company resulting from the sale of CLIC.

Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period.  Restricted shares (including our performance units) are not included in basic earnings per share until vested.  Diluted earnings per share reflect the potential dilution that could occur if outstanding stock options and warrants were exercised and restricted stock was vested.  The dilution from options, warrants and restricted shares is calculated using the treasury stock method.  Under this method, we assume the proceeds from the exercise of the options and warrants (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the average market price during the period, reducing the dilutive effect of the exercise of the options and warrants (or the vesting of the restricted stock and performance units). Initially, the 7.0% Debentures were convertible into 182.1494 shares of our common stock for each $1,000 principal amount of 7.0% Debentures, which was equivalent to an initial conversion price of approximately $5.49 per share. The conversion rate was subject to adjustment following the occurrence of certain events (including the payment of dividends on our common stock) in accordance with the terms of the an indenture dated as of October 16, 2009. On July 1, 2013, the Company issued a conversion right termination notice to holders of the 7.0% Debentures and the right to convert the 7.0% Debentures into shares of its common stock was terminated effective July 30, 2013.

18

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

BUSINESS SEGMENTS

Prior to 2014, the Company managed its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; Other CNO Business, comprised primarily of products we no longer sell actively; and corporate operations, comprised of holding company activities and certain noninsurance company businesses.  As a result of the sale of CLIC which was completed on July 1, 2014 and the coinsurance agreements to cede certain long-term care business effective December 31, 2013 (as further described in the note to the consolidated financial statements entitled "Reinsurance"), management has changed the manner in which it disaggregates the Company's operations for making operating decisions and assessing performance. In periods prior to 2014: (i) the results in the Washington National segment have been adjusted to include the results from the business in the Other CNO Business segment that are being retained; (ii) the Other CNO Business segment included only the long-term care business that was ceded effective December 31, 2013 and the overhead expense of CLIC that is expected to continue after the completion of the sale; and (iii) the CLIC business being sold is excluded from our analysis of business segment results. Beginning on January 1, 2014: (i) the overhead expense of CLIC that is expected to continue after the completion of the sale has been reallocated primarily to the Bankers Life and Washington National segments; (ii) there is no longer an Other CNO Business segment; and (iii) the CLIC business being sold continues to be excluded from our analysis of business segment results. After the completion of the sale of CLIC: (i) the Bankers Life segment will include the results of certain life insurance business that was recaptured from Wilton Re; and (ii) the revenues and expenses associated with a transition services agreement and a special support services agreement with Wilton Re will be included in our non-operating earnings. Our prior period segment disclosures have been revised to reflect management's current view of the Company's operating segments.

We measure segment performance by excluding the loss on the operations of CLIC being sold, the earnings of CLIC being sold, net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities ("VIEs"), loss on extinguishment or modification of debt and income taxes ("pre-tax operating earnings") because we believe that this performance measure is a better indicator of the ongoing business and trends in our business.  Our primary investment focus is on investment income to support our liabilities for insurance products as opposed to the generation of net realized investment gains (losses), and a long-term focus is necessary to maintain profitability over the life of the business.

The loss on the operations of CLIC being sold, the earnings of CLIC being sold, net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), equity in earnings of certain non-strategic investments and earnings attributable to VIEs and loss on extinguishment or modification of debt depend on market conditions or represent unusual items that do not necessarily relate to the underlying business of our segments.  Net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) may affect future earnings levels since our underlying business is long-term in nature and changes in our investment portfolio may impact our ability to earn the assumed interest rates needed to maintain the profitability of our business.

19

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

Operating information by segment was as follows (dollars in millions):

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Revenues:
Bankers Life:
Insurance policy income:
Annuities	$	7.7	$	8.6	$	15.2	$	16.5
Health	320.5		334.1		651.0		666.7
Life	79.9		76.4		158.2		153.9
Net investment income (a)	247.6		226.6		472.0		488.3
Fee revenue and other income (a)	5.8		4.0		11.1		7.7
Total Bankers Life revenues	661.5		649.7		1,307.5		1,333.1
Washington National:
Insurance policy income:
Annuities	1.4		1.7		2.4		3.2
Health	148.8		145.8		297.7		291.2
Life	6.5		5.6		12.2		11.6
Net investment income (a)	71.8		69.8		140.8		147.7
Fee revenue and other income (a)	.2		.2		.4		.4
Total Washington National revenues	228.7		223.1		453.5		454.1
Colonial Penn:
Insurance policy income:
Health	.9		1.1		1.9		2.2
Life	60.8		56.9		120.3		112.7
Net investment income (a)	10.5		9.9		21.2		19.8
Fee revenue and other income (a)	.3		.2		.5		.4
Total Colonial Penn revenues	72.5		68.1		143.9		135.1
Other CNO Business:
Insurance policy income - health	—		6.1		—		12.3
Net investment income (a)	—		8.4		—		16.8
Total Other CNO Business revenues	—		14.5		—		29.1
Corporate operations:
Net investment income	5.7		4.5		12.7		14.6
Fee and other income	1.3		1.5		2.7		3.2
Total corporate revenues	7.0		6.0		15.4		17.8
Total revenues	969.7		961.4		1,920.3		1,969.2

(continued on next page)

20

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

(continued from previous page)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Expenses:
Bankers Life:
Insurance policy benefits	$	427.9		$	434.1		$	842.9		$	904.6
Amortization	45.4			45.7			93.6			100.2
Interest expense on investment borrowings	1.9			1.7			3.8			3.1
Other operating costs and expenses	98.9			89.1			195.6			184.0
Total Bankers Life expenses	574.1			570.6			1,135.9			1,191.9
Washington National:
Insurance policy benefits	132.8			130.3			264.6			268.0
Amortization	16.0			16.2			32.3			33.3
Interest expense on investment borrowings	.5			.5			.9			1.0
Other operating costs and expenses	47.1			40.3			92.3			82.0
Total Washington National expenses	196.4			187.3			390.1			384.3
Colonial Penn:
Insurance policy benefits	43.2			41.2			87.9			84.2
Amortization	3.8			3.7			7.8			7.4
Other operating costs and expenses	21.7			22.0			50.6			47.7
Total Colonial Penn expenses	68.7			66.9			146.3			139.3
Other CNO Business:
Insurance policy benefits	—			15.3			—			30.9
Other operating costs and expenses	—			6.4			—			12.7
Total Other CNO Business expenses	—			21.7			—			43.6
Corporate operations:
Interest expense on corporate debt	11.1			13.1			22.2			28.2
Interest expense on investment borrowings	—			—			—			.1
Other operating costs and expenses	22.5			3.6			36.9			12.3
Total corporate expenses	33.6			16.7			59.1			40.6
Total expenses	872.8			863.2			1,731.4			1,799.7
Pre-tax operating earnings by segment:
Bankers Life	87.4			79.1			171.6			141.2
Washington National	32.3			35.8			63.4			69.8
Colonial Penn	3.8			1.2			(2.4		)	(4.2		)
Other CNO Business	—			(7.2		)	—			(14.5		)
Corporate operations	(26.6		)	(10.7		)	(43.7		)	(22.8		)
Pre-tax operating earnings	$	96.9		$	98.2		$	188.9		$	169.5

___________________

(a) It is not practicable to provide additional components of revenue by product or services.

21

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income (loss) is as follows (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Total segment revenues	$	969.7		$	961.4		$	1,920.3		$	1,969.2
Net realized investment gains	11.7			1.6			33.0			14.8
Revenues related to certain non-strategic investments and earnings attributable to VIEs	7.3			8.2			13.6			15.1
Revenues of CLIC being sold	104.3			110.3			210.8			225.0
Consolidated revenues	1,093.0			1,081.5			2,177.7			2,224.1
Total segment expenses	872.8			863.2			1,731.4			1,799.7
Gain related to reinsurance transaction	(3.8		)	—			(3.8		)	—
Insurance policy benefits - fair value changes in embedded derivative liabilities	10.1			(29.0		)	25.3			(32.1		)
Amortization related to fair value changes in embedded derivative liabilities	(2.7		)	10.5			(6.9		)	11.5
Amortization related to net realized investment gains	.1			.4			.5			1.2
Expenses related to certain non-strategic investments and earnings attributable to VIEs	10.2			11.1			19.8			19.9
Loss on extinguishment or modification of debt	.6			7.7			.6			65.4
Loss on sale of subsidiary	—			—			278.6			—
Expenses of CLIC being sold	91.3			102.9			187.4			209.2
Consolidated expenses	978.6			966.8			2,232.9			2,074.8
Income (loss) before tax	114.4			114.7			(55.2		)	149.3
Income tax expense:
Tax expense on period income	40.3			42.6			79.3			75.8
Valuation allowance for deferred taxes and other tax items	(4.0		)	(5.0		)	15.4			(15.5		)
Net income (loss)	$	78.1		$	77.1		$	(149.9	)	$	89.0

22

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

ACCOUNTING FOR DERIVATIVES

Our fixed index annuity products provide a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the "participation rate") of the amount of increase in the value of a particular index, such as the Standard & Poor's 500 Index, over a specified period.  Typically, on each policy anniversary date, a new index period begins.  We are generally able to change the participation rate at the beginning of each index period during a policy year, subject to contractual minimums.  We typically buy call options (including call spreads) referenced to the applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked.  We reflect changes in the estimated fair value of these options in net investment income (classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios).  Net investment gains (losses) related to fixed index products were $36.7 million and $75.9 million in the six months ended June 30, 2014 and 2013, respectively. These amounts were substantially offset by a corresponding change to insurance policy benefits.  The estimated fair value of these options was $130.7 million (including $4.3 million classified as "Assets of subsidiary being sold") and $156.2 million at June 30, 2014 and December 31, 2013, respectively.  We classify these instruments as other invested assets.

The Company accounts for the options attributed to the policyholder for the estimated life of the annuity contract as embedded derivatives.  The Company purchases options to hedge liabilities for the next policy period approximately on each policy anniversary date and must estimate the fair value of the forward embedded options related to the policies.  These accounting requirements often create volatility in the earnings from these products.  We record the changes in the fair values of the embedded derivatives in earnings as a component of insurance policy benefits.  The fair value of these derivatives, which are classified as "policyholder account balances", was $980.3 million and $903.7 million at June 30, 2014 and December 31, 2013, respectively. We recognized an increase to earnings of $7.4 million and $18.5 million in the second quarters of 2014 and 2013, respectively, and $18.4 million and $20.6 million in the first six months of 2014 and 2013, respectively, from the volatility caused by the accounting requirements to record embedded options at fair value.

If the counterparties for the call options we hold fail to meet their obligations, we may have to recognize a loss.  We limit our exposure to such a loss by diversifying among several counterparties believed to be strong and creditworthy.  At June 30, 2014, substantially all of our counterparties were rated "BBB" or higher by Standard & Poor's Corporation ("S&P").

In periods prior to the second quarter of 2014, we were required to establish an embedded derivative related to a modified coinsurance agreement which ceded the risks of a block of interest sensitive life business. We recaptured this block in the second quarter of 2014, resulting in a gain of $3.8 million, primarily consisting of the release of the embedded derivative. Prior to the recapture of this block, we maintained the investments related to the modified coinsurance agreement in our trading securities account, which we carried at estimated fair value with changes in such value recognized as investment income.  Such trading securities were sold in the second quarter of 2014 in conjunction with the reinsurance recapture.

We purchase certain fixed maturity securities that contain embedded derivatives that are required to be bifurcated from the instrument and held at fair value on the consolidated balance sheet. For certain of these securities, we have elected the fair value option to carry the entire security at fair value with changes in fair value reported in net income for operational ease. Such securities totaled $221.1 million (including $24.3 million classified as "Assets of subsidiary being sold") and $180.6 million at June 30, 2014 and December 31, 2013, respectively.

REINSURANCE

The cost of reinsurance ceded totaled $55.4 million and $55.1 million in the second quarters of 2014 and 2013, respectively, and $107.5 million and $107.1 million in the first six months of 2014 and 2013, respectively.  We deduct this cost from insurance policy income.  Reinsurance recoveries netted against insurance policy benefits totaled $61.2 million and $39.1 million in the second quarters of 2014 and 2013, respectively, and $120.8 million and $92.7 million in the first six months of 2014 and 2013, respectively.

From time-to-time, we assume insurance from other companies.  Any costs associated with the assumption of insurance are amortized consistent with the method used to amortize deferred acquisition costs described above.  Reinsurance premiums assumed totaled $3.8 million and $15.4 million in the second quarters of 2014 and 2013, respectively, and $14.7 million and $29.1 million in the first six months of 2014 and 2013, respectively.  Reinsurance premiums included amounts assumed pursuant to marketing and quota-share agreements with Coventry Health Care ("Coventry") of nil and $10.8 million in the second quarters of 2014 and 2013, respectively and $6.8 million and $19.7 million in the first six months of 2014 and 2013,

23

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

respectively. In August 2013, we received a notice of Coventry's intent to terminate the Medicare Part D prescription drug plan ("PDP") quota-share reinsurance agreement whereby we assumed a portion of the risk related to the PDP business sold through our Bankers Life segment. The PDP premiums received in 2014 (all of which were received in the first quarter of 2014)represent adjustments on such business related to periods prior to the termination of the agreement. We continue to receive distribution income from Coventry for PDP business sold through our Bankers Life segment.

In December 2013, two of our insurance subsidiaries with long-term care business in the Other CNO Business segment entered into 100% coinsurance agreements ceding $495 million of long-term care reserves to Beechwood Re Ltd. ("BRe"). Pursuant to the agreements, the insurance subsidiaries paid an additional premium of $96.9 million to BRe and an amount equal to the related net liabilities. The insurance subsidiaries' ceded reserve credits are secured by assets in market-value trusts subject to a 7% over-collateralization, investment guidelines and periodic true-up provisions. Future payments into the trusts to maintain collateral requirements are the responsibility of BRe.

In the second quarter of 2014, we recaptured a block of interest-sensitive life business that was previously ceded under a modified coinsurance agreement. The recapture of this block resulted in a gain related to reinsurance transaction of $3.8 million. The gain primarily consisted of the release of an embedded derivative that is no longer required.

24

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

INCOME TAXES

The Company's interim tax expense is based upon the estimated annual effective tax rate for the respective period. Under authoritative guidance, certain items are required to be excluded from the estimated annual effective tax rate calculation. Such items include changes in judgment about the realizability of deferred tax assets resulting from changes in projections of income expected to be available in future years, and items deemed to be unusual, infrequent, or that can not be reliably estimated. In these cases, the actual tax expense or benefit applicable to that item is treated discretely and is reported in the same period as the related item. Discrete items include: (i) the loss on the sale of CLIC of $278.6 million in the six months ended June 30, 2014; and (ii) the loss on extinguishment or modification of debt of $7.7 million and $65.4 million in the three and six months ended June 30, 2013, respectively. The components of income tax expense are as follows (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Current tax expense	$	3.9		$	2.7		$	6.1		$	5.4
Deferred tax expense	36.4			40.8			73.2			71.8
Income tax expense calculated based on estimated annual effective tax rate	40.3			43.5			79.3			77.2
Income tax expense (benefit) on discrete items:
Related to the sale of CLIC:
Tax expense related to tax gain on sale	8.4			—			21.6			—
Previously unrecognized tax benefit recognized as a result of the gain	—			—			(7.4		)	—
Valuation allowance release related to the gain	(8.4		)	—			(14.2		)	—
Valuation allowance increase related to the decrease in projected future taxable income	—			—			19.4			—
Valuation allowance reduction resulting from the realization of capital gains and utilization of loss carryforwards	(4.0		)	(5.0		)	(4.0		)	(15.5		)
Deferred tax benefit related to loss on extinguishment or modification of debt	—			(.9		)	—			(1.4		)
Total income tax expense	$	36.3		$	37.6		$	94.7		$	60.3

A reconciliation of the U.S. statutory corporate tax rate to the estimated annual effective rate, before discrete items, reflected in the consolidated statement of operations is as follows:

	Six months ended
	June 30,
	2014		2013
U.S. statutory corporate rate	35.0	%	35.0	%
Non-taxable income and nondeductible benefits, net	(1.0	)	(.5	)
State taxes	1.5		1.4
Estimated annual effective tax rate	35.5	%	35.9	%

25

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The components of the Company's income tax assets and liabilities are summarized below (dollars in millions):

	June 30, 2014			December 31, 2013
Deferred tax assets:
Net federal operating loss carryforwards	$	1,141.8		$	1,240.2
Net state operating loss carryforwards	18.4			20.0
Tax credits	40.6			43.9
Capital loss carryforwards	.6			13.4
Deductible temporary differences:
Investments	68.2			74.3
Insurance liabilities	622.2			723.8
Other	(1.7		)	64.7
Gross deferred tax assets	1,890.1			2,180.3
Deferred tax liabilities:
Present value of future profits and deferred acquisition costs	(318.1		)	(306.8		)
Accumulated other comprehensive income	(512.6		)	(405.5		)
Gross deferred tax liabilities	(830.7		)	(712.3		)
Net deferred tax assets before valuation allowance	1,059.4			1,468.0
Valuation allowance	(296.0		)	(294.8		)
Net deferred tax assets	763.4			1,173.2
Current income taxes accrued	(32.9		)	(26.0		)
Income tax assets, net	$	730.5		$	1,147.2

Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carryforwards and NOLs. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted.

A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred income tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income of the appropriate type during the periods in which our temporary differences become deductible and before our capital loss carryforwards and life and non-life NOLs expire.

Based on our assessment, it appears more likely than not that $763.4 million of our deferred tax assets will be realized through future taxable earnings. We will continue to assess the need for a valuation allowance in the future. If future results are less than projected, a valuation allowance may be required to reduce the deferred tax asset, which could have a material impact on our results of operations in the period in which it is recorded.

Our deferred tax valuation model reflects projections of future taxable income based on a normalized average annual taxable income for the last three years, plus 3 percent growth for the next five years and level income thereafter. Such normalized projected taxable income has been adjusted to reflect the investment trading strategies and the coinsurance

26

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

agreements to cede certain long-term care business, both completed in 2013. In addition, projected taxable income has been adjusted to reflect the sale of CLIC, which is expected to result in a net reduction to CNO's taxable income in future periods and required us to establish a valuation allowance of $19.4 million in the first six months of 2014. Our current deferred tax valuation model assumes estimated normalized taxable income of approximately $315.0 million in 2014. We have evaluated each component of the deferred tax asset and assessed the effect of limitations and/or interpretations on the value of each component and have concluded that it is more likely than not that the components recognized will be fully realized in the future.

Recovery of our deferred tax asset is dependent on achieving the level of future taxable income projected in our deferred tax valuation model and failure to do so could result in an increase in the valuation allowance in a future period.  Any future increase in the valuation allowance may result in additional income tax expense and reduce shareholders' equity, and such an increase could have a significant impact upon our earnings in the future.  In addition, the use of the Company's NOLs is dependent, in part, on whether the Internal Revenue Service (the "IRS") ultimately agrees with the tax position we have taken in our tax returns with respect to the character of the loss recognized as a result of the transfer of the stock of our former subsidiary, Conseco Senior Health Insurance Company ("CSHI"), to Senior Health Care Oversight Trust, an independent trust (the "Independent Trust").

The Internal Revenue Code (the "Code") limits the extent to which losses realized by a non-life entity (or entities) may offset income from a life insurance company (or companies) to the lesser of:  (i) 35 percent of the income of the life insurance company; or (ii) 35 percent of the total loss of the non-life entities (including NOLs of the non-life entities).  There is no similar limitation on the extent to which losses realized by a life insurance entity (or entities) may offset income from a non-life entity (or entities). This limitation is the primary reason a valuation allowance for NOL carryforwards is required.

Section 382 of the Code imposes limitations on a corporation's ability to use its NOLs when the company undergoes an ownership change.  Future transactions and the timing of such transactions could cause an ownership change for Section 382 income tax purposes.  Such transactions may include, but are not limited to, additional repurchases under our securities repurchase program, issuances of common stock and acquisitions or sales of shares of CNO stock by certain holders of our shares, including persons who have held, currently hold or may accumulate in the future five percent or more of our outstanding common stock for their own account.  Many of these transactions are beyond our control.  If an additional ownership change were to occur for purposes of Section 382, we would be required to calculate an annual restriction on the use of our NOLs to offset future taxable income.  The annual restriction would be calculated based upon the value of CNO's equity at the time of such ownership change, multiplied by a federal long-term tax exempt rate (3.32 percent at June 30, 2014), and the annual restriction could effectively eliminate our ability to use a substantial portion of our NOLs to offset future taxable income.  We regularly monitor ownership change (as calculated for purposes of Section 382) and, as of June 30, 2014, we were below the 50 percent ownership change level that would trigger further impairment of our ability to utilize our NOLs.

27

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

As of June 30, 2014, we had $3.3 billion of federal NOLs and $1.8 million of capital loss carryforwards. The following table summarizes the expiration dates of our loss carryforwards assuming the IRS ultimately agrees with the position we have taken with respect to the loss on our investment in CSHI (dollars in millions):

Year of expiration	Net operating loss carryforwards						Capital loss		Total loss
	Life			Non-life			carryforwards		carryforwards
2018	$	120.6		$	—		$	—	$	120.6
2021	30.0			—			—		30.0
2022	152.0			—			—		152.0
2023	742.6			2,126.1			—		2,868.7
2025	—			115.3			—		115.3
2027	—			202.6			—		202.6
2028	—			.5			—		.5
2029	—			272.3			—		272.3
2032	—			44.0			—		44.0
Subtotal	1,045.2			2,760.8			—		3,806.0
Less:
Unrecognized tax benefits	(344.7		)	(199.0		)	1.8		(541.9		)
Total	$	700.5		$	2,561.8		$	1.8	$	3,264.1

We had deferred tax assets related to NOLs for state income taxes of $18.4 million and $20.0 million at June 30, 2014 and December 31, 2013, respectively.  The related state NOLs are available to offset future state taxable income in certain states through 2025.

We recognized an $878 million ordinary loss on our investment in CSHI which was worthless when it was transferred to the Independent Trust in 2008. Of this loss, $742 million has been reported as a life loss and $136 million as a non-life loss. The IRS has disagreed with our ordinary loss treatment and believes that it should be treated as a capital loss, subject to a five year carryover. If the IRS position is ultimately determined to be correct, $473 million would have expired unused in 2013. Due to this uncertainty, we have not recognized a tax benefit of $166.0 million. However, if this unrecognized tax benefit would have been recognized, we would also have established a valuation allowance of $41.0 million at June 30, 2014.

Tax years 2004 and 2008 through 2012 are open to examination by the IRS.  The Company's various state income tax returns are generally open for tax years 2010 through 2012 based on the individual state statutes of limitation. Generally, for tax years which generate NOLs, capital losses or tax credit carryforwards, the statute of limitations does not close until the expiration of the statute of limitations for the tax year in which such carryforwards are utilized.

28

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS

The following notes payable were direct corporate obligations of the Company as of June 30, 2014 and December 31, 2013 (dollars in millions):

	June 30, 2014			December 31, 2013
Senior Secured Credit Agreement (as defined below)	$	555.5		$	581.5
6.375% Senior Secured Notes due October 2020 (the "6.375% Notes")	275.0			275.0
7.0% Debentures	—			3.5
Unamortized discount on Senior Secured Credit Agreement	(3.2		)	(3.6		)
Direct corporate obligations	$	827.3		$	856.4

Senior Secured Credit Agreement

On September 28, 2012, the Company entered into a new senior secured credit agreement, providing for: (i) a $425.0 million six-year term loan facility ($393.0 million remained outstanding at June 30, 2014); (ii) a $250.0 million four-year term loan facility ($162.5 million remained outstanding at June 30, 2014); and (iii) a $50.0 million three-year revolving credit facility, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto (the "Senior Secured Credit Agreement"). The Senior Secured Credit Agreement is guaranteed by the Subsidiary Guarantors (as defined below) and secured by a first-priority lien (which ranks pari passu with the liens securing the 6.375% Notes) on substantially all of the Company's and the Subsidiary Guarantors' assets. As of June 30, 2014, no amounts have been borrowed under the revolving credit facility.

The revolving credit facility includes an uncommitted subfacility for swingline loans of up to $5.0 million, and up to $5.0 million of the revolving credit facility is available for the issuance of letters of credit. The six-year term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 1% and the four-year term loan facility amortizes in quarterly installments resulting in an annual amortization of 20% during the first and second years and 30% during the third and fourth years. Subject to certain conditions, the Company may incur additional incremental loans under the Senior Secured Credit Agreement in an amount of up to $250.0 million.

The interest rates with respect to loans under: (i) the six-year term loan facility are, at the Company's option, equal to a eurodollar rate, plus 2.75% per annum, or a base rate, plus 1.75% per annum, subject to a eurodollar rate "floor" of 1.00% and a base rate "floor" of 2.25% (such rate was 3.75% at June 30, 2014); (ii) the four-year term loan facility are, at the Company's option, equal to a eurodollar rate, plus 2.25% per annum, or a base rate, plus 1.25% per annum, subject to a eurodollar rate "floor" of .75% and a base rate "floor" of 2.00% (such rate was 3.00% at June 30, 2014); and (iii) the revolving credit facility will be, at the Company's option, equal to a eurodollar rate, plus 3.00% per annum, or a base rate, plus 2.00% per annum, in each case, with respect to revolving credit facility borrowings only, subject to certain step-downs based on the debt to total capitalization ratio of the Company.

In the first six months of 2014, we made $26.0 million of scheduled quarterly principal payments due under the Senior Secured Credit Agreement.

On May 30, 2014, the Company completed an amendment to the Senior Secured Credit Agreement to waive the requirement that the net proceeds in excess of $125 million to be received from the sale of CLIC be used to prepay amounts outstanding under the Senior Secured Credit Agreement. In the second quarter of 2014, we recognized expenses related to the amendment of the Senior Secured Credit Agreement totaling $.4 million which are included in the loss on extinguishment or modification of debt.

The amendment to the Senior Secured Credit Agreement did not impact the restrictions set forth in the 6.375% Indenture dated as of September 28, 2012 (the "6.375% Indenture") for the Company’s 6.375% Notes regarding the Company’s use of the proceeds from the sale of CLIC. Under the Indenture, the net proceeds received by the Company from the sale of CLIC

29

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

(defined as "Net Available Cash" under the Indenture) may be used to: (i) reinvest in or acquire assets to be used in the insurance business or a related business; or (ii) repay the Senior Secured Credit Agreement. Under the Indenture, any Net Available Cash not so reinvested or applied within 365 days after the closing of the sale of CLIC must be used to make an offer to purchase the outstanding notes at par and, in the interim, may only be invested as set forth in the Indenture. The Company currently plans to reinvest the cash received from the sale of CLIC in its business including the payment on July 1, 2014, of $28.0 million to recapture a block of life insurance business from Wilton Re.

Mandatory prepayments of the Senior Secured Credit Agreement will be required, subject to certain exceptions, in an amount equal to: (i) 100% of the net cash proceeds from certain asset sales or casualty events; (ii) 100% of the net cash proceeds received by the Company or any of its restricted subsidiaries from certain debt issuances; and (iii) 100% of the amount of certain restricted payments made (including any common stock dividends and share repurchases) as defined in the Senior Secured Credit Agreement provided that if, as of the end of the fiscal quarter immediately preceding such restricted payment, the debt to total capitalization ratio is: (x) equal to or less than 25.0%, but greater than 20.0%, the prepayment requirement shall be reduced to 33.33%; or (y) equal to or less than 20.0%, the prepayment requirement shall not apply.

Notwithstanding the foregoing, no mandatory prepayments pursuant to item (i) in the preceding paragraph shall be required if: (x) the debt to total capitalization ratio is equal or less than 20% and (y) either (A) the financial strength rating of certain of the Company's insurance subsidiaries is equal or better than A- (stable) from A.M. Best Company ("A.M. Best") or (B) the Senior Secured Credit Agreement is rated equal or better than BBB- (stable) from S&P and Baa3 (stable) by Moody's Investor Services, Inc. ("Moody's").

The Senior Secured Credit Agreement requires the Company to maintain (each as calculated in accordance with the Senior Secured Credit Agreement): (i) a debt to total capitalization ratio of not more than 27.5 percent (such ratio was 17.6 percent at June 30, 2014); (ii) an interest coverage ratio of not less than 2.50 to 1.00 for each rolling four quarters (or, if less, the number of full fiscal quarters commencing after the effective date of the Senior Secured Credit Agreement) (such ratio was 9.81 to 1.00 for the four quarters ended June 30, 2014); (iii) an aggregate ratio of total adjusted capital to company action level risk-based capital for the Company's insurance subsidiaries of not less than 250 percent (such ratio was 437 percent at June 30, 2014); and (iv) a combined statutory capital and surplus for the Company's insurance subsidiaries of at least $1,300.0 million (combined statutory capital and surplus at June 30, 2014, was $2,057 million).

6.375% Notes

On September 28, 2012, we issued $275.0 million in aggregate principal amount of 6.375% Notes pursuant to the 6.375% Indenture, among the Company, the subsidiary guarantors party thereto (the "Subsidiary Guarantors") and Wilmington Trust, National Association, as trustee and as collateral agent. The net proceeds from the issuance of the 6.375% Notes, together with the net proceeds from the Senior Secured Credit Agreement, were used to repay other outstanding indebtedness and for general corporate purposes. The 6.375% Notes mature on October 1, 2020. Interest on the 6.375% Notes accrues at a rate of 6.375% per annum and is payable semiannually in arrears on April 1 and October 1 of each year, commencing on April 1, 2013. The 6.375% Notes and the guarantees thereof (the "Guarantees") are senior secured obligations of the Company and the Subsidiary Guarantors and rank equally in right of payment with all of the Company's and the Subsidiary Guarantors' existing and future senior obligations, and senior to all of the Company's and the Subsidiary Guarantors' future subordinated indebtedness. The 6.375% Notes are secured by a first-priority lien on substantially all of the assets of the Company and the Subsidiary Guarantors, subject to certain exceptions. The 6.375% Notes and the Guarantees are pari passu with respect to security and in right of payment with all of the Company's and the Subsidiary Guarantors' existing and future secured indebtedness under the Senior Secured Credit Agreement. The 6.375% Notes are structurally subordinated to all of the liabilities and preferred stock of each of the Company's insurance subsidiaries, which are not guarantors of the 6.375% Notes.

Under the 6.375% Indenture, the Company can make Restricted Payments (as such term is defined in the 6.375% Indenture) up to a calculated limit, provided that the Company's pro forma risk-based capital ratio exceeds 225% after giving effect to the Restricted Payment and certain other conditions are met. Restricted Payments include, among other items, repurchases of common stock and cash dividends on common stock (to the extent such dividends exceed $30.0 million in the aggregate in any calendar year).

The limit of Restricted Payments permitted under the 6.375% Indenture is the sum of (x) 50% of the Company's "Net Excess Cash Flow" (as defined in the 6.375% Indenture) for the period (taken as one accounting period) from July 1, 2012 to

30

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

the end of the Company's most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment, (y) $175.0 million and (z) certain other amounts specified in the 6.375% Indenture. Based on the provisions set forth in the 6.375% Indenture and the Company's Net Excess Cash Flow for the period from July 1, 2012 through June 30, 2014, the Company could have made additional Restricted Payments under this 6.375% Indenture covenant of approximately $178 million as of June 30, 2014. This limitation on Restricted Payments does not apply if the Debt to Total Capitalization Ratio (as defined in the 6.375% Indenture) as of the last day of the Company's most recently ended fiscal quarter for which financial statements are available that immediately precedes the date of any Restricted Payment, calculated immediately after giving effect to such Restricted Payment and any related transactions on a pro forma basis, is equal to or less than 17.5%.

7.0% Debentures

On May 30, 2014, we repurchased the remaining $3.5 million principal amount of the 7.0% Debentures for a purchase price of $3.7 million and recognized a loss on the extinguishment of debt of $.2 million.

Scheduled Repayment of our Direct Corporate Obligations

The scheduled repayment of our direct corporate obligations was as follows at June 30, 2014 (dollars in millions):

Year ending June 30,
2015	$	73.0
2016	79.3
2017	23.0
2018	4.2
2019	376.0
Thereafter	275.0
	$	830.5

INVESTMENT BORROWINGS

Two of the Company's insurance subsidiaries (Washington National Insurance Company ("Washington National") and Bankers Life) are members of the Federal Home Loan Bank ("FHLB").  As members of the FHLB, Washington National and Bankers Life have the ability to borrow on a collateralized basis from the FHLB.  Washington National and Bankers Life are required to hold certain minimum amounts of FHLB common stock as a condition of membership in the FHLB, and additional amounts based on the amount of the borrowings.  At June 30, 2014, the carrying value of the FHLB common stock was $73.5 million.  As of June 30, 2014, collateralized borrowings from the FHLB totaled $1.5 billion and the proceeds were used to purchase fixed maturity securities.  The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet.  The borrowings are collateralized by investments with an estimated fair value of $1.8 billion at June 30, 2014, which are maintained in a custodial account for the benefit of the FHLB.  Substantially all of such investments are classified as fixed maturities, available for sale, in our consolidated balance sheet.  

CLIC was also a member of the FHLB and "Assets of subsidiary being sold" included FHLB common stock of $22.5 million and "Liabilities of subsidiary being sold" included collateralized borrowings of $383.4 million, both as of June 30, 2014. These borrowings are collateralizd by investments with an estimated fair value of $503.9 million included in the "Assets of subsidiary being sold".

31

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The following summarizes the terms of the borrowings from the FHLB by Washington National and Bankers Life (dollars in millions):

Amount		Maturity	Interest rate at
borrowed		date	June 30, 2014
$	50.0	September 2015	Variable rate – 0.528%
50.0		October 2015	Variable rate – 0.502%
100.0		June 2016	Variable rate – 0.592%
75.0		June 2016	Variable rate – 0.394%
100.0		October 2016	Variable rate – 0.412%
50.0		November 2016	Variable rate – 0.497%
50.0		November 2016	Variable rate – 0.622%
57.7		June 2017	Variable rate – 0.581%
50.0		August 2017	Variable rate – 0.424%
75.0		August 2017	Variable rate – 0.377%
100.0		October 2017	Variable rate – 0.656%
50.0		November 2017	Variable rate – 0.737%
50.0		January 2018	Variable rate – 0.578%
50.0		January 2018	Variable rate – 0.566%
50.0		February 2018	Variable rate – 0.533%
50.0		February 2018	Variable rate – 0.315%
22.0		February 2018	Variable rate – 0.559%
100.0		May 2018	Variable rate – 0.600%
50.0		July 2018	Variable rate – 0.698%
50.0		August 2018	Variable rate – 0.344%
50.0		January 2019	Variable rate – 0.649%
50.0		February 2019	Variable rate – 0.315%
100.0		March 2019	Variable rate – 0.634%
21.8		June 2020	Fixed rate – 1.960%
27.2		March 2023	Fixed rate – 2.160%
20.5		June 2025	Fixed rate – 2.940%
$	1,499.2

32

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The following summarizes the terms of the borrowings classified as "Liabilities of subsidiary being sold" (dollars in millions):

Amount		Maturity	Interest rate at
borrowed		date	June 30, 2014
$	146.4	November 2015	Fixed rate – 5.300%
100.0		December 2015	Fixed rate – 4.710%
100.0		July 2017	Fixed rate – 3.900%
37.0		November 2017	Fixed rate – 3.750%
$	383.4

The variable rate borrowings are pre-payable on each interest reset date without penalty.  The fixed rate borrowings are pre-payable subject to payment of a yield maintenance fee based on current market interest rates.  At June 30, 2014, the aggregate yield maintenance fee to prepay all fixed rate borrowings was $29.5 million.

Interest expense of $13.8 million and $13.6 million in the first six months of 2014 and 2013, respectively, was recognized related to total borrowings from the FHLB.

As part of our investment strategy, we may enter into repurchase agreements to increase our investment return. Pursuant to such agreements, the Company sells securities subject to an obligation to repurchase the same securities. Under these arrangements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing arrangements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. Such borrowings totaled $8.4 million at June 30, 2014 and mature prior to June 30, 2015.

The primary risks associated with short-term collateralized borrowings are: (i) a substantial decline in the market value of the margined security; and (ii) that a counterparty may be unable to perform under the terms of the contract or be unwilling to extend such financing in future periods especially if the liquidity or value of the margined security has declined. Exposure is limited to any depreciation in value of the related securities.

CHANGES IN COMMON STOCK

Changes in the number of shares of common stock outstanding were as follows (shares in thousands):

Balance, December 31, 2013	220,324
Treasury stock purchased and retired	(7,834	)
Stock options exercised	732
Restricted and performance stock vested	533		(a)
Balance, June 30, 2014	213,755

____________________

(a) Such amount was reduced by 227 thousand shares which were tendered to the Company for the payment of required federal and state tax withholdings owed on the vesting of restricted and performance stock.

In May 2011, the Company announced a common share repurchase program of up to $100.0 million. In February 2012, June 2012, December 2012 and December 2013, the Company's Board of Directors approved, in aggregate, an additional $800.0 million to repurchase the Company's outstanding securities. In the first six months of 2014, we repurchased 7.8 million shares of common stock for $136.6 million under the securities repurchase program. The Company had remaining repurchase authority of $260.8 million as of June 30, 2014.

In the first six months of 2014, dividends declared and paid on common stock totaled $26.3 million ($0.12 per common share). In March 2014, the Company increased its quarterly common stock dividend to $0.06 per share from $0.03 per share.

33

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

SALES INDUCEMENTS

Certain of our annuity products offer sales inducements to contract holders in the form of enhanced crediting rates or bonus payments in the initial period of the contract.  Certain of our life insurance products offer persistency bonuses credited to the contract holders balance after the policy has been outstanding for a specified period of time.  These enhanced rates and persistency bonuses are considered sales inducements in accordance with GAAP.  Such amounts are deferred and amortized in the same manner as deferred acquisition costs.  Sales inducements deferred totaled $3.1 million and $2.5 million during the six months ended June 30, 2014 and 2013, respectively.  Amounts amortized totaled $9.4 million and $13.3 million during the six months ended June 30, 2014 and 2013, respectively.  The unamortized balance of deferred sales inducements was $102.3 million (including $33.9 million classified as "Assets of subsidiary being sold") and $108.6 million at June 30, 2014 and December 31, 2013, respectively.  The balance of insurance liabilities for persistency bonus benefits was $27.6 million (including $25.7 million classified as "Liabilities of subsidiary being sold") and $28.9 million at June 30, 2014 and December 31, 2013, respectively.

ASSETS AND LIABILITIES SUBJECT TO OFFSETTING DISCLOSURE REQUIREMENTS

Call options

As further described in the note entitled "Accounting for Derivatives", we buy call options (including call spreads) referenced to applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked. We limit our exposure to the counterparties failing to meet their obligation with respect to the call options by diversifying among several counterparties believed to be strong and credit worthy. The call options are free-standing derivatives and are recorded at fair value in the Company's consolidated balance sheet. The Company and its subsidiaries are parties to master netting arrangements with its counterparties related to entering into various derivative contracts. However, the offsetting of assets and liabilities is not applicable to the derivative contracts that were in place at June 30, 2014 or December 31, 2013. The counterparties do not provide collateral to the Company related to their obligations under the call options.

The following table summarizes information related to call options as of June 30, 2014 and December 31, 2013 (dollars in millions):

								Gross amounts not offset in the balance sheet
		Gross amounts of recognized assets		Gross amounts offset in the balance sheet		Net amounts of assets presented in the balance sheet		Financial instruments		Cash collateral received		Net amount
June 30, 2014:
	Call Options (a)	$	130.7	$	—	$	130.7	$	—	$	—	$	130.7
December 31, 2013:
	Call Options	156.2		—		156.2		—		—		156.2

___________________________

(a) Includes $4.3 million classified as "Assets of subsidiary being sold".

34

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

Repurchase agreements

We may enter into agreements under which we sell securities subject to an obligation to repurchase the same securities. These repurchase agreements are accounted for as collateralized financing arrangements and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as investment borrowings in the Company's consolidated balance sheet, while the securities underlying the repurchase agreements remain in the respective investment asset accounts. There is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. In addition, as the Company does not currently have any outstanding reverse repurchase agreements, there is no such offsetting to be done with the repurchase agreements.

The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., fails to make an interest payment to the counterparty). If the counterparty were to default (e.g., declare bankruptcy), the Company could cancel the repurchase agreement (i.e., cease payment of principal and interest), and attempt collection on the amount of collateral value in excess of the repurchase agreement fair value. The collateral is held by a third party financial institution in the counterparty's custodial account. The counterparty has the right to sell or repledge the investment securities.

The following table summarizes information related to repurchase agreements as of June 30, 2014 (dollars in millions):

								Gross amounts not offset in the balance sheet
		Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet		Net amounts of liabilities presented in the balance sheet		Financial instruments		Cash collateral pledged		Net amount
June 30, 2014:
	Repurchase agreements (a)	$	8.4	$	—	$	8.4	$	—	$	—	$	8.4

_________________

(a) As of June 30, 2014, these agreements were collateralized by investment securities with a fair value of $10.5 million. There were no repurchase agreements outstanding at December 31, 2013.

RECENTLY ISSUED ACCOUNTING STANDARDS

Pending Accounting Standards

In April 2014, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance changing the criteria for reporting discontinued operations. Under the revised guidance, only disposals of a component or a group of components, including those classified as held for sale, which represent a strategic shift that has or will have a major effect on a company's operations and financial results will be reported as discontinued operations. The guidance is effective prospectively for new disposals occurring after January 1, 2015.

In May 2014, the FASB issued authoritative guidance for recognizing revenue from contracts with customers. Certain contracts with customers are specifically excluded from this guidance, including insurance contracts. The core principle of the new guidance is that an entity should recognize revenue when it transfers promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance will be effective for the Company on January 1, 2017 and permits two methods of transition upon adoption; full retrospective and modified retrospective. Under the full retrospective method, prior periods would be restated under the new revenue standard, providing for comparability in all periods presented. Under the modified retrospective method, prior periods would not be restated. Instead, revenues and other disclosures for pre-2017 periods would be provided in

35

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

the notes to the financial statements as previously reported under the current revenue standard. The Company is currently assessing the impact the guidance will have upon adoption.

In June 2014, the FASB issued authoritative guidance on the accounting and disclosure of repurchase-to-maturity transactions and repurchase financings. Under this new accounting guidance, repurchase-to-maturity transactions will be accounted for as secured borrowings rather than sales of an asset, and transfers of financial assets with a contemporaneous repurchase financing arrangement will no longer be evaluated to determine whether they should be accounted for on a combined basis as forward contracts. The new guidance also prescribes additional disclosures particularly on the nature of collateral pledged in the repurchase agreement accounted for as a secured borrowing. The new guidance is effective beginning on January 1, 2015. The Company is currently assessing the impact the guidance will have upon adoption.

Adopted Accounting Standards

In July 2013, the FASB issued authoritative guidance regarding the financial statement presentation of an unrecognized tax benefit when a NOL carryforward, a similar tax loss or a tax credit carryforward exists. Such guidance will require an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a NOL carryforward, a similar tax loss, or a tax credit carryforward, except under certain circumstances as further described in the guidance. Such guidance does not require new recurring disclosures. This guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this guidance did not have a material impact on our consolidated financial statements.

LITIGATION AND OTHER LEGAL PROCEEDINGS

Legal Proceedings

The Company and its subsidiaries are involved in various legal actions in the normal course of business, in which claims for compensatory and punitive damages are asserted, some for substantial amounts.  We recognize an estimated loss from these loss contingencies when we believe it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Some of the pending matters have been filed as purported class actions and some actions have been filed in certain jurisdictions that permit punitive damage awards that are disproportionate to the actual damages incurred.  The amounts sought in certain of these actions are often large or indeterminate and the ultimate outcome of certain actions is difficult to predict.  In the event of an adverse outcome in one or more of these matters, there is a possibility that the ultimate liability may be in excess of the liabilities we have established and could have a material adverse effect on our business, financial condition, results of operations and cash flows.  In addition, the resolution of pending or future litigation may involve modifications to the terms of outstanding insurance policies or could impact the timing and amount of rate increases, which could adversely affect the future profitability of the related insurance policies.  Based upon information presently available, and in light of legal, factual and other defenses available to the Company and its subsidiaries, the Company does not believe that it is probable that the ultimate liability from either pending or threatened legal actions, after consideration of existing loss provisions, will have a material adverse effect on the Company's consolidated financial condition, operating results or cash flows. However, given the inherent difficulty in predicting the outcome of legal proceedings, there exists the possibility that such legal actions could have a material adverse effect on the Company's consolidated financial condition, operating results or cash flows.

In addition to the inherent difficulty of predicting litigation outcomes, particularly those that will be decided by a jury, the matters specifically identified below purport to seek substantial or an unspecified amount of damages for unsubstantiated conduct spanning several years based on complex legal theories and damages models. The alleged damages typically are indeterminate or not factually supported in the complaint, and, in any event, the Company's experience indicates that monetary demands for damages often bear little relation to the ultimate loss. In some cases, plaintiffs are seeking to certify classes in the litigation and class certification either has been denied or is pending and we have filed oppositions to class certification or sought to decertify a prior class certification. In addition, for many of these cases: (i) there is uncertainty as to the outcome of pending appeals or motions; (ii) there are significant factual issues to be resolved; and/or (iii) there are novel legal issues presented. Accordingly, the Company cannot reasonably estimate the possible loss or range of loss in excess of amounts accrued, if any, or predict the timing of the eventual resolution of these matters.  The Company reviews these matters on an ongoing basis.  When assessing reasonably possible and probable outcomes, the Company bases its assessment on the expected ultimate outcome following all appeals.

Litigation

On October 25, 2012, a purported nationwide class action was filed in the United States District Court for the Central District of California, William Jeffrey Burnett and Joe H. Camp v. Conseco Life Insurance Company, CNO Financial Group, Inc., CDOC, Inc. and CNO Services, LLC, Case No. EDCV12-01715VAPSPX. The plaintiffs bring this action under Rule 23(B)(3) on behalf of various Lifetrend policyholders who since October 2008 have surrendered their policies or had them lapse. Additionally, plaintiffs seek certification of a subclass of various Lifetrend policyholders who accepted optional benefits and

36

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

signed a release pursuant to a regulatory settlement. The plaintiffs allege breach of contract and seek declaratory relief, compensatory damages, attorney fees and costs. On November 30, 2012, CLIC and the other defendants filed a motion to dismiss the complaint. On November 18, 2013, the court granted the dismissal, with leave to amend, of CNO Financial Group, Inc., CDOC, Inc. and CNO Services, LLC, and denied the motion to dismiss CLIC. With the completion of the sale of CLIC on July 1, 2014, our consolidated financial statements will no longer include CLIC's liability related to this litigation in future periods.

Regulatory Examinations and Fines

Insurance companies face significant risks related to regulatory investigations and actions.  Regulatory investigations generally result from matters related to sales or underwriting practices, payment of contingent or other sales commissions, claim payments and procedures, product design, product disclosure, additional premium charges for premiums paid on a periodic basis, denial or delay of benefits, charging excessive or impermissible fees on products, procedures related to canceling policies, changing the way cost of insurance charges are calculated for certain life insurance products or recommending unsuitable products to customers.  We are, in the ordinary course of our business, subject to various examinations, inquiries and information requests from state, federal and other authorities.  The ultimate outcome of these regulatory actions (including the costs of complying with information requests and policy reviews) cannot be predicted with certainty.  In the event of an unfavorable outcome in one or more of these matters, the ultimate liability may be in excess of liabilities we have established and we could suffer significant reputational harm as a result of these matters, which could also have a material adverse effect on our business, financial condition, results of operations or cash flows.

In August 2011, we were notified of an examination to be done on behalf of a number of states for the purpose of determining compliance with unclaimed property laws by the Company and its subsidiaries.  Such examination has included inquiries related to the use of data available on the U.S. Social Security Administration's Death Master File to identify instances where benefits under life insurance policies, annuities and retained asset accounts are payable. We are continuing to provide information to the examiners in response to their requests. A total of 38 states and the District of Columbia are currently participating in this examination.

37

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

CONSOLIDATED STATEMENT OF CASH FLOWS

The following disclosures supplement our consolidated statement of cash flows.

The following reconciles net income to net cash provided by operating activities (dollars in millions):

	Six months ended
	June 30,
	2014				2013
Cash flows from operating activities:
Net income (loss)	$	(149.9	)		$	89.0
Adjustments to reconcile net income to net cash from operating activities:
Amortization and depreciation	146.2				172.6
Income taxes	92.7				57.4
Insurance liabilities	155.2				205.3
Accrual and amortization of investment income	(77.5		)		(125.0		)
Deferral of policy acquisition costs	(116.9		)		(107.2		)
Net realized investment gains	(35.8		)		(18.5		)
Payment to reinsurer pursuant to long-term care business reinsured	(590.3		)		—
Loss on sale of subsidiary	278.6				—
Gain related to reinsurance transaction	(3.8		)		—
Loss on extinguishment or modification of debt	.6				65.4
Other	(14.0		)		(49.1		)
Net cash from operating activities	$	(314.9	)	(a)	$	289.9

______________________

(a) Cash flows from operating activities reflect outflows in the 2014 period due to the payment to reinsurer to transfer certain long-term care business.

Non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions):

	Six months ended
	June 30,
	2014		2013
Stock options, restricted stock and performance units	$	8.1	$	7.2

INVESTMENTS IN VARIABLE INTEREST ENTITIES

We have concluded that we are the primary beneficiary with respect to certain VIEs, which are consolidated in our financial statements.  The following is a description of our significant investments in VIEs.

All of the VIEs are collateralized loan trusts that were established to issue securities to finance the purchase of corporate loans and other permitted investments (including two new VIEs which were consolidated in 2014).  The assets held by the trusts are legally isolated and not available to the Company.  The liabilities of the VIEs are expected to be satisfied from the cash flows generated by the underlying loans held by the trusts, not from the assets of the Company.  The Company has no financial obligation to the VIEs beyond its investment in each VIE.

38

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

Certain of our insurance subsidiaries are noteholders of the VIEs.  Another subsidiary of the Company is the investment manager for the VIEs.  As such, it has the power to direct the most significant activities of the VIEs which materially impacts the economic performance of the VIEs.

The following table provides supplemental information about the assets and liabilities of the VIEs which have been consolidated in accordance with authoritative guidance (dollars in millions):

	June 30, 2014
	VIEs		Eliminations			Net effect on consolidated balance sheet
Assets:
Investments held by variable interest entities	$	1,241.1	$	—		$	1,241.1
Notes receivable of VIEs held by insurance subsidiaries	—		(116.0		)	(116.0		)
Cash and cash equivalents held by variable interest entities	101.8		—			101.8
Accrued investment income	2.5		—			2.5
Income tax assets, net	6.8		(2.2		)	4.6
Other assets	14.2		(.9		)	13.3
Total assets	$	1,366.4	$	(119.1	)	$	1,247.3
Liabilities:
Other liabilities	$	148.2	$	(3.2	)	$	145.0
Borrowings related to variable interest entities	1,110.8		—			1,110.8
Notes payable of VIEs held by insurance subsidiaries	120.1		(120.1		)	—
Total liabilities	$	1,379.1	$	(123.3	)	$	1,255.8

	December 31, 2013
	VIEs		Eliminations			Net effect on consolidated balance sheet
Assets:
Investments held by variable interest entities	$	1,046.7	$	—		$	1,046.7
Notes receivable of VIEs held by insurance subsidiaries	—		(108.5		)	(108.5		)
Cash and cash equivalents held by variable interest entities	104.3		—			104.3
Accrued investment income	1.9		—			1.9
Income tax assets, net	5.4		(2.5		)	2.9
Other assets	22.6		(.9		)	21.7
Total assets	$	1,180.9	$	(111.9	)	$	1,069.0
Liabilities:
Other liabilities	$	66.0	$	(4.0	)	$	62.0
Borrowings related to variable interest entities	1,012.3		—			1,012.3
Notes payable of VIEs held by insurance subsidiaries	112.5		(112.5		)	—
Total liabilities	$	1,190.8	$	(116.5	)	$	1,074.3

The investment portfolios held by the VIEs are primarily comprised of commercial bank loans to corporate obligors which are almost entirely rated below-investment grade.  At June 30, 2014, such loans had an amortized cost of $1,241.5

39

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

million; gross unrealized gains of $3.3 million; gross unrealized losses of $3.7 million; and an estimated fair value of $1,241.1 million.

The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at June 30, 2014, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

	Amortized cost		Estimated fair value
	(Dollars in millions)
Due in one year or less	$	2.8	$	2.8
Due after one year through five years	353.8		354.1
Due after five years through ten years	884.9		884.2
Total	$	1,241.5	$	1,241.1

During the first six months of 2014, we recognized net realized investment losses on the VIE investments of $2.0 million.  During the first six months of 2013, we recognized net realized investment losses on the VIE investments of $.3 million, which were comprised of $.3 million of net gains from the sales of fixed maturities, and $.6 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

At June 30, 2014, there were no investments held by the VIEs that were in default.

During the first six months of 2014, $21.3 million of investments held by the VIEs were sold which resulted in gross investment losses (before income taxes) of $2.1 million. During the first six months of 2013, no investments held by the VIEs were sold which resulted in gross investment losses.

At June 30, 2014, the VIEs held:  (i) investments with a fair value of $470.8 million and gross unrealized losses of $2.2 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $157.2 million and gross unrealized losses of $1.5 million that had been in an unrealized loss position for greater than twelve months.

At December 31, 2013, the VIEs held: (i) investments with a fair value of $355.5 million and gross unrealized losses of $3.1 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $7.9 million and gross unrealized losses of less than $.1 million that had been in an unrealized loss position for greater than twelve months.

The investments held by the VIEs are evaluated for other-than-temporary declines in fair value in a manner that is consistent with the Company's fixed maturities, available for sale.

In addition, the Company, in the normal course of business, makes passive investments in structured securities issued by VIEs for which the Company is not the investment manager.  These structured securities include asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, residential mortgage-backed securities and collateralized mortgage obligations.  Our maximum exposure to loss on these securities is limited to our cost basis in the investment.  We have determined that we are not the primary beneficiary of these structured securities due to the relative size of our investment in comparison to the total principal amount of the individual structured securities and the level of credit subordination which reduces our obligation to absorb gains or losses.

At June 30, 2014, we held investments in various limited partnerships, in which we are not the primary beneficiary, totaling $24.6 million (classified as other invested assets).  At June 30, 2014, we had unfunded commitments to these partnerships of $99.5 million.  Our maximum exposure to loss on these investments is limited to the amount of our investment.

40

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and, therefore, represents an exit price, not an entry price.  We carry certain assets and liabilities at fair value on a recurring basis, including fixed maturities, equity securities, trading securities, investments held by VIEs, derivatives, cash and cash equivalents, separate account assets and embedded derivatives.  We carry our company-owned life insurance policy, which is backed by a series of mutual funds, at its cash surrender value and our hedge fund investments at their net asset values; in both cases, we believe these values approximate their fair values. In addition, we disclose fair value for certain financial instruments, including mortgage loans and policy loans, insurance liabilities for interest-sensitive products, investment borrowings, notes payable and borrowings related to VIEs.

The degree of judgment utilized in measuring the fair value of financial instruments is largely dependent on the level to which pricing is based on observable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information.  Financial instruments with readily available active quoted prices would be considered to have fair values based on the highest level of observable inputs, and little judgment would be utilized in measuring fair value.  Financial instruments that rarely trade would often have fair value based on a lower level of observable inputs, and more judgment would be utilized in measuring fair value.

Valuation Hierarchy

There is a three-level hierarchy for valuing assets or liabilities at fair value based on whether inputs are observable or unobservable.

• Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities.  Our Level 1 assets primarily include cash and exchange traded securities.

• Level 2 – includes assets and liabilities valued using inputs that are quoted prices for similar assets in an active market, quoted prices for identical or similar assets in a market that is not active, observable inputs, or observable inputs that can be corroborated by market data.  Level 2 assets and liabilities include those financial instruments that are valued by independent pricing services using models or other valuation methodologies.  These models consider various inputs such as interest rate, credit or issuer spreads, reported trades and other inputs that are observable or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace.  Financial assets in this category primarily include:  certain public and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund and hedge fund investments; and most short-term investments; and non-exchange-traded derivatives such as call options to hedge liabilities related to our fixed index annuity products. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs.

• Level 3 – includes assets and liabilities valued using unobservable inputs that are used in model-based valuations that contain management assumptions.  Level 3 assets and liabilities include those financial instruments whose fair value is estimated based on broker/dealer quotes, pricing services or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information.  Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities.  Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) since their values include significant unobservable inputs including actuarial assumptions.

At each reporting date, we classify assets and liabilities into the three input levels based on the lowest level of input that is significant to the measurement of fair value for each asset and liability reported at fair value.  This classification is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions.  Our assessment of the significance of a particular input to the fair value measurement and the ultimate classification of each asset and liability requires judgment

41

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

and is subject to change from period to period based on the observability of the valuation inputs. Any transfers between levels are reported as having occurred at the beginning of the period. There were no transfers between Level 1 and Level 2 in both the first six months of 2014 and 2013.

The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs, short-term and separate account assets use Level 2 inputs for the determination of fair value.  These fair values are obtained primarily from independent pricing services, which use Level 2 inputs for the determination of fair value.  Substantially all of our Level 2 fixed maturity securities and separate account assets were valued from independent pricing services.  Third party pricing services normally derive the security prices through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information.  If there are no recently reported trades, the third party pricing services may use matrix or model processes to develop a security price where future cash flow expectations are discounted at an estimated risk-adjusted market rate.  The number of prices obtained for a given security is dependent on the Company's analysis of such prices as further described below.

For securities that are not priced by pricing services and may not be reliably priced using pricing models, we obtain broker quotes.  These broker quotes are non-binding andrepresent an exit price, but assumptions used to establish the fair value may not be observable and therefore represent Level 3 inputs.  Approximately 43 percent of our Level 3 fixed maturity securities were valued using unadjusted broker quotes or broker-provided valuation inputs.  The remaining Level 3 fixed maturity investments do not have readily determinable market prices and/or observable inputs.  For these securities, we use internally developed valuations.  Key assumptions used to determine fair value for these securities may include risk-free rates, risk premiums, performance of underlying collateral and other factors involving significant assumptions which may not be reflective of an active market.  For certain investments, we use a matrix or model process to develop a security price where future cash flow expectations are discounted at an estimated market rate.  The pricing matrix incorporates term interest rates as well as a spread level based on the issuer's credit rating and other factors relating to the issuer and the security's maturity.  In some instances issuer-specific spread adjustments, which can be positive or negative, are made based upon internal analysis of security specifics such as liquidity, deal size, and time to maturity.

As the Company is responsible for the determination of fair value, we have control processes designed to ensure that the fair values received from third-party pricing sources are reasonable and the valuation techniques and assumptions used appear reasonable and consistent with prevailing market conditions. Additionally, when inputs are provided by third-party pricing sources, we have controls in place to review those inputs for reasonableness. As part of these controls, we perform monthly quantitative and qualitative analysis on the prices received from third parties to determine whether the prices are reasonable estimates of fair value.  The Company's analysis includes:  (i) a review of the methodology used by third party pricing services; (ii) where available, a comparison of multiple pricing services' valuations for the same security; (iii) a review of month to month price fluctuations; (iv) a review to ensure valuations are not unreasonably dated; and (v) back testing to compare actual purchase and sale transactions with valuations received from third parties.  As a result of such procedures, the Company may conclude the prices received from third parties are not reflective of current market conditions.  In those instances, we may request additional pricing quotes or apply internally developed valuations.  However, the number of instances is insignificant and the aggregate change in value of such investments is not materially different from the original prices received.

The categorization of the fair value measurements of our investments priced by independent pricing services was based upon the Company's judgment of the inputs or methodologies used by the independent pricing services to value different asset classes.  Such inputs include:  benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data.  The Company categorizes such fair value measurements based upon asset classes and the underlying observable or unobservable inputs used to value such investments.

The fair value measurements for derivative instruments, including embedded derivatives requiring bifurcation, are determined based on the consideration of several inputs including closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options; market interest rates; and non-performance risk.  For certain embedded derivatives, we use actuarial assumptions in the determination of fair value.

42

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at June 30, 2014 is as follows (dollars in millions):

	Quoted prices in active markets for identical assets or liabilities (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs  (Level 3)		Total
Assets:
Fixed maturities, available for sale:
Corporate securities	$	—	$	13,491.8	$	389.8	$	13,881.6
United States Treasury securities and obligations of United States government corporations and agencies	—		160.1		—		160.1
States and political subdivisions	—		2,122.2		28.7		2,150.9
Asset-backed securities	—		1,273.4		52.7		1,326.1
Collateralized debt obligations	—		310.0		14.2		324.2
Commercial mortgage-backed securities	—		1,266.2		—		1,266.2
Mortgage pass-through securities	—		7.6		1.3		8.9
Collateralized mortgage obligations	—		1,415.5		.1		1,415.6
Total fixed maturities, available for sale	—		20,046.8		486.8		20,533.6
Equity securities - corporate securities	52.9		208.4		26.2		287.5
Trading securities:
Corporate securities	—		23.8		—		23.8
United States Treasury securities and obligations of United States government corporations and agencies	—		4.2		—		4.2
Asset-backed securities	—		20.9		—		20.9
Commercial mortgage-backed securities	—		146.6		—		146.6
Mortgage pass-through securities	—		.1		—		.1
Collateralized mortgage obligations	—		23.9		5.9		29.8
Equity securities	2.0		—		—		2.0
Total trading securities	2.0		219.5		5.9		227.4
Investments held by variable interest entities - corporate securities	—		1,241.1		—		1,241.1
Other invested assets - derivatives	.9		126.4		—		127.3
Assets held in separate accounts	—		9.4		—		9.4
Assets of subsidiary being sold	—		3,458.6		63.1		3,521.7
Total assets carried at fair value by category	$	55.8	$	25,310.2	$	582.0	$	25,948.0
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	$	—	$	—	$	980.3	$	980.3
Total liabilities for insurance products	—		—		980.3		980.3
Total liabilities carried at fair value by category	$	—	$	—	$	980.3	$	980.3

43

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2013 is as follows (dollars in millions):

	Quoted prices in active markets  for identical assets or liabilities (Level 1)		Significant other observable inputs  (Level 2)		Significant unobservable inputs  (Level 3)		Total
Assets:
Fixed maturities, available for sale:
Corporate securities	$	—	$	15,313.8	$	359.6	$	15,673.4
United States Treasury securities and obligations of United States government corporations and agencies	—		73.1		—		73.1
States and political subdivisions	—		2,204.4		—		2,204.4
Asset-backed securities	—		1,419.9		42.2		1,462.1
Collateralized debt obligations	—		47.3		246.7		294.0
Commercial mortgage-backed securities	—		1,609.0		—		1,609.0
Mortgage pass-through securities	—		11.8		1.6		13.4
Collateralized mortgage obligations	—		1,848.9		—		1,848.9
Total fixed maturities, available for sale	—		22,528.2		650.1		23,178.3
Equity securities - corporate securities	79.6		145.2		24.5		249.3
Trading securities:
Corporate securities	—		45.2		—		45.2
United States Treasury securities and obligations of United States government corporations and agencies	—		4.6		—		4.6
States and political subdivisions	—		14.1		—		14.1
Asset-backed securities	—		24.3		—		24.3
Commercial mortgage-backed securities	—		125.8		—		125.8
Mortgage pass-through securities	—		.1		—		.1
Collateralized mortgage obligations	—		31.1		—		31.1
Equity securities	2.4		—		—		2.4
Total trading securities	2.4		245.2		—		247.6
Investments held by variable interest entities - corporate securities	—		1,046.7		—		1,046.7
Other invested assets - derivatives	.6		156.2		—		156.8
Assets held in separate accounts	—		10.3		—		10.3
Total assets carried at fair value by category	$	82.6	$	24,131.8	$	674.6	$	24,889.0
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	$	—	$	—	$	903.7	$	903.7
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—		—		1.8		1.8
Total liabilities for insurance products	—		—		905.5		905.5
Total liabilities carried at fair value by category	$	—	$	—	$	905.5	$	905.5

44

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

For those financial instruments disclosed at fair value, we use the following methods and assumptions to determine the estimated fair values:

Mortgage loans and policy loans.  We discount future expected cash flows for loans included in our investment portfolio based on interest rates currently being offered for similar loans to borrowers with similar credit ratings.  We aggregate loans with similar characteristics in our calculations.  The fair value of policy loans approximates their carrying value.

Company-owned life insurance is backed by a series of mutual funds and is carried at cash surrender value which approximates estimated fair value.

Alternative investment funds are carried at their net asset values which approximates estimated fair value.

Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value.

Liabilities for policyholder account balances.  We discount future expected cash flows based on interest rates currently being offered for similar contracts with similar maturities.

Investment borrowings, notes payable and borrowings related to variable interest entities.  For publicly traded debt, we use current fair values.  For other notes, we use discounted cash flow analyses based on our current incremental borrowing rates for similar types of borrowing arrangements.

Assets of subsidiary being sold include mortgage loans, policy loans, and cash and cash equivalents. The estimated fair value of these financial instruments is determined in the same manner as described above.

Liabilities of subsidiary being sold include liabilities for policyholder account balances and investment borrowings. The estimated fair value of these financial instruments is determined in the same manner as described above.

The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions):

	June 30, 2014
	Quoted prices in active markets for identical assets or liabilities (Level 1)		Significant other observable inputs  (Level 2)		Significant unobservable inputs  (Level 3)		Total estimated fair value		Total carrying amount
Assets:
Mortgage loans	$	—	$	—	$	1,647.1	$	1,647.1	$	1,595.9
Policy loans	—		—		99.7		99.7		99.7
Other invested assets:
Company-owned life insurance	—		149.4		—		149.4		149.4
Alternative investment funds	—		86.6		—		86.6		86.6
Cash and cash equivalents:
Unrestricted	167.8		211.0		—		378.8		378.8
Held by variable interest entities	101.8		—		—		101.8		101.8
Assets of subsidiary being sold	164.7		—		351.0		515.7		503.8
Liabilities:
Policyholder account balances (a)	—		—		10,649.7		10,649.7		10,649.7
Investment borrowings	—		1,507.0		—		1,507.0		1,507.6
Borrowings related to variable interest entities	—		955.9		—		955.9		1,110.8
Notes payable – direct corporate obligations	—		852.4		—		852.4		827.3
Liabilities of subsidiary being sold	—		412.9		2,070.0		2,482.9		2,453.4

45

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

	December 31, 2013
	Quoted prices in active markets for identical assets or liabilities (Level 1)		Significant other observable inputs  (Level 2)		Significant unobservable inputs  (Level 3)		Total estimated fair value		Total carrying amount
Assets:
Mortgage loans	$	—	$	—	$	1,749.5	$	1,749.5	$	1,729.5
Policy loans	—		—		277.0		277.0		277.0
Other invested assets:
Company-owned life insurance	—		144.8		—		144.8		144.8
Alternative investment funds	—		67.6		—		67.6		67.6
Cash and cash equivalents:
Unrestricted	457.8		241.2		—		699.0		699.0
Held by variable interest entities	104.3		—		—		104.3		104.3
Liabilities:
Policyholder account balances (a)	—		—		12,776.4		12,776.4		12,776.4
Investment borrowings	—		1,948.5		—		1,948.5		1,900.0
Borrowings related to variable interest entities	—		993.7		—		993.7		1,012.3
Notes payable – direct corporate obligations	—		872.5		—		872.5		856.4

____________________

(a) The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value at June 30, 2014 and December 31, 2013.  This was because interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year.

46

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended June 30, 2014 (dollars in millions):

	June 30, 2014
	Beginning balance as of March 31, 2014			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Ending balance as of June 30, 2014			Amount of total gains (losses) for the three months ended June 30, 2014 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	336.8		$	47.7		$	—		$	4.0		$	16.3	$	(15.0	)	$	389.8		$	—
States and political subdivisions	—			—			—			.7			28.0		—			28.7			—
Asset-backed securities	42.2			(.5		)	—			1.1			9.9		—			52.7			—
Collateralized debt obligations	14.1			(.1		)	—			.2			—		—			14.2			—
Mortgage pass-through securities	.4			.9			—			—			—		—			1.3			—
Collateralized mortgage obligations	—			—			—			(.1		)	.2		—			.1			—
Total fixed maturities, available for sale	393.5			48.0			—			5.9			54.4		(15.0		)	486.8			—
Equity securities - corporate securities	25.4			.8			—			—			—		—			26.2			—
Trading securities - collateralized mortgage obligations	5.9			—			—			—			—		—			5.9			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(930.8		)	(38.7		)	(10.8		)	—			—		—			(980.3		)	(10.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(3.4		)	3.4			—			—			—		—			—			—
Total liabilities for insurance products	(934.2		)	(35.3		)	(10.8		)	—			—		—			(980.3		)	(10.8		)

47

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

_________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the three months ended June 30, 2014 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	51.0		$	(3.3	)	$	—		$	—	$	47.7
Asset-backed securities	—			(.5		)	—			—		(.5		)
Collateralized debt obligations	—			(.1		)	—			—		(.1		)
Mortgage pass-through securities	1.1			(.2		)	—			—		.9
Total fixed maturities, available for sale	52.1			(4.1		)	—			—		48.0
Equity securities - corporate securities	.8			—			—			—		.8
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(31.1		)	.5			(22.5		)	14.4		(38.7		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			3.4			—			—		3.4
Total liabilities for insurance products	(31.1		)	3.9			(22.5		)	14.4		(35.3		)

48

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the six months ended June 30, 2014 (dollars in millions):

	June 30, 2014
	Beginning balance as of December 31, 2013			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)		Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Amounts classified as Assets of subsidiary being sold			Ending balance as of June 30, 2014			Amount of total gains (losses) for the six months ended June 30, 2014 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	359.6		$	41.2		$	—		$	13.4	$	26.8	$	—		$	(51.2	)	$	389.8		$	—
States and political subdivisions	—			—			—			2.0		28.9		—			(2.2		)	28.7			—
Asset-backed securities	42.2			9.0			—			3.3		7.9		—			(9.7		)	52.7			—
Collateralized debt obligations	246.7			(4.4		)	—			—		12.6		(240.7		)	—			14.2			—
Mortgage pass-through securities	1.6			(.3		)	—			—		—		—			—			1.3			—
Collateralized mortgage obligations	—			—			—			—		.1		—			—			.1			—
Total fixed maturities, available for sale	650.1			45.5			—			18.7		76.3		(240.7		)	(63.1		)	486.8			—
Equity securities - corporate securities	24.5			1.7			—			—		—		—			—			26.2			—
Trading securities - collateralized mortgage obligations	—			—			—			.1		5.8		—			—			5.9			.1
Assets of subsidiary being sold	—			—			—			—		—		—			63.1			63.1			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(903.7		)	(49.8		)	(26.8		)	—		—		—			—			(980.3		)	(26.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(1.8		)	1.8			—			—		—		—			—			—			—
Total liabilities for insurance products	(905.5		)	(48.0		)	(26.8		)	—		—		—			—			(980.3		)	(26.8		)

49

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

_________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the six months ended June 30, 2014 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	51.0		$	(9.8	)	$	—		$	—	$	41.2
Asset-backed securities	9.9			(.9		)	—			—		9.0
Collateralized debt obligations	.9			(5.3		)	—			—		(4.4		)
Mortgage pass-through securities	1.1			(1.4		)	—			—		(.3		)
Total fixed maturities, available for sale	62.9			(17.4		)	—			—		45.5
Equity securities - corporate securities	1.7			—			—			—		1.7
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(57.7		)	3.6			(24.6		)	28.9		(49.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			3.4			(1.6		)	—		1.8
Total liabilities for insurance products	(57.7		)	7.0			(26.2		)	28.9		(48.0		)

50

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended June 30, 2013 (dollars in millions):

	June 30, 2013
	Beginning balance as of March 31, 2013			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Ending balance as of June 30, 2013			Amount of total gains (losses) for the three months ended June 30, 2013 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	356.3		$	2.2		$	(.3	)	$	(9.6	)	$	44.5	$	—		$	393.1		$	—
States and political subdivisions	15.0			—			—			—			—		(15.0		)	—			—
Asset-backed securities	46.6			(.2		)	—			(2.5		)	2.0		(.5		)	45.4			—
Collateralized debt obligations	309.7			(33.7		)	(.1		)	.9			10.8		—			287.6			—
Commercial mortgage-backed securities	3.8			(.5		)	—			—			—		—			3.3			—
Mortgage pass-through securities	1.8			—			—			—			—		—			1.8			—
Collateralized mortgage obligations	36.6			—			—			—			—		(36.5		)	.1			—
Total fixed maturities, available for sale	769.8			(32.2		)	(.4		)	(11.2		)	57.3		(52.0		)	731.3			—
Equity securities:
Corporate securities	.1			—			—			—			—		—			.1			—
Venture capital investments	3.1			—			—			—			—		—			3.1			—
Total equity securities	3.2			—			—			—			—		—			3.2			—
Trading securities:
States and political subdivisions	.6			—			—			—			—		(.6		)	—			—
Collateralized mortgage obligations	5.7			—			—			(.1		)	4.8		—			10.4			—
Total trading securities	6.3			—			—			(.1		)	4.8		(.6		)	10.4			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(794.3		)	(32.7		)	30.7			—			—		—			(796.3		)	30.7
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(5.1		)	2.5			—			—			—		—			(2.6		)	—
Total liabilities for insurance products	(799.4		)	(30.2		)	30.7			—			—		—			(798.9		)	30.7

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

____________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the three months ended June 30, 2013 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	10.0		$	(7.8	)	$	—		$	—	$	2.2
Asset-backed securities	—			(.2		)	—			—		(.2		)
Collateralized debt obligations	—			(33.7		)	—			—		(33.7		)
Commercial mortgage-backed securities	—			(.5		)	—			—		(.5		)
Total fixed maturities, available for sale	10.0			(42.2		)	—			—		(32.2		)
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(27.7		)	—			(14.0		)	9.0		(32.7		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			2.5			—			—		2.5
Total liabilities for insurance products	(27.7		)	2.5			(14.0		)	9.0		(30.2		)

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the six months ended June 30, 2013 (dollars in millions):

	June 30, 2013
	Beginning balance as of December 31, 2012			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Ending balance as of June 30, 2013			Amount of total gains (losses) for the six months ended June 30, 2013 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	355.5		$	63.6		$	(.3	)	$	(13.4	)	$	—	$	(12.3	)	$	393.1		$	—
States and political subdivisions	13.1			—			—			—			—		(13.1		)	—			—
Asset-backed securities	44.0			7.2			—			(3.3		)	2.0		(4.5		)	45.4			—
Collateralized debt obligations	324.0			(42.0		)	.1			5.5			—		—			287.6			—
Commercial mortgage-backed securities	6.2			(.7		)	—			.1			—		(2.3		)	3.3			—
Mortgage pass-through securities	1.9			(.1		)	—			—			—		—			1.8			—
Collateralized mortgage obligations	16.9			(.1		)	—			—			—		(16.7		)	.1			—
Total fixed maturities, available for sale	761.6			27.9			(.2		)	(11.1		)	2.0		(48.9		)	731.3			—
Equity securities:
Corporate securities	.1			—			—			—			—		—			.1			—
Venture capital investments	2.8			—			—			.3			—		—			3.1			—
Total equity securities	2.9			—			—			.3			—		—			3.2			—
Trading securities:
States and political subdivisions	.6			—			—			—			—		(.6		)	—			—
Collateralized debt obligations	7.3			(7.7		)	.6			(.2		)	—		—			—			—
Collateralized mortgage obligations	5.8			—			—			(.3		)	4.9		—			10.4			—
Total trading securities	13.7			(7.7		)	.6			(.5		)	4.9		(.6		)	10.4			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(734.0		)	(95.8		)	33.5			—			—		—			(796.3		)	33.5
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(5.5		)	2.9			—			—			—		—			(2.6		)	—
Total liabilities for insurance products	(739.5		)	(92.9		)	33.5			—			—		—			(798.9		)	33.5

53

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

____________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the six months ended June 30, 2013 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	71.5		$	(7.9	)	$	—		$	—	$	63.6
Asset-backed securities	7.6			(.4		)	—			—		7.2
Collateralized debt obligations	13.3			(55.3		)	—			—		(42.0		)
Commercial mortgage-backed securities	—			(.7		)	—			—		(.7		)
Mortgage pass-through securities	—			(.1		)	—			—		(.1		)
Collateralized mortgage obligations	—			(.1		)	—			—		(.1		)
Total fixed maturities, available for sale	92.4			(64.5		)	—			—		27.9
Trading securities - collateralized debt obligations	—			(7.7		)	—			—		(7.7		)
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(52.8		)	1.4			(64.2		)	19.8		(95.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			2.9			—			—		2.9
Total liabilities for insurance products	(52.8		)	4.3			(64.2		)	19.8		(92.9		)

At June 30, 2014, 81 percent of our Level 3 fixed maturities, available for sale, were investment grade and 3 percent and 80 percent of our Level 3 fixed maturities, available for sale, consisted of structured securities and corporate securities, respectively.

Realized and unrealized investment gains and losses presented in the preceding tables represent gains and losses during the time the applicable financial instruments were classified as Level 3.

Realized and unrealized gains (losses) on Level 3 assets are primarily reported in either net investment income for policyholder and reinsurer accounts and other special-purpose portfolios, net realized investment gains (losses) or insurance

54

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

policy benefits within the consolidated statement of operations or accumulated other comprehensive income within shareholders' equity based on the appropriate accounting treatment for the instrument.

The amount presented for gains (losses) included in our net loss for assets and liabilities still held as of the reporting date primarily represents impairments for fixed maturities, available for sale, changes in fair value of trading securities and certain derivatives and changes in fair value of embedded derivative instruments included in liabilities for insurance products that exist as of the reporting date.

The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at June 30, 2014 (dollars in millions):

	Fair value at June 30, 2014		Valuation technique(s)	Unobservable inputs	Range (weighted average)
Assets:
Corporate securities (a)	$	254.5	Discounted cash flow analysis	Discount margins	1.50% - 5.00% (2.44%)
Asset-backed securities (b)	29.1		Discounted cash flow analysis	Discount margins	1.72% - 4.30% (2.81%)
Other assets categorized as Level 3 (c)	235.3		Unadjusted third-party price source	Not applicable	Not applicable
Assets of subsidiary being sold:
Corporate securities (a)	19.1		Discounted cash flow analysis	Discount margins	1.50% - 2.45% (1.96%)
Asset-backed securities (b)	8.7		Discounted cash flow analysis	Discount margins	3.50%
Other assets categorized as Level 3 (c)	35.3		Unadjusted third-party price source	Not applicable	Not applicable
Total	582.0
Liabilities:
Interest-sensitive products (d)	980.3		Discounted projected embedded derivatives	Projected portfolio yields	5.35% - 6.63% (5.60%)
				Discount rates	0.00 - 3.78% (2.04%)
				Surrender rates	2.80% - 54.60% (14.39%)

________________________________

(a) Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(b) Asset-backed securities - The significant unobservable input used in the fair value measurement of our asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(c) Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.

(d) Interest-sensitive products - The significant unobservable inputs used in the fair value measurement of our interest-sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

55

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2013 (dollars in millions):

	Fair value at December 31, 2013		Valuation technique(s)	Unobservable inputs	Range (weighted average)
Assets:
Corporate securities (a)	$	260.3	Discounted cash flow analysis	Discount margins	1.65% - 2.90% (2.36%)
Asset-backed securities (b)	35.1		Discounted cash flow analysis	Discount margins	2.03% - 4.20% (3.09%)
Collateralized debt obligations (c)	240.7		Discounted cash flow analysis	Recoveries	64% - 67% (65.8%)
				Constant prepayment rate	20%
				Discount margins	.95% - 2.00% (1.32%)
				Annual default rate	1.14% - 5.57% (3.05%)
				Portfolio CCC %	1.52% - 21.79% (12.57%)
Equity security (d)	24.5		Cost approach	Historical cost	Not applicable
Other assets categorized as Level 3 (e)	114.0		Unadjusted third-party price source	Not applicable	Not applicable
Total	674.6
Liabilities:
Interest-sensitive products (f)	905.5		Discounted projected embedded derivatives	Projected portfolio yields	5.35% - 6.63% (5.60%)
				Discount rates	0.00 - 4.64% (2.47%)
				Surrender rates	2.80% - 54.60% (14.39%)

________________________________

(a) Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(b) Asset-backed securities - The significant unobservable input used in the fair value measurement of our asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(c) Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes.

(d) Equity security - The significant unobservable input used in the fair value measurement of this equity security is historical cost as that is the amount that would be required to replace the security with a comparable security. The amount represents an investment in an entity that is currently in the construction phase of a manufacturing facility.  The fair value measurement is sensitive to the construction phase and operational risk of the security.

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(unaudited)

___________________

(e) Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.

(f) Interest-sensitive products - The significant unobservable inputs used in the fair value measurement of our interest-sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

___________________

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

In this section, we review the consolidated financial condition of CNO at June 30, 2014, and its consolidated results of operations for the six months ended June 30, 2014 and 2013, and, where appropriate, factors that may affect future financial performance. Please read this discussion in conjunction with the accompanying consolidated financial statements and notes.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Our statements, trend analyses and other information contained in this report and elsewhere (such as in filings by CNO with the SEC, press releases, presentations by CNO or its management or oral statements) relative to markets for CNO's products and trends in CNO'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," "guidance," "outlook" 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.  The "Risk Factors" section of our 2013 Annual Report on Form 10-K provides examples of risks, uncertainties and events that could cause our actual results to differ materially from the expectations expressed in our forward-looking statements.  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:

• changes in or sustained low interest rates causing reductions in investment income, the margins of our fixed annuity and life insurance businesses, and sales of, and demand for, our products;

• expectations of lower future investment earnings may cause us to accelerate amortization, write down the balance of insurance acquisition costs or establish additional liabilities for insurance products;

• general economic, market and political conditions, including the performance 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;

• the ultimate outcome of lawsuits filed against us and other legal and regulatory proceedings to which we are subject;

• our ability to make anticipated changes to certain non-guaranteed elements of our life insurance products;

• our ability to obtain adequate and timely rate increases on our health products, including our long-term care business;

• the receipt of any required regulatory approvals for dividend and surplus debenture interest payments from our insurance subsidiaries;

• 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;

• changes in our assumptions related to deferred acquisition costs or the present value of future profits;

• the recoverability of our deferred tax assets and the effect of potential ownership changes and tax rate changes on their value;

• our assumption that the positions we take on our tax return filings will not be successfully challenged by the IRS;

• changes in accounting principles and the interpretation thereof;

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

___________________

• our ability to continue to satisfy the financial ratio and balance requirements and other covenants of our debt agreements;

• 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;

• performance and valuation of our investments, including the impact of realized losses (including other-than-temporary impairment charges);

• 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;

• our ability to generate sufficient liquidity to meet our debt service obligations and other cash needs;

• our ability to maintain effective controls over financial reporting;

• our ability to continue to recruit and retain productive agents and distribution partners and customer response to new products, distribution channels and marketing initiatives;

• our ability to achieve additional upgrades of the financial strength ratings of CNO 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;

• the risk factors or uncertainties listed from time to time in our filings with the SEC;

• 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;

• determination of the final sales price and net proceeds for the sale of CLIC; and

• 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 written or oral forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statement.  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.

The reporting of risk-based capital ("RBC") measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.

OVERVIEW

We are a holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance products.  We focus on serving the senior and middle-income markets, which we believe are attractive, underserved, high growth markets.  We sell our products through three distribution channels: career agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing.

Prior to 2014, the Company managed its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; Other CNO Business, comprised primarily of products we no longer sell actively; and corporate operations, comprised of holding company activities and certain noninsurance company businesses.  As a result of the sale of CLIC which was completed on July 1, 2014 and the coinsurance

59

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

___________________

agreements to cede certain long-term care business effective December 31, 2013 (as further described in the note to the consolidated financial statements entitled "Reinsurance"), management has changed the manner in which it disaggregates the Company's operations for making operating decisions and assessing performance. In periods prior to 2014: (i) the results in the Washington National segment have been adjusted to include the results from the business in the Other CNO Business segment that are being retained; (ii) the Other CNO Business segment included only the long-term care business that was ceded effective December 31, 2013 and the overhead expense of CLIC that is expected to continue after the completion of the sale; and (iii) the CLIC business being sold is excluded from our analysis of business segment results. Beginning on January 1, 2014: (i) the overhead expense of CLIC that is expected to continue after the completion of the sale has been reallocated primarily to the Bankers Life and Washington National segments; (ii) there is no longer an Other CNO Business segment; and (iii) the CLIC business being sold continues to be excluded from our analysis of business segment results. After the completion of the sale of CLIC: (i) the Bankers Life segment will include the results of certain life insurance business that was recaptured from Wilton Re; and (ii) the revenues and expenses associated with a transition services agreement and a special support services agreement with Wilton Re will be included in our non-operating earnings. Under such agreements, we will receive $30 million in the year ended June 30, 2015 and $20 million in the year ended June 30, 2016. In addition, certain services will continue to be provided in the three years ended June 30, 2019 for an annual fee of $.2 million per year. The income we receive from these services agreements will offset certain of our overhead costs. If we are not successful in reducing our overhead costs to the same extent as the reduction in fees to be received from Wilton Re over the period of the agreements, our results of operations will be adversely affected. Our prior period segment disclosures have been revised to reflect management's current view of the Company's operating segments. The Company’s insurance segments are described below:

• Bankers Life,which markets and distributes Medicare supplement insurance, interest-sensitive life insurance, traditional life insurance, fixed annuities and long-term care insurance products to the middle-income senior market through a dedicated field force of career agents and sales managers supported by a network of community-based sales offices.  The Bankers Life segment includes primarily the business of Bankers Life and Casualty Company.  Bankers Life also markets and distributes Medicare Advantage plans primarily through distribution arrangements with Humana, Inc. and United HealthCare and PDP primarily through a distribution arrangement with Coventry.

• Washington National, which markets and distributes supplemental health (including specified disease, accident and hospital indemnity insurance products) and life insurance to middle-income consumers at home and at the worksite.  These products are marketed through Performance Matters Associates of Texas, Inc. ("PMA") and through independent marketing organizations and insurance agencies including worksite marketing.  The products being marketed are underwritten by Washington National.

• Colonial Penn, which markets primarily graded benefit and simplified issue life insurance directly to customers in the senior middle-income market through television advertising, direct mail, the internet and telemarketing.  The Colonial Penn segment includes primarily the business of Colonial Penn Life Insurance Company ("Colonial Penn").

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

___________________

The following summarizes our earnings for the three and six months ending June 30, 2014 and 2013 (dollars in millions, except per share data):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Income before the loss on the operations of CLIC being sold, the earnings of CLIC being sold, net realized investment gains, fair value changes in embedded derivative liabilities, equity in earnings of certain non-strategic investments and earnings attributable to VIEs, corporate interest expense, loss on extinguishment or modification of debt and income taxes ("EBIT" a non-GAAP financial measure) (a):
Bankers Life	$	87.4		$	79.1		$	171.6		$	141.2
Washington National	32.3			35.8			63.4			69.8
Colonial Penn	3.8			1.2			(2.4		)	(4.2		)
Other CNO Business:
Losses from the long-term care business reinsured effective December 31, 2013	—			(2.2		)	—			(4.9		)
Overhead expense of CLIC allocated to other segments effective January 1, 2014	—			(5.0		)	—			(9.6		)
EBIT from business segments continuing after the CLIC sale	123.5			108.9			232.6			192.3
Corporate operations, excluding corporate interest expense	(15.5		)	2.4			(21.5		)	5.4
EBIT from operations continuing after the CLIC sale	108.0			111.3			211.1			197.7
Corporate interest expense	(11.1		)	(13.1		)	(22.2		)	(28.2		)
Operating earnings before taxes	96.9			98.2			188.9			169.5
Tax expense on operating income	33.2			34.3			65.3			60.0
Net operating income	63.7			63.9			123.6			109.5
Earnings of CLIC being sold (net of taxes)	8.5			4.8			15.2			10.3
Loss on operations of CLIC being sold (including impact of taxes)	—			—			(298.0		)	—
Gain related to reinsurance transaction (net of taxes)	2.5			—			2.5			—
Net realized investment gains (net of related amortization and taxes)	7.5			.8			21.1			8.8
Fair value changes in embedded derivative liabilities (net of related amortization and taxes)	(4.8		)	12.1			(12.0		)	13.4
Equity in earnings of certain non-strategic investments and earnings attributable to VIEs (net of taxes)	(2.9		)	(2.7		)	(5.9		)	(4.5		)
Loss on extinguishment or modification of debt (net of taxes)	(.4		)	(6.8		)	(.4		)	(64.0		)
Valuation allowance for deferred tax assets and other tax items (b)	4.0			5.0			4.0			15.5
Net income (loss)	$	78.1		$	77.1		$	(149.9	)	$	89.0
Per diluted share:
Net operating income	$	.29		$	.28		$	.56		$	.47
Earnings of CLIC being sold (net of taxes)	.04			.02			.07			.04
Loss on operations of CLIC being sold (including impact of taxes)	—			—			(1.36		)	—
Gain related to reinsurance transaction (net of taxes)	.01			—			.01			—
Net realized investment gains (net of related amortization and taxes)	.03			.01			.10			.04
Fair value changes in embedded derivative liabilities (net of related amortization and taxes)	(.02		)	.05			(.06		)	.06
Equity in earnings of certain non-strategic investments and earnings attributable to VIEs (net of taxes)	(.02		)	(.01		)	(.03		)	(.02		)
Loss on extinguishment or modification of debt (net of taxes)	—			(.03		)	—			(.27		)
Valuation allowance for deferred tax assets and other tax items (b)	.02			.02			.02			.06
Net income (loss)	$	.35		$	.34		$	(.69	)	$	.38

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____________

(a) Management believes that an analysis of EBIT provides a clearer comparison of the operating results of the Company from period to period because it excludes:  (i) the loss on the operations of CLIC being sold; (ii) the earnings of CLIC being sold; (iii) net realized investment gains or losses, net of related amortization and taxes; (iv) 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 taxes; (v) equity in earnings of certain non-strategic investments and earnings attributable to VIEs, net of taxes; (vi) loss on extinguishment or modification of debt, net of taxes; and (vii) changes in the valuation allowance for deferred tax assets. Net realized investment gains or losses include: (i) gains or losses on the sales of investments; (ii) other-than-temporary impairments recognized through net income; and (iii) changes in fair value of certain fixed maturity investments with embedded derivatives.  The table above reconciles the non-GAAP measure to the corresponding GAAP measure.

(b) Increase in valuation allowance of $19.4 million in the six months ended June 30, 2014, related to the expected change in future taxable income following the sale of CLIC, is included in the "loss on operations of CLIC being sold (including impact of taxes)".

CRITICAL ACCOUNTING POLICIES

Refer to "Critical Accounting Policies" in our 2013 Annual Report of Form 10-K for information on our other accounting policies that we consider critical in preparing our consolidated financial statements.

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RESULTS OF OPERATIONS

The following tables and narratives summarize the operating results of our segments (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Pre-tax operating earnings (a non-GAAP measure) (a):
Bankers Life	$	87.4		$	79.1		$	171.6		$	141.2
Washington National	32.3			35.8			63.4			69.8
Colonial Penn	3.8			1.2			(2.4		)	(4.2		)
Corporate operations	(26.6		)	(10.7		)	(43.7		)	(22.8		)
Other CNO Business	—			(7.2		)	—			(14.5		)
	96.9			98.2			188.9			169.5
Gain related to reinsurance transaction:
Washington National	3.8			—			3.8			—
Net realized investment gains (losses), net of related amortization:
Bankers Life	1.9			2.9			3.4			10.8
Washington National	1.2			(1.8		)	30.3			2.5
Colonial Penn	.2			.4			.4			.1
Corporate operations	8.3			(.3		)	(1.6		)	.2
	11.6			1.2			32.5			13.6
Fair value changes in embedded derivative liabilities, net of related amortization:
Bankers Life	(7.3		)	18.2			(18.2		)	20.3
Washington National	(.1		)	.3			(.2		)	.3
	(7.4		)	18.5			(18.4		)	20.6
Equity in earnings of certain non-strategic investments and earnings attributable to VIEs:
Corporate operations	(2.9		)	(2.9		)	(6.2		)	(4.8		)
Loss on extinguishment or modification of debt:
Corporate operations	(.6		)	(7.7		)	(.6		)	(65.4		)
Amounts related to CLIC being sold:
Earnings of CLIC being sold	13.0			7.4			23.4			15.8
Loss on sale of CLIC	—			—			(278.6		)	—
	13			7.4			(255.2		)	15.8
Income (loss) before income taxes:
Bankers Life	82.0			100.2			156.8			172.3
Washington National	37.2			34.3			97.3			72.6
Colonial Penn	4.0			1.6			(2.0		)	(4.1		)
Corporate operations	(21.8		)	(21.6		)	(52.1		)	(92.8		)
Other CNO Business	—			(7.2		)	—			(14.5		)
Amount related to CLIC being sold	13.0			7.4			(255.2		)	15.8
Income (loss) before income taxes	$	114.4		$	114.7		$	(55.2	)	$	149.3

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(a) These non-GAAP measures as presented in the above table and in the following segment financial data and discussions of segment results exclude the loss on the operations of CLIC being sold, the earnings of CLIC being sold, net realized investment gains (losses), fair value changes in embedded derivative liabilities, net of related amortization, equity in earnings of certain non-strategic investments and earnings attributable to VIEs,loss on extinguishment or modification of debt and before income taxes.  These are considered non-GAAP financial measures.  A non-GAAP measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

These non-GAAP financial measures of "pre-tax operating earnings" differ from "income (loss) before income taxes" as presented in our consolidated statement of operations prepared in accordance with GAAP due to the exclusion of the loss on the operations of CLIC being sold, the earnings of CLIC being sold, realized investment gains (losses), fair value changes in embedded derivative liabilities, net of related amortization, equity in earnings of certain non-strategic investments and earnings attributable to VIEs and loss on extinguishment or modification of debt.  We measure segment performance excluding these items because we believe that this performance measure is a better indicator of the ongoing businesses and trends in our business. Our primary investment focus is on investment income to support our liabilities for insurance products as opposed to the generation of realized investment gains (losses), and a long-term focus is necessary to maintain profitability over the life of the business. Realized investment gains (losses), fair value changes in embedded derivative liabilities and equity in earnings of certain non-strategic investments and earnings attributable to VIEs depend on market conditions and do not necessarily relate to decisions regarding the underlying business of our segments.  However, "pre-tax operating earnings" does not replace "income (loss) before income taxes" as a measure of overall profitability.

We may experience realized investment gains (losses), which will affect future earnings levels since our underlying business is long-term in nature and we need to earn the assumed interest rates on the investments backing our liabilities for insurance products to maintain the profitability of our business.  In addition, management uses this non-GAAP financial measure in its budgeting process, financial analysis of segment performance and in assessing the allocation of resources. We believe these non-GAAP financial measures enhance an investor's understanding of our financial performance and allows them to make more informed judgments about the Company as a whole.  These measures also highlight operating trends that might not otherwise be transparent.  The table above reconciles the non-GAAP measure to the corresponding GAAP measure.

General: CNO is the top tier holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance products. We distribute these products through our Bankers Life segment, which utilizes a career agency force, through our Washington National segment, which utilizes independent producers and through our Colonial Penn segment, which utilizes direct response marketing.

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Bankers Life (dollars in millions)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Premium collections:
Annuities	$	200.8		$	183.7		$	391.3		$	349.3
Medicare supplement and other supplemental health	310.1			324.6			625.6			659.7
Life	101.5			91.1			195.5			180.6
Total collections	$	612.4		$	599.4		$	1,212.4		$	1,189.6
Average liabilities for insurance products:
Fixed index annuities	$	3,575.7		$	3,132.2		$	3,519.2		$	3,085.5
Deferred annuities	3,889.6			4,162.1			3,936.3			4,203.9
SPIAs and supplemental contracts:
Mortality based	206.5			227.2			204.8			228.2
Deposit based	148.1			157.9			149.1			158.3
Health:
Long-term care	4,682.5			4,651.7			4,625.3			4,744.7
Medicare supplement	330.6			333.3			334.4			335.4
Other health	47.1			45.3			46.8			45.2
Life:
Interest sensitive	552.5			480.3			542.9			473.9
Non-interest sensitive	693.6			598.1			683.0			584.3
Total average liabilities for insurance products, net of reinsurance ceded	$	14,126.2		$	13,788.1		$	14,041.8		$	13,859.4
Revenues:
Insurance policy income	$	408.1		$	419.1		$	824.4		$	837.1
Net investment income:
General account invested assets	220.5			211.0			440.3			423.8
Fixed index products	27.1			15.6			31.7			64.5
Fee revenue and other income	5.8			4.0			11.1			7.7
Total revenues	661.5			649.7			1,307.5			1,333.1
Expenses:
Insurance policy benefits	356.0			370.4			721.7			744.2
Amounts added to policyholder account balances:
Cost of interest credited to policyholders	32.2			36.0			65.1			71.9
Cost of options to fund index credits, net of forfeitures	12.1			11.9			24.1			23.7
Market value changes credited to policyholders	27.6			15.8			32.0			64.8
Amortization related to operations	45.4			45.7			93.6			100.2
Interest expense on investment borrowings	1.9			1.7			3.8			3.1
Other operating costs and expenses	98.9			89.1			195.6			184.0
Total benefits and expenses	574.1			570.6			1,135.9			1,191.9
Income before net realized investment gains, net of related amortization, and fair value changes in embedded derivative liabilities, net of related amortization, and income taxes	87.4			79.1			171.6			141.2
Net realized investment gains	2.0			3.3			3.5			11.9
Amortization related to net realized investment gains	(.1		)	(.4		)	(.1		)	(1.1		)
Net realized investment gains, net of related amortization	1.9			2.9			3.4			10.8
Insurance policy benefits - fair value changes in embedded derivative liabilities	(9.6		)	27.3			(24.3		)	30.5
Amortization related to fair value changes in embedded derivative liabilities	2.3			(9.1		)	6.1			(10.2		)
Fair value changes in embedded derivative liabilities, net of related amortization	(7.3		)	18.2			(18.2		)	20.3
Income before income taxes	$	82.0		$	100.2		$	156.8		$	172.3

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	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Health benefit ratios:
All health lines:
Insurance policy benefits	$	301.5		$	310.0		$	608.7		$	620.8
Benefit ratio (a)	94.0		%	92.8		%	93.5		%	93.1		%
Medicare supplement:
Insurance policy benefits	$	134.2		$	127.2		$	265.8		$	256.2
Benefit ratio (a)	69.5		%	67.2		%	68.6		%	67.9		%
PDP:
Insurance policy benefits	$	—		$	9.2		$	5.3		$	15.9
Benefit ratio (a)	N/A			85.2		%	77.9		%	80.5		%
Long-term care:
Insurance policy benefits	$	167.2		$	173.6		$	337.5		$	348.7
Benefit ratio (a)	131.2		%	129.5		%	131.6		%	129.4		%
Interest-adjusted benefit ratio (b)	79.2		%	81.4		%	80.1		%	81.5		%

______________

(a) We calculate benefit ratios by dividing the related product's insurance policy benefits by insurance policy income.

(b) We calculate the interest-adjusted benefit ratio (a non-GAAP measure) for Bankers Life's long-term care products by dividing such product's insurance policy benefits less the imputed interest income on the accumulated assets backing the insurance liabilities by policy income. These are considered non-GAAP financial measures. A non-GAAP measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

These non-GAAP financial measures of "interest-adjusted benefit ratios" differ from "benefit ratios" due to the deduction of imputed interest income on the accumulated assets backing the insurance liabilities from the product's insurance policy benefits used to determine the ratio. Interest income is an important factor in measuring the performance of health products that are expected to be inforce for a longer duration of time, are not subject to unilateral changes in provisions (such as non-cancelable or guaranteed renewable contracts) and require the performance of various functions and services (including insurance protection) for an extended period of time. The net cash flows from long-term care products generally cause an accumulation of amounts in the early years of a policy (accounted for as reserve increases) that 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 benefits will be partially offset by the imputed interest income earned on the accumulated assets. The interest-adjusted benefit ratio reflects the effects of such interest income offset. Since interest income is an important factor in measuring the performance of this product, management believes a benefit ratio that includes the effect of interest income is useful in analyzing product performance. We utilize the interest-adjusted benefit ratio in measuring segment performance because we believe that this performance measure is a better indicator of the ongoing businesses and trends in the business. However, the "interest-adjusted benefit ratio" does not replace the "benefit ratio" as a measure of current period benefits to current period insurance policy income. Accordingly, management reviews both "benefit ratios" and "interest-adjusted benefit ratios" when analyzing the financial results attributable to these products. The imputed investment income earned on the accumulated assets backing Bankers Life's long-term care reserves was $66.3 million and $64.5 million in the three months ended June 30, 2014 and 2013, respectively, and was $132.0 million and $129.1 million in the six months ended June 30, 2014 and 2013, respectively.

Total premium collections were $612.4 million in the second quarter of 2014, up 2.2 percent from 2013, and were $1,212.4 million in the first six months of 2014, up 1.9 percent from 2013. See "Premium Collections" for further analysis of Bankers Life's premium collections.

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Average liabilities for insurance products, net of reinsurance ceded were $14.1 billion in the second quarter of 2014, up 2.5 percent from 2013, and were $14.0 billion in the first six months of 2014, up 1.3 percent from 2013. Such average insurance liabilities for certain long-term care products were increased by $84 million and $195 million in the second quarters of 2014 and 2013, respectively, and $42 million and $311 million in the six months ended June 30, 2014 and 2013, respectively, to reflect the premium deficiencies that would exist if unrealized gains on the assets backing such products had been realized and the proceeds from the sales of such assets were invested at then current yields. Such increase is reflected as a reduction of accumulated other comprehensive income. Excluding the impact of the aforementioned additional liabilities, the increase in average liabilities for insurance products was primarily due to new sales of these products.

Insurance policy income is comprised of premiums earned on policies which provide mortality or morbidity coverage and fees and other charges assessed on other policies.

Net investment income on general account invested assets (which excludes income on policyholder accounts) was $220.5 million in the second quarter of 2014, up 4.5 percent from 2013, and was $440.3 million in the first six months of 2014, up 3.9 percent from 2013. The increase in net investment income is due to the impact of favorable experience resulting in prospective changes in assumptions which increased the yield on certain structured securities and higher general account invested assets resulting from sales and increased persistency of our annuity and health products in recent periods. Prepayment income was $3.2 million and $1.3 million in the second quarters of 2014 and 2013, respectively, and was $4.4 million and $6.9 million in the first six months of 2014 and 2013, respectively.

Net investment income related to fixed index products represents the change in the estimated fair value of options which are purchased in an effort to offset or hedge certain potential benefits accruing to the policyholders of our fixed index products. Our fixed index products are designed so that investment income spread is expected to be more than adequate to cover the cost of the options and other costs related to these policies.  Net investment income related to fixed index products was $27.1 million and $15.6 million in the second quarters of 2014 and 2013, respectively, and was $31.7 million and $64.5 million in the first six months of 2014 and 2013, respectively. Such amounts were generally offset by the corresponding charge to amounts added to policyholder account balances - market value changes credited to policyholders.Such income and related charges fluctuate based on the value of options embedded in the segment's fixed index annuity policyholder account balances subject to this benefit and to the performance of the index to which the returns on such products are linked.

Fee revenue and other income was $5.8 million and $4.0 million, in the second quarters of 2014 and 2013, respectively, and was $11.1 million and $7.7 million, in the first six months of 2014 and 2013, respectively. We recognized fee income of $5.7 million and $3.9 million, in the second quarters of 2014 and 2013, respectively, and $10.9 million and $7.5 million, in the first six months of 2014 and 2013, respectively, pursuant to marketing agreements to sell PDP and Medicare Advantage products of other insurance companies.

Insurance policy benefits fluctuated as a result of the factors summarized below for benefit ratios.  Benefit ratios are calculated by dividing the related insurance product’s insurance policy benefits by insurance policy income.

The Medicare supplement business consists of both individual and group policies.  Government regulations generally require us to attain and maintain a ratio of total benefits incurred to total premiums earned (excluding changes in policy benefit reserves), after three years from the original issuance of the policy and over the lifetime of the policy, of not less than 65 percent on individual products and not less than 75 percent on group products, as determined in accordance with statutory accounting principles.  Since the insurance product liabilities we establish for Medicare supplement business are subject to significant estimates, the ultimate claim liability we incur for a particular period is likely to be different than our initial estimate. Our benefit ratios were 69.5 percent and 67.2 percent in the second quarters of 2014 and 2013, respectively, and 68.6 percent and 67.9 percent in the first six months of 2014 and 2013, respectively. The benefit ratio in the second quarter of 2013 was impacted by the favorable development of prior period claim reserves of approximately $6.5 million. In 2014, we currently expect the benefit ratio on this Medicare supplement business will be approximately 70 percent.

The insurance policy benefits on our PDP business resulted from our quota-share reinsurance agreement with Coventry.  Insurance margins (insurance policy income less insurance policy benefits) on the PDP business were nil and $1.6 million in the second quarters of 2014 and 2013, respectively, and were $1.5 million and $3.8 million in the first six months of 2014 and 2013, respectively. In August 2013, we received a notice of Coventry's intent to terminate our PDP quota-share

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reinsurance agreement, as further described in the note to the consolidated financial statements entitled "Summary of Significant Accounting Policies - Reinsurance". The PDP results in the first quarter of 2014 represent adjustments to earnings on such business related to periods prior to the termination of the agreement.

The net cash flows from our long-term care products 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 typically increases, but the increase in reserves is partially offset by investment income earned on the accumulated assets.  The benefit ratio on our long-term care business in the Bankers Life segment was 131.2 percent and 129.5 percent in the second quarters of 2014 and 2013, respectively, and was 131.6 percent and 129.4 percent in the first six months of 2014 and 2013, respectively.  The interest-adjusted benefit ratio on this business was 79.2 percent and 81.4 percent in the second quarters of 2014 and 2013, respectively, and was 80.1 percent and 81.5 percent in the first six months of 2014 and 2013, respectively.  We recognized an out-of-period adjustment of $6.7 million in the first quarter of 2013 and made certain refinements to reserving methodologies of $3.5 million in the second quarter of 2013, both of which increased insurance policy benefits. In 2014, we currently expect the interest adjusted benefit ratio on this long-term care business will be approximately 79 percent. Since the insurance product liabilities we establish for long-term care business are subject to significant estimates, the ultimate claim liability we incur for a particular period is likely to be different than our initial estimate.

Amounts added to policyholder account balances - cost of interest credited to policyholders were $32.2 million and $36.0 million in the second quarters of 2014 and 2013, respectively, and were $65.1 million and $71.9 million in the first six months of 2014 and 2013, respectively. The weighted average crediting rates for these products was 2.8 percent and 3.0 percent in the second quarters of 2014 and 2013, respectively, and was 2.8 percent and 3.0 percent in the first six months of 2014 and 2013, respectively. The average liabilities of the deferred annuity block were $3.9 billion and $4.2 billion in the first six months of 2014 and 2013, respectively.

Amounts added to policyholder account balances for fixed index products represent a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the "participation rate") of the amount of increase in the value of a particular index, such as the S&P 500 Index, over a specified period. Such amounts include our cost to fund the annual index credits, net of policies that are canceled prior to their anniversary date (classified as cost of options to fund index credits, net of forfeitures). Market value changes in the underlying indices during a specified period of time are classified as market value changes credited to policyholders. Such market value changes are generally offset by the net investment income related to fixed index products discussed above.

Amortization related to operations includes amortization of deferred acquisition costs and the present value of future profits. Deferred acquisition costs and the present value of future profits are collectively referred to as "insurance acquisition costs". Insurance acquisition costs are generally amortized either:  (i) in relation to the estimated gross profits for interest-sensitive life and annuity products; or (ii) in relation to actual and expected premium revenue for other products.  In addition, for interest-sensitive life and annuity products, we are required to adjust the total amortization recorded to date through the statement of operations if actual experience or other evidence suggests that earlier estimates of future gross profits should be revised. Accordingly, amortization for interest-sensitive life and annuity products is dependent on the profits realized during the period and on our expectation of future profits.  For other products, we amortize insurance acquisition costs in relation to actual and expected premium revenue, and amortization is only adjusted if expected premium revenue changes or if we determine the balance of these costs is not recoverable from future profits.  Bankers Life’s amortization expense was $45.4 million and $45.7 million in the second quarters of 2014 and 2013, respectively, and was $93.6 million and $100.2 million in the first six months of 2014 and 2013, respectively.

Interest expense on investment borrowings represents interest expense on collateralized borrowings as further described in the note to the consolidated financial statements entitled "Investment Borrowings".

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Other operating costs and expenses in our Bankers Life segment were $98.9 million in the second quarter of 2014, up 11 percent from 2013, and were $195.6 million in the first six months of 2014, up 6.3 percent from 2013. Expenses in the 2014 periods included approximately $2 million and $4 million in the three and six months ended June 30, 2014, respectively, of overhead expenses that were allocated to the Other CNO Business segment prior to 2014 and are expected to continue after the completion of the sale of CLIC. Other operating costs and expenses include the following (dollars in millions):

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Commission expense and agent manager benefits	$	14.3	$	15.1	$	28.1	$	31.3
Other operating expenses	84.6		74.0		167.5		152.7
Total	$	98.9	$	89.1	$	195.6	$	184.0

Net realized investment gains fluctuated each period. During the first six months of 2014, we recognized $5.5 million of net gains from the sales of investments (primarily fixed maturities) and $2.0 million of writedowns of investments for other than temporary declines in fair value recognized through net income. During the first six months of 2013, we recognized $11.9 million of net gains from the sales of investments (primarily fixed maturities).

Amortization related to net realized investment gains is the increase or decrease in the amortization of insurance acquisition costs which results from realized investment gains or losses. When we sell securities which back our interest-sensitive life and annuity products at a gain (loss) and reinvest the proceeds at a different yield, we increase (reduce) the amortization of insurance acquisition costs in order to reflect the change in estimated gross profits due to the gains (losses) realized and the resulting effect on estimated future yields. Sales of fixed maturity investments resulted in an increase in the amortization of insurance acquisition costs of $.1 million and $.4 million in the second quarters of 2014 and 2013, respectively, and $.1 million and $1.1 million in the first six months of 2014 and 2013, respectively.

Insurance policy benefits - fair value changes in embedded derivative liabilities represents fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to our fixed index annuities.

Amortization related to fair value changes in embedded derivative liabilities is the increase or decrease in the amortization of insurance acquisition costs which results from changes in interest rates used to discount embedded derivative liabilities related to our fixed index annuities.

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Washington National (dollars in millions)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Premium collections:
Supplemental health and other health	$	129.7		$	122.7		$	256.2		$	243.8
Medicare supplement	21.7			25.0			42.8			51.6
Life	6.4			6.3			12.9			12.6
Annuity	.6			1.4			1.2			2.3
Total collections	$	158.4		$	155.4		$	313.1		$	310.3
Average liabilities for insurance products:
Fixed index annuities	$	426.3		$	462.1		$	430.0		$	468.1
Deferred annuities	131.4			151.2			132.9			154.1
SPIAs and supplemental contracts:
Mortality based	242.9			248.2			244.2			249.6
Deposit based	252.3			245.9			250.9			243.9
Separate Accounts	9.7			15.3			10.0			15.3
Health:
Supplemental health	2,415.7			2,224.5			2,340.5			2,218.2
Medicare supplement	36.0			39.0			36.4			39.7
Other health	16.8			12.3			13.9			12.6
Life:
Interest sensitive life	160.3			166.7			163.1			166.9
Non-interest sensitive life	192.6			202.6			193.4			199.9
Total average liabilities for insurance products, net of reinsurance ceded	$	3,884.0		$	3,767.8		$	3,815.3		$	3,768.3
Revenues:
Insurance policy income	$	156.7		$	153.1		$	312.3		$	306.0
Net investment income:
General account invested assets	67.6			68.3			135.8			138.1
Fixed index products	2.8			1.6			3.7			8.4
Trading account income related to reinsurer accounts	(.2		)	(2.5		)	1.4			(2.9		)
Change in value of embedded derivatives related to modified coinsurance agreements	.2			2.5			(1.4		)	2.9
Trading account income related to policyholder accounts	1.4			(.1		)	1.3			1.2
Fee revenue and other income	.2			.2			.4			.4
Total revenues	228.7			223.1			453.5			454.1
Expenses:
Insurance policy benefits	123.3			123.3			249.3			246.9
Amounts added to policyholder account balances:
Cost of interest credited to policyholders	4.0			3.9			7.4			7.7
Cost of options to fund index credits, net of forfeitures	1.4			1.4			2.9			3.3
Market value changes credited to policyholders	4.1			1.7			5.0			10.1
Amortization related to operations	16.0			16.2			32.3			33.3
Interest expense on investment borrowings	.5			.5			.9			1.0
Other operating costs and expenses	47.1			40.3			92.3			82.0
Total benefits and expenses	196.4			187.3			390.1			384.3
Income before net realized investment gains (losses) and fair value changes in embedded derivative liabilities, net of related amortization, and income taxes	32.3			35.8			63.4			69.8
Gain related to reinsurance transaction	3.8			—			3.8			—
Net realized investment gains (losses)	1.2			(1.8		)	30.7			2.6
Amortization related to net realized investment gains (losses)	—			—			(.4		)	(.1		)
Net realized investment gains (losses), net of related amortization	1.2			(1.8		)	30.3			2.5
Insurance policy benefits - fair value changes in embedded derivative liabilities	(.5		)	1.7			(1.0		)	1.6
Amortization related to fair value changes in embedded derivative liabilities	.4			(1.4		)	.8			(1.3		)
Fair value changes in embedded derivative liabilities, net of related amortization	(.1		)	.3			(.2		)	.3
Income before income taxes	$	37.2		$	34.3		$	97.3		$	72.6

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	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Health benefit ratios:
Medicare supplement:
Insurance policy benefits	$	13.6		$	17.0		$	28.4		$	34.4
Benefit ratio (a)	61.7		%	65.5		%	62.8		%	65.3		%
Supplemental health and other:
Insurance policy benefits	$	101.8		$	95.4		$	201.1		$	190.1
Benefit ratio (a)	80.3		%	79.6		%	79.6		%	79.7		%
Interest-adjusted benefit ratio (b)	54.8		%	53.5		%	53.9		%	53.5		%

_________________

(a) We calculate benefit ratios by dividing the related product’s insurance policy benefits by insurance policy income.

(b) We calculate the interest-adjusted benefit ratio (a non-GAAP measure) for Washington National's supplemental health products by dividing such product’s insurance policy benefits less the imputed interest income on the accumulated assets backing the insurance liabilities by policy income.  These are considered non-GAAP financial measures.  A non-GAAP measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

These non-GAAP financial measures of "interest-adjusted benefit ratios" differ from "benefit ratios" due to the deduction of imputed interest income on the accumulated assets backing the insurance liabilities from the product’s insurance policy benefits used to determine the ratio.  Interest income is an important factor in measuring the performance of health products that are expected to be inforce for a longer duration of time, are not subject to unilateral changes in provisions (such as non-cancelable or guaranteed renewable contracts) and require the performance of various functions and services (including insurance protection) for an extended period of time.  The net cash flows from supplemental health products generally cause an accumulation of amounts in the early years of a policy (accounted for as reserve increases) that 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 benefits will be partially offset by the imputed interest income earned on the accumulated assets.  The interest-adjusted benefit ratio reflects the effects of such interest income offset. Since interest income is an important factor in measuring the performance of these products, management believes a benefit ratio that includes the effect of interest income is useful in analyzing product performance.  We utilize the interest-adjusted benefit ratio in measuring segment performance because we believe that this performance measure is a better indicator of the ongoing businesses and trends in the business.  However, the "interest-adjusted benefit ratio" does not replace the "benefit ratio" as a measure of current period benefits to current period insurance policy income. Accordingly, management reviews both "benefit ratios" and "interest-adjusted benefit ratios" when analyzing the financial results attributable to these products.  The imputed investment income earned on the accumulated assets backing the supplemental health reserves was $32.4 million and $31.3 million in the three months ended June 30, 2014 and 2013, respectively, and was $65.0 million and $62.4 million in the six months ended June 30, 2014 and 2013, respectively.

Total premium collections were $158.4 million in the second quarter of 2014, up 1.9 percent from 2013, and were $313.1 million in the first six months of 2014, up .9 percent from 2013. See "Premium Collections" for further analysis of fluctuations in premiums collected by product.

Average liabilities for insurance products, net of reinsurance ceded were $3.9 billion in the second quarter of 2014, up 3.1 percent from 2013, and were $3.8 billion in the first six months of 2014, up 1.2 percent from 2013, reflecting an increase in the health blocks; partially offset by the run-off of the annuity blocks. The increase in average liabilities for the supplemental health and other health blocks primarily relates to a change in how certain business will be ceded from CLIC to Washington National in conjunction with the sale of CLIC. In previous periods, it was assumed these blocks would be ceded under a modified coinsurance arrangement, pursuant to which the related reserves were included in the operations of CLIC being sold.

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In the second quarter of 2014, an agreement was reached pursuant to which the blocks will be ceded under a coinsurance arrangement (subject to regulatory approval). Accordingly, effective April 1, 2014, the reserves related to these blocks were included in the Washington National segment.

Insurance policy income is comprised of premiums earned on traditional insurance policies which provide mortality or morbidity coverage and fees and other charges assessed on other policies. Such income increased in recent periods as supplemental health premiums have increased and Medicare supplement premiums have decreased consistent with sales.

Net investment income on general account invested assets (which excludes income on policyholder and reinsurer accounts) was $67.6 million in the second quarter of 2014, down 1.0 percent from 2013, and was $135.8 million in the first six months of 2014, down 1.7 percent from 2013. Prepayment income was not significant in the 2014 and 2013 periods.

Net investment income related to fixed index products represents the change in the estimated fair value of options which are purchased in an effort to offset or hedge certain potential benefits accruing to the policyholders of our fixed index products. Our fixed index products are designed so that investment income spread is expected to be more than adequate to cover the cost of the options and other costs related to these policies. Net investment income related to fixed index products was $2.8 million and $1.6 million in the second quarters of 2014 and 2013, respectively, and was $3.7 million and $8.4 million in the first six months of 2014 and 2013, respectively. Such amounts were generally offset by the corresponding charge to amounts added to policyholder account balances - market value changes credited to policyholders.  Such income and related charges fluctuate based on the value of options embedded in the segment's fixed index annuity policyholder account balances subject to this benefit and to the performance of the index to which the returns on such products are linked.

Trading account income related to reinsurer accounts primarily represents the income on trading securities which were held to act as hedges for embedded derivatives related to a modified coinsurance agreement. Such trading securities were sold in the second quarter of 2014 in conjunction with the recapture of the modified coinsurance agreement.

Change in value of embedded derivatives related to a modified coinsurance agreement is described in the note to our consolidated financial statements entitled "Accounting for Derivatives." In the second quarter of 2014, we recaptured this modified coinsurance agreement and the embedded derivative was eliminated. The release of the embedded derivative was classified as a portion of the gain related to the reinsurance transaction (as further described below under gain related to reinsurance transaction).

Trading account income related to policyholder accounts represents the income on investments backing the market strategies of certain annuity products which provide for different rates of cash value growth based on the experience of a particular market strategy. The income on our trading account securities is designed to substantially offset certain amounts included in insurance policy benefits related to the aforementioned annuity products.

Insurance policy benefits fluctuated as a result of the factors summarized below for benefit ratios. Benefit ratios are calculated by dividing the related insurance product's insurance policy benefits by insurance policy income.

Washington National's Medicare supplement business primarily consists of individual policies. The insurance product liabilities we establish for our Medicare supplement business are subject to significant estimates and the ultimate claim liability we incur for a particular period is likely to be different than our initial estimate.  Governmental regulations generally require us to attain and maintain a ratio of total benefits incurred to total premiums earned (excluding changes in policy benefit reserves), after three years from the original issuance of the policy and over the lifetime of the policy, of not less than 65 percent on these products, as determined in accordance with statutory accounting principles. Insurance margins (insurance policy income less insurance policy benefits) on these products were $8.5 million and $8.9 million in the second quarters of 2014 and 2013, respectively, and were $16.8 million and $18.3 million in the first six months of 2014 and 2013, respectively. Such decrease reflects the run-off of this business as we discontinued new sales of Medicare supplement business in this segment in the fourth quarter of 2012.

Washington National's supplemental health products (including specified disease, accident and hospital indemnity products) generally provide fixed or limited benefits. For example, payments under cancer insurance policies are generally made directly to, or at the direction of, the policyholder following diagnosis of, or treatment for, a covered type of cancer. Approximately three-fourths of our supplemental health policies inforce (based on policy count) are sold with return of

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premium or cash value riders. The return of premium rider generally provides that after a policy has been inforce for a specified number of years or upon the policyholder reaching a specified age, we will pay to the policyholder, or a beneficiary under the policy, the aggregate amount of all premiums paid under the policy, without interest, less the aggregate amount of all claims incurred under the policy. The cash value rider is similar to the return of premium rider, but also provides for payment of a graded portion of the return of premium benefit if the policy terminates before the return of premium benefit is earned. Accordingly, the net cash flows from these products generally result in the accumulation of amounts in the early years of a policy (reflected in our earnings as reserve increases) which will be paid out as benefits in later policy years (reflected in our earnings as reserve decreases which offset the recording of benefit payments). As the policies age, the benefit ratio will typically increase, but the increase in benefits will be partially offset by investment income earned on the accumulated assets. The benefit ratio will fluctuate depending on the claim experience during the year.

Insurance margins (insurance policy income less insurance policy benefits) on these products were $24.9 million and $24.5 million in the second quarters of 2014 and 2013, respectively, and were $51.4 million and $48.4 million in the first six months of 2014 and 2013, respectively. The interest adjusted benefit ratio on this supplemental health business was 54.8 percent and 53.5 percent in the second quarters of 2014 and 2013, respectively, and was 53.9 percent and 53.5 percent in the first six months of 2014 and 2013, respectively. The benefit ratios on this business can be impacted by changes in the extent to which policyholders convert their current policies to policies with additional benefits, as well as persistency in certain blocks. Changes in policy conversions and persistency have resulted in higher benefit ratios in recent periods and we currently expect that this interest-adjusted benefit ratio will be approximately 54 percent during 2014.

Amounts added to policyholder account balances - cost of interest credited to policyholders were $4.0 million and $3.9 million in the second quarters of 2014 and 2013, respectively, and were $7.4 million and $7.7 million in the first six months of 2014 and 2013, respectively.

Amounts added to policyholder account balances for fixed index products represent a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the "participation rate") of the amount of increase in the value of a particular index, such as the S&P 500 Index, over a specified period. Such amounts include our cost to fund the annual index credits, net of policies that are canceled prior to their anniversary date (classified as cost of options to fund index credits, net of forfeitures). Market value changes in the underlying indices during a specified period of time are classified as market value changes credited to policyholders. Such market value changes are generally offset by the net investment income related to fixed index products discussed above.

Amortization related to operations includes amortization of insurance acquisition costs. Insurance acquisition costs are generally amortized in relation to actual and expected premium revenue, and amortization is only adjusted if expected premium revenue changes or if we determine the balance of these costs is not recoverable from future profits. Such amounts were generally consistent with the related premium revenue. A revision to our current assumptions could result in increases or decreases to amortization expense in future periods.

Other operating costs and expenses were $47.1 million and $40.3 million in the second quarters of 2014 and 2013, respectively, and were $92.3 million and $82.0 million in the first six months of 2014 and 2013, respectively. Other operating costs and expenses include commission expense of $15.9 million and $16.1 million in the second quarters of 2014 and 2013, respectively, and $32.1 million and $32.0 million in the first six months of 2014 and 2013, respectively. Expenses in the three and six months ended June 30, 2014 included approximately $2 million and $4 million, respectively, of overhead expenses that were allocated to the Other CNO Business segment prior to 2014 and are expected to continue after the completion of the sale of CLIC.

Gain related to reinsurance transactionpertained to the recapture of a modified coinsurance agreement in the second quarter of 2014. The gain of $3.8 million primarily resulted from the release of an embedded derivative that is no longer required.

Net realized investment gains fluctuate each period. During the first six months of 2014, we recognized $32.6 million of net gains from the sales of investments (primarily fixed maturities) and $1.9 million of writedowns of investments for other than temporary declines in fair value recognized through net income. During the first six months of 2013, we recognized $2.6 million of net gains from the sales of investments (primarily fixed maturities).

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Amortization related to net realized investment gains is the increase or decrease in the amortization of insurance acquisition costs which results from realized investment gains or losses. When we sell securities which back our interest-sensitive life and annuity products at a gain (loss) and reinvest the proceeds at a different yield (or when we have the intent to sell the impaired investments before an anticipated recovery in value occurs), we increase (reduce) the amortization of insurance acquisition costs in order to reflect the change in estimated gross profits due to the gains (losses) realized and the resulting effect on estimated future yields. Sales of fixed maturity investments resulted in an increase in the amortization of insurance acquisition costs of $.4 million and $.1 million in the first six months of 2014 and 2013, respectively.

Insurance policy benefits - fair value changes in embedded derivative liabilities represents fair value changes due to fluctuations in the interest rates used to discount embedded derivative liabilities related to our fixed index annuities.

Amortization related to fair value changes in embedded derivative liabilities is the increase or decrease in the amortization of insurance acquisition costs which results from changes in interest rates used to discount embedded derivative liabilities related to our fixed index annuities.

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Colonial Penn (dollars in millions)

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014			2013
Premium collections:
Life	$	60.0	$	56.4	$	120.1		$	112.5
Supplemental health	.9		1.0		1.8			2.1
Total collections	$	60.9	$	57.4	$	121.9		$	114.6
Average liabilities for insurance products:
SPIAs - mortality based	$	68.8	$	74.4	$	69.1		$	74.6
Health:
Medicare supplement	8.3		9.3		8.5			9.5
Other health	4.5		4.8		4.5			4.8
Life:
Interest sensitive	17.1		17.7		17.1			17.7
Non-interest sensitive	648.2		629.9		646.3			624.0
Total average liabilities for insurance products, net of reinsurance ceded	$	746.9	$	736.1	$	745.5		$	730.6
Revenues:
Insurance policy income	$	61.7	$	58.0	$	122.2		$	114.9
Net investment income on general account invested assets	10.5		9.9		21.2			19.8
Fee revenue and other income	.3		.2		.5			.4
Total revenues	72.5		68.1		143.9			135.1
Expenses:
Insurance policy benefits	43.1		41.1		87.6			83.9
Amounts added to annuity and interest-sensitive life product account balances	.1		.1		.3			.3
Amortization related to operations	3.8		3.7		7.8			7.4
Other operating costs and expenses	21.7		22.0		50.6			47.7
Total benefits and expenses	68.7		66.9		146.3			139.3
Income (loss) before net realized investment gains and income taxes	3.8		1.2		(2.4		)	(4.2		)
Net realized investment gains	.2		.4		.4			.1
Income (loss) before income taxes	$	4.0	$	1.6	$	(2.0	)	$	(4.1	)

This segment's results are significantly impacted by the accounting standard related to deferred acquisition costs. We are not able to defer most of Colonial Penn's direct response advertising costs although such costs generate predictable sales and future in-force profits. We plan to continue to invest in this segment's business, including the development of new products and markets. The amount of our investment in new business during a particular period will have a significant impact on this segment's results. In the three months ended June 30, 2014, the Colonial Penn segment benefited from: (i) earnings growth from the in-force block; (ii) improvements in the effectiveness of our sales and marketing expenditures; and (iii) an increase in the deferral of acquisition costs due to a slight shift to deferrable direct mail marketing activities. Based on our current forecast, we expect this segment to report approximately break-even results for 2014 (before net realized investment gains (losses) and income taxes).

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Total premium collections were $60.9 million in the second quarter of 2014, up 6.1 percent from 2013, and were $121.9 million in the first six months of 2014, up 6.4 percent from 2013. See "Premium Collections" for further analysis of Colonial Penn's premium collections.

Average liabilities for insurance products, net of reinsurance ceded have increased as a result of growth in this segment.

Insurance policy income is comprised of premiums earned on policies which provide mortality or morbidity coverage and fees and other charges assessed on other policies. The increase in such income reflects the growth in the block of business.

Net investment income on general account invested assets was $10.5 million in the second quarter of 2014, up 6.1 percent from 2013, and was $21.2 million in the first six months of 2014, up 7.1 percent from 2013. The increase in net investment income is primarily due to the higher general account invested assets as a result of the growth in this segment.

Insurance policy benefits fluctuated as a result of the growth in this segment.

Amortization related to operations includes amortization of insurance acquisition costs. Insurance acquisition costs in the Colonial Penn segment are amortized in relation to actual and expected premium revenue, and amortization is only adjusted if expected premium revenue changes or if we determine the balance of these costs is not recoverable from future profits. Such amounts were generally consistent with the related premium revenue and gross profits for such periods and the assumptions we made when we established the present value of future profits. A revision to our current assumptions could result in increases or decreases to amortization expense in future periods.

Other operating costs and expenses in our Colonial Penn segment fluctuate primarily due to changes in the marketing expenses incurred to generate new business. Such marketing expenses totaled $16.8 million and $18.9 million, in the second quarters of 2014 and 2013, respectively and $36.5 million and $34.8 million, in the first six months of 2014 and 2013, respectively. The decrease in marketing expense in the second quarter of 2014 reflects a modest increase in the deferral of acquisition costs due to a slight shift to deferrable direct mail marketing activities. Although the effectiveness of our sales and marketing expenditures improved in the second quarter of 2014, we continue to face increased competition from other insurance companies who also distribute products through direct marketing. In addition, the demand and cost of television advertising appropriate for Colonial Penn's campaigns has fluctuated widely in certain periods. In some periods increased advertising costs have resulted in decisions to lower our planned spending. These factors may reoccur in the future.

Net realized investment gains fluctuated each period. During the first six months of 2014, we recognized $.4 million of net gains from the sales of investments (primarily fixed maturities). During the first six months of 2013, we recognized $.1 million of net gains from the sales of investments (primarily fixed maturities).

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Corporate Operations (dollars in millions)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Corporate operations:
Interest expense on corporate debt	$	(11.1	)	$	(13.1	)	$	(22.2	)	$	(28.2	)
Net investment income (loss):
General investment portfolio	1.7			1.5			3.5			2.6
Other special-purpose portfolios:
COLI	3.1			.1			4.1			4.7
Investments held in a rabbi trust	.3			—			.4			.4
Investments in certain hedge funds	(1.8		)	(.2		)	(.7		)	—
Other trading account activities	2.4			3.1			5.4			6.9
Fee revenue and other income	1.3			1.5			2.7			3.2
Interest expense on investment borrowings	—			—			—			(.1		)
Other operating costs and expenses	(22.5		)	(3.6		)	(36.9		)	(12.3		)
Loss before net realized investment gains (losses), equity in earnings of certain non-strategic investments and earnings attributable to VIEs, loss on extinguishment or modification of debt and income taxes	(26.6		)	(10.7		)	(43.7		)	(22.8		)
Net realized investment gains (losses)	8.3			(.3		)	(1.6		)	.2
Equity in earnings of certain non-strategic investments and earnings attributable to VIEs	(2.9		)	(2.9		)	(6.2		)	(4.8		)
Loss on extinguishment or modification of debt	(.6		)	(7.7		)	(.6		)	(65.4		)
Loss before income taxes	$	(21.8	)	$	(21.6	)	$	(52.1	)	$	(92.8	)

Interest expense on corporate debt has been primarily impacted by: (i) repayments of the Senior Secured Credit Agreement; (ii) the amendment to our Senior Secured Credit Agreement in May 2013 which reduced the interest rate payable; and (iii) the completion of the cash tender offer (the "Offer") in March 2013 for $59.3 million aggregate principal amount of our 7.0% Debentures. Our average corporate debt outstanding was $853.6 million and $973.2 million in the first six months of 2014 and 2013, respectively. The average interest rate on our debt was 4.5 percent and 5.2 percent in the first six months of 2014 and 2013, respectively.

Net investment income on general investment portfolio fluctuates based on the amount and type of invested assets in the corporate operations segment.

Net investment income on other special-purpose portfolios includes the income (loss) from:  (i) investments related to deferred compensation plans held in a rabbi trust (which is offset by amounts included in other operating costs and expenses as the investment results are allocated to participants' account balances); (ii) trading account activities; (iii) income (loss) from Company-owned life insurance ("COLI") equal to the difference between the return on these investments (representing the change in value of the underlying investments) and our overall portfolio yield; and (iv) other investments including certain hedge funds and other alternative strategies.  COLI is utilized as an investment vehicle to fund Bankers Life's agent deferred compensation plan.  For segment reporting, the Bankers Life segment is allocated a return on these investments equivalent to the yield on the Company’s overall portfolio, with any difference in the actual COLI return allocated to the Corporate operations segment. We recognized death benefits, net of cash surrender value, of $1.7 million in the first three months of 2014 and $2.9 million in the second quarter of 2013 related to the COLI.

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Other operating costs and expenses include general corporate expenses, net of amounts charged to subsidiaries for services provided by the corporate operations. These amounts fluctuate as a result of expenses such as consulting and legal costs which often vary from period to period. Other operating costs and expenses increased (decreased) by $11.8 million and $(6.1) million in the three months ended June 30, 2014 and 2013, respectively, due to the impact of changes in interest rates on the values of liabilities for our agent deferred compensation plan and certain retirement benefits. In addition, such amounts in the first three months of 2014 included higher expenses of $3 million primarily related to accrual adjustments for incentive compensation.

Net realized investment gains (losses) often fluctuate each period. During the first six months of 2014, net realized investment losses in this segment included $6.4 million of net gains from the sales of investments (of which $2.0 million were losses recognized by VIEs) and $8.0 million of writedowns of investments (none of which were recognized by VIEs) related to two legacy private company investments where earnings and cash flows have not met the expectations assumed in our previous valuations.  During the first six months of 2013, we recognized $.8 million of net gains from the sales of investments (of which $.3 million were net gains recognized by VIEs) and $.6 million of writedowns of investments (all of which were recognized by VIEs) due to other-than-temporary declines in value recognized through net income. 

Equity in earnings of certain non-strategic investments and earnings attributable to VIEs include the earnings attributable to non-controlling interests in certain VIEs that we are required to consolidate and certain private companies that were acquired in the commutation of an investment made by our Predecessor, net of affiliated amounts. Such earnings are not indicative and are unrelated to the Company's underlying fundamentals.

Loss on extinguishment or modification of debt in the first six months of 2014 of $.6 million resulted from: (i) expenses related to the amendment of the Senior Secured Credit Agreement in May 2014; and (ii) the repurchase of the remaining $3.5 million principal amount of the 7.0% Debentures for a purchase price of $3.7 million. The loss on the extinguishment of debt in the first six months of 2013 of $65.4 million resulted from: (i) the Offer and repurchase of 7.0% Debentures, the write-off of unamortized discount and issuance costs associated with the 7.0% Debentures that were repurchased and other transaction costs; and (ii) expenses related to the amendment of our Senior Secured Credit Agreement in May 2013 and the write-off of unamortized discount and issuance costs associated with prepayments on the Senior Secured Credit Agreement.

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Other CNO Business (dollars in millions)

	Three months ended			Six months ended
	June 30,			June 30,
	2013			2013
Premium collections:
Long-term care (all renewal)	$	6.1		$	12.4
Average liabilities for insurance products:
Average liabilities for long-term care products, net of reinsurance ceded	$	468.0		$	468.0
Revenues:
Insurance policy income	$	6.1		$	12.3
Net investment income on general account invested assets	8.4			16.8
Total revenues	14.5			29.1
Expenses:
Insurance policy benefits	15.3			30.9
Other operating costs and expenses:
Related to long-term care block reinsured effective December 31, 2013	1.4			3.1
Overhead expense of CLIC expected to continue after the completion of the sale	5.0			9.6
Total benefits and expenses	21.7			43.6
Loss before income taxes	$	(7.2	)	$	(14.5	)

The Other CNO Business segment no longer exists, effective January 1, 2014. The Other CNO Business segment reflects the long-term care business that was ceded to BRe effective December 31, 2013, as further described in the note to the consolidated financial statements entitled "Reinsurance". This segment also included the overhead expense of CLIC that is expected to continue after the completion of the CLIC sale. Beginning on January 1, 2014 the overhead of CLIC that is expected to continue after the completion of the sale has been reallocated primarily to the Bankers Life and Washington National segments.

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Amounts related to CLIC being sold (dollars in millions)

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014			2013
Premium collections:
Annuities	$	.2	$	.1	$	.2		$	.2
Life	34.8		36.6		71.0			75.0
Total collections	$	35.0	$	36.7	$	71.2		$	75.2
Average liabilities for insurance products:
Fixed index annuities	$	.8	$	.8	$	.8		$	.4
Deferred annuities	142.9		148.9		143.4			150.4
SPIAs and supplemental contracts:
Mortality based	36.9		39.4		37.3			39.9
Deposit based	94.4		109.6		95.5			110.5
Health:
Supplemental health	—		149.0		68.2			151.3
Medicare supplement	—		2.2		1.0			2.3
Other health	—		6.7		3.4			6.8
Life:
Interest sensitive	2,233.3		2,333.9		2,243.5			2,343.9
Non-interest sensitive	415.4		433.0		418.3			436.5
Total average liabilities for insurance products, net of reinsurance ceded	$	2,923.7	$	3,223.5	$	3,011.4		$	3,242.0
Revenues:
Insurance policy income	$	52.5	$	55.0	$	106.0		$	112.2
Net investment income:
General account invested assets	49.7		52.9		100.7			106.1
Fixed index products	1.4		.8		1.3			3.0
Total revenues	103.6		108.7		208.0			221.3
Expenses:
Insurance policy benefits	54.1		57.3		115.8			121.9
Amounts added to policyholder account balances:
Cost of interest credited to policyholders	21.6		22.7		43.2			46.0
Cost of options to fund index credits, net of forfeitures	.4		.3		.8			.7
Market value changes credited to policyholders	1.0		1.0		.9			3.1
Amortization related to operations	2.3		2.7		4.3			4.9
Interest expense on investment borrowings	4.4		4.8		9.1			9.6
Other operating costs and expenses	7.5		14.1		13.3			23.0
Total benefits and expenses	91.3		102.9		187.4			209.2
Income (loss) before net realized investment gains, loss on sale of CLIC and income taxes	12.3		5.8		20.6			12.1
Net realized investment gains	.7		1.6		2.8			3.7
Earnings of CLIC being sold	13.0		7.4		23.4			15.8
Loss on sale of CLIC	—		—		(278.6		)	—
Income (loss) before income taxes	$	13.0	$	7.4	$	(255.2	)	$	15.8

The information summarized above represents the pre-tax earnings related to the operations of CLIC being sold as well as the loss on the sale of CLIC. Operating expenses exclude overhead expense that is expected to continue after the sale of CLIC. Refer to the note to the consolidated financial statements entitled "Agreement to Sell Subsidiary" for additional information.

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EBIT from Business Segments Continuing After the CLIC Sale Summarized by In-Force and New Business

Management believes that an analysis of EBIT from our business segments continuing after the CLIC sale, separated between in-force and new business provides increased clarity around the value drivers of our business, particularly since the new business results are significantly impacted by the rate of sales, mix of business and the distribution channel through which new sales are made. EBIT from new business includes pre-tax revenues and expenses associated with new sales of our insurance products during the first year after the sale is completed. EBIT from in-force business includes all pre-tax revenues and expenses associated with sales of insurance products that were completed more than one year before the end of the reporting period. The allocation of certain revenues and expenses between new and in-force business is based on estimates, which we believe are reasonable.

The following summarizes our earnings, separated between in-force and new business on a consolidated basis and for each of our operating segments for the three and six months ended June 30, 2014 and 2013:

Business segments - total (dollars in millions)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
EBIT from In-Force Business
Revenues:
Insurance policy income	$	534.9		$	539.6		$	1,076.5		$	1,074.6
Net investment income and other	325.4			311.9			627.8			662.7
Total revenues	860.3			851.5			1,704.3			1,737.3
Benefits and expenses:
Insurance policy benefits	542.5			557.0			1,075.4			1,152.9
Amortization	58.6			57.6			120.2			126.2
Other expenses	87.0			84.2			169.9			170.6
Total benefits and expenses	688.1			698.8			1,365.5			1,449.7
EBIT from In-Force Business	$	172.2		$	152.7		$	338.8		$	287.6
EBIT from New Business
Revenues:
Insurance policy income	$	91.6		$	96.7		$	182.4		$	195.7
Net investment income and other	10.8			7.2			18.2			18.4
Total revenues	102.4			103.9			200.6			214.1
Benefits and expenses:
Insurance policy benefits	61.4			63.9			120.0			134.8
Amortization	6.6			8.0			13.5			14.7
Other expenses	83.1			75.8			173.3			159.9
Total benefits and expenses	151.1			147.7			306.8			309.4
EBIT from New Business	$	(48.7	)	$	(43.8	)	$	(106.2	)	$	(95.3	)
EBIT from In-Force and New Business
Revenues:
Insurance policy income	$	626.5		$	636.3		$	1,258.9		$	1,270.3
Net investment income and other	336.2			319.1			646.0			681.1
Total revenues	962.7			955.4			1,904.9			1,951.4
Benefits and expenses:
Insurance policy benefits	603.9			620.9			1,195.4			1,287.7
Amortization	65.2			65.6			133.7			140.9
Other expenses	170.1			160.0			343.2			330.5
Total benefits and expenses	839.2			846.5			1,672.3			1,759.1
EBIT from In-Force and New Business	$	123.5		$	108.9		$	232.6		$	192.3

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

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Bankers Life (dollars in millions)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
EBIT from In-Force Business
Revenues:
Insurance policy income	$	346.2		$	349.4		$	700.4		$	695.2
Net investment income and other	242.6			223.4			464.9			477.6
Total revenues	588.8			572.8			1,165.3			1,172.8
Benefits and expenses:
Insurance policy benefits	380.7			383.4			750.8			796.2
Amortization	40.0			38.7			82.5			87.4
Other expenses	43.8			41.1			85.3			83.5
Total benefits and expenses	464.5			463.2			918.6			967.1
EBIT from In-Force Business	$	124.3		$	109.6		$	246.7		$	205.7
EBIT from New Business
Revenues:
Insurance policy income	$	61.9		$	69.7		$	124.0		$	141.9
Net investment income and other	10.8			7.2			18.2			18.4
Total revenues	72.7			76.9			142.2			160.3
Benefits and expenses:
Insurance policy benefits	47.2			50.7			92.1			108.4
Amortization	5.4			7.0			11.1			12.8
Other expenses	57.0			49.7			114.1			103.6
Total benefits and expenses	109.6			107.4			217.3			224.8
EBIT from New Business	$	(36.9	)	$	(30.5	)	$	(75.1	)	$	(64.5	)
EBIT from In-Force and New Business
Revenues:
Insurance policy income	$	408.1		$	419.1		$	824.4		$	837.1
Net investment income and other	253.4			230.6			483.1			496.0
Total revenues	661.5			649.7			1,307.5			1,333.1
Benefits and expenses:
Insurance policy benefits	427.9			434.1			842.9			904.6
Amortization	45.4			45.7			93.6			100.2
Other expenses	100.8			90.8			199.4			187.1
Total benefits and expenses	574.1			570.6			1,135.9			1,191.9
EBIT from In-Force and New Business	$	87.4		$	79.1		$	171.6		$	141.2

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

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Washington National (dollars in millions)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
EBIT from In-Force Business
Revenues:
Insurance policy income	$	138.5		$	137.6		$	276.6		$	275.0
Net investment income and other	72.0			70.0			141.2			148.1
Total revenues	210.5			207.6			417.8			423.1
Benefits and expenses:
Insurance policy benefits	125.2			123.7			249.7			254.7
Amortization	14.9			15.3			30.1			31.6
Other expenses	35.6			30.7			69.3			61.6
Total benefits and expenses	175.7			169.7			349.1			347.9
EBIT from In-Force Business	$	34.8		$	37.9		$	68.7		$	75.2
EBIT from New Business
Revenues:
Insurance policy income	$	18.2		$	15.5		$	35.7		$	31.0
Net investment income and other	—			—			—			—
Total revenues	18.2			15.5			35.7			31.0
Benefits and expenses:
Insurance policy benefits	7.6			6.6			14.9			13.3
Amortization	1.1			.9			2.2			1.7
Other expenses	12.0			10.1			23.9			21.4
Total benefits and expenses	20.7			17.6			41.0			36.4
EBIT from New Business	$	(2.5	)	$	(2.1	)	$	(5.3	)	$	(5.4	)
EBIT from In-Force and New Business
Revenues:
Insurance policy income	$	156.7		$	153.1		$	312.3		$	306.0
Net investment income and other	72.0			70.0			141.2			148.1
Total revenues	228.7			223.1			453.5			454.1
Benefits and expenses:
Insurance policy benefits	132.8			130.3			264.6			268.0
Amortization	16.0			16.2			32.3			33.3
Other expenses	47.6			40.8			93.2			83.0
Total benefits and expenses	196.4			187.3			390.1			384.3
EBIT from In-Force and New Business	$	32.3		$	35.8		$	63.4		$	69.8

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

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Colonial Penn (dollars in millions)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
EBIT from In-Force Business
Revenues:
Insurance policy income	$	50.2		$	46.5		$	99.5		$	92.1
Net investment income and other	10.8			10.1			21.7			20.2
Total revenues	61.0			56.6			121.2			112.3
Benefits and expenses:
Insurance policy benefits	36.6			34.6			74.9			71.1
Amortization	3.7			3.6			7.6			7.2
Other expenses	7.6			6.0			15.3			12.8
Total benefits and expenses	47.9			44.2			97.8			91.1
EBIT from In-Force Business	$	13.1		$	12.4		$	23.4		$	21.2
EBIT from New Business
Revenues:
Insurance policy income	$	11.5		$	11.5		$	22.7		$	22.8
Net investment income and other	—			—			—			—
Total revenues	11.5			11.5			22.7			22.8
Benefits and expenses:
Insurance policy benefits	6.6			6.6			13.0			13.1
Amortization	.1			.1			.2			.2
Other expenses	14.1			16.0			35.3			34.9
Total benefits and expenses	20.8			22.7			48.5			48.2
EBIT from New Business	$	(9.3	)	$	(11.2	)	$	(25.8	)	$	(25.4	)
EBIT from In-Force and New Business
Revenues:
Insurance policy income	$	61.7		$	58.0		$	122.2		$	114.9
Net investment income and other	10.8			10.1			21.7			20.2
Total revenues	72.5			68.1			143.9			135.1
Benefits and expenses:
Insurance policy benefits	43.2			41.2			87.9			84.2
Amortization	3.8			3.7			7.8			7.4
Other expenses	21.7			22.0			50.6			47.7
Total benefits and expenses	68.7			66.9			146.3			139.3
EBIT from In-Force and New Business	$	3.8		$	1.2		$	(2.4	)	$	(4.2	)

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

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Other CNO Business (dollars in millions)

	Three months ended			Six months ended
	June 30,			June 30,
	2013			2013
EBIT from In-Force Business (a)
Revenues:
Insurance policy income	$	6.1		$	12.3
Net investment income and other	8.4			16.8
Total revenues	14.5			29.1
Benefits and expenses:
Insurance policy benefits	15.3			30.9
Other expenses	6.4			12.7
Total benefits and expenses	21.7			43.6
EBIT from In-Force Business	$	(7.2	)	$	(14.5	)

_________________________

(a) All activity in the Other CNO Business segment relates to in-force business.

The above analysis of EBIT, separated between in-force and new business, illustrates how our business segments are impacted by the rate of sales, mix of business and distribution channel through which new sales are made. In addition, when the impacts from new business are separated, the value drivers of our in-force business are more apparent.

The EBIT from in-force business in the Bankers Life segment grew in the 2014 periods primarily due to the growth in the size of the block. The EBIT from new business in the Bankers Life segment reflects increased sales.

The EBIT from in-force business in the Washington National segment was lower in the 2014 periods due to the run-off of the Medicare supplement business in this segment and additional overhead expenses that were previously allocated to the Other CNO Business segment.

The EBIT from in-force business in the Colonial Penn segment in the 2014 periods reflects growth in the size of the block. The EBIT from new business in the Colonial Penn segment in the second quarter of 2014 reflects a modest increase in the deferral of acquisition costs due to a slight shift to deferrable direct mail marketing activities. The vast majority of the costs to generate new business in this segment are not deferrable and EBIT will fluctuate based on management's decisions on how much marketing costs to incur in each period.

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

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PREMIUM COLLECTIONS

In accordance with GAAP, insurance policy income in our consolidated statement of operations consists of premiums earned for traditional insurance policies that have life contingencies or morbidity features.  For annuity and interest-sensitive life contracts, premiums collected are not reported as revenues, but as deposits to insurance liabilities.  We recognize revenues for these products over time in the form of investment income and surrender or other charges.

Our insurance segments sell products through three primary distribution channels - career agents (our Bankers Life segment), direct marketing (our Colonial Penn segment) and independent producers (our Washington National segment).  Our career agency force in the Bankers Life segment sells primarily Medicare supplement and long-term care insurance policies, life insurance and annuities.  These agents visit the customer's home, which permits one-on-one contact with potential policyholders and promotes strong personal relationships with existing policyholders.  Our direct marketing distribution channel in the Colonial Penn segment is engaged primarily in the sale of graded benefit life and simplified issue life insurance policies which are sold directly to the policyholder.  Our Washington National segment sells primarily supplemental health and life insurance.  These products are marketed through PMA, a subsidiary that specializes in marketing and distributing health products, and through independent marketing organizations and insurance agencies, including worksite marketing.

Agents, insurance brokers and marketing companies who market our products and prospective purchasers of our products use the financial strength ratings of our insurance subsidiaries as an important factor in determining whether to market or purchase.  Ratings have the most impact on our sales of supplemental health and life products to consumers at the worksite.  The current financial strength ratings of our primary insurance subsidiaries (except CLIC which was sold on July 1, 2014) from S&P, Fitch Ratings ("Fitch"), Moody's and A.M. Best are "BBB+", "BBB", "Baa2" and "B++", respectively.  For a description of these ratings and additional information on our ratings, see "Financial Strength Ratings of our Insurance Subsidiaries."

We set premium rates on our health insurance policies based on facts and circumstances known at the time we issue the policies using assumptions about numerous variables, including the actuarial probability of a policyholder incurring a claim, the probable size of the claim, and the interest rate earned on our investment of premiums.  We also consider historical claims information, industry statistics, the rates of our competitors and other factors.  If our actual claims experience is less favorable than we anticipated and we are unable to raise our premium rates, our financial results may be adversely affected.  We generally cannot raise our health insurance premiums in any state until we obtain the approval of the state insurance regulator.  We review the adequacy of our premium rates regularly and file for rate increases on our products when we believe such rates are too low.  It is likely that we will not be able to obtain approval for all requested premium rate increases.  If such requests are denied in one or more states, our net income may decrease.  If such requests are approved, increased premium rates may reduce the volume of our new sales and may cause existing policyholders to lapse their policies.  If the healthier policyholders allow their policies to lapse, this would reduce our premium income and profitability in the future.

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

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Total premium collections by segment were as follows:

Bankers Life (dollars in millions)

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Premiums collected by product:
Annuities:
Fixed index (first-year)	$	166.6	$	143.4	$	313.9	$	270.0
Other fixed rate (first-year)	32.2		38.5		73.6		75.7
Other fixed rate (renewal)	2.0		1.8		3.8		3.6
Subtotal - other fixed rate annuities	34.2		40.3		77.4		79.3
Total annuities	200.8		183.7		391.3		349.3
Health:
Medicare supplement (first-year)	22.3		22.7		43.5		45.4
Medicare supplement (renewal)	155.5		153.4		313.7		315.9
Subtotal - Medicare supplement	177.8		176.1		357.2		361.3
Long-term care (first-year)	4.2		5.4		8.6		11.1
Long-term care (renewal)	122.0		127.8		241.3		257.5
Subtotal - long-term care	126.2		133.2		249.9		268.6
PDP (first year)	—		—		—		.1
PDP (renewal)	—		10.5		6.8		20.6
Subtotal – PDP	—		10.5		6.8		20.7
Supplemental health (first-year)	2.0		2.0		4.1		3.6
Supplemental health (renewal)	2.0		.2		3.5		.2
Subtotal – supplemental health	4.0		2.2		7.6		3.8
Other health (first-year)	.2		.4		.4		.7
Other health (renewal)	1.9		2.2		3.7		4.6
Subtotal - other health	2.1		2.6		4.1		5.3
Total health	310.1		324.6		625.6		659.7
Life insurance:
First-year	39.2		41.0		77.4		83.4
Renewal	62.3		50.1		118.1		97.2
Total life insurance	101.5		91.1		195.5		180.6
Collections on insurance products:
Total first-year premium collections on insurance products	266.7		253.4		521.5		490.0
Total renewal premium collections on insurance products	345.7		346.0		690.9		699.6
Total collections on insurance products	$	612.4	$	599.4	$	1,212.4	$	1,189.6

Annuities in this segment include fixed index and other fixed annuities sold to the senior market. Annuity collections in this segment increased 9.3 percent, to $200.8 million, in the second quarter of 2014, and 12 percent, to $391.3 million, in the first six months of 2014, as compared to the same periods in 2013. Premium collections from our fixed index products were favorably impacted in the 2014 periods by the general stock market performance which made these products attractive to certain customers.

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

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Health products include Medicare supplement, PDP contracts, long-term care and other insurance products. Our profits on health policies depend on the overall level of sales, the length of time the business remains inforce, investment yields, claims experience and expense management.

Collected premiums on Medicare supplement policies in the Bankers Life segment increased 1.0 percent, to $177.8 million, in the second quarter of 2014, and decreased 1.1 percent, to $357.2 million, in the first six months of 2014, as compared to the same periods in 2013. In recent periods, we have experienced a slight shift in the sale of Medicare supplement policies to the sale of Medicare Advantage policies. Medicare Advantage policies are sold through Bankers Life's agency force for other providers in exchange for marketing fees.

Premiums collected on Bankers Life's long-term care policies decreased 5.3 percent, to $126.2 million, in the second quarter of 2014, and 7.0 percent, to $249.9 million, in the first six months of 2014, as compared to the same periods in 2013, reflecting lower sales of these policies in recent periods and lower renewal premiums.

Premiums collected on PDP business related to our quota-share reinsurance agreement with Coventry. In August 2013, we received a notice of Coventry's intent to terminate our PDP quota-share reinsurance agreement as further described in the note to the consolidated financial statements entitled "Reinsurance". The premiums collected in the first six months of 2014 represent adjustments to premiums on such business related to periods prior to the termination of the agreement.

Premiums collected on supplemental health products relate to a new critical illness product that was introduced in 2012.

Life products in this segment include traditional and interest-sensitive life products. Life premiums collected in this segment increased 11 percent, to $101.5 million, in the second quarter of 2014, and 8.3 percent, to $195.5 million, in the first six months of 2014, as compared to the same periods in 2013 due to growth in the size of the block.

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

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Washington National (dollars in millions)

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Premiums collected by product:
Annuities:
Fixed index (first-year)	$	—	$	.1	$	.1	$	.3
Fixed index (renewal)	.4		1.3		.8		1.9
Subtotal - fixed index annuities	.4		1.4		.9		2.2
Other fixed rate (renewal)	.2		—		.3		.1
Total annuities	.6		1.4		1.2		2.3
Health:
Medicare supplement (first-year)	—		—		—		.2
Medicare supplement (renewal)	21.7		25.0		42.8		51.4
Subtotal - Medicare supplement	21.7		25.0		42.8		51.6
Supplemental health (first-year)	18.5		16.3		35.2		31.9
Supplemental health (renewal)	110.6		105.6		219.8		210.3
Subtotal – supplemental health	129.1		121.9		255.0		242.2
Other health (first-year)	.1		—		.1		—
Other health (renewal)	.5		.8		1.1		1.6
Subtotal - Other health	.6		.8		1.2		1.6
Total health	151.4		147.7		299.0		295.4
Life insurance:
First-year	1.5		1.1		2.6		2.3
Renewal	4.9		5.2		10.3		10.3
Total life insurance	6.4		6.3		12.9		12.6
Collections on insurance products:
Total first-year premium collections on insurance products	20.1		17.5		38.0		34.7
Total renewal premium collections on insurance products	138.3		137.9		275.1		275.6
Total collections on insurance products	$	158.4	$	155.4	$	313.1	$	310.3

Annuities in this segment include fixed index and other fixed annuities. We are no longer actively pursuing sales of annuity products in this segment.

Health products in the Washington National segment include Medicare supplement, supplemental health and other insurance products. Our profits on health policies depend on the overall level of sales, the length of time the business remains inforce, investment yields, claim experience and expense management.

Collected premiums on Medicare supplement policies in the Washington National segment decreased 13 percent, to $21.7 million, in the second quarter of 2014, and 17 percent, to $42.8 million, in the first six months of 2014, as compared to the same periods in 2013. We discontinued new sales of Medicare supplement policies in this segment in the fourth quarter of 2012.

Premiums collected on supplemental health products (including specified disease, accident and hospital indemnity insurance products) increased 5.9 percent, to $129.1 million, in the second quarter of 2014, and 5.3 percent, to $255.0 million, in the first six months of 2014, as compared to the same periods in 2013. Such increase is due to higher new sales in recent periods and an improvement in persistency.

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

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Overall, excluding premiums from the Washington National Medicare supplement and annuity blocks which are in run-off, collected premiums were up 5.5 percent in the second quarter of 2014, and 5.0 percent in the first six months of 2014, as compared to the same periods in 2013, driven by strong sales and persistency.

Life products in the Washington National segment are primarily traditional life products. Life premiums collected in this segment in the three and six months ended June 30, 2014 were slightly higher than the same periods in 2013.

Colonial Penn (dollars in millions)

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Premiums collected by product:
Life insurance:
First-year	$	11.3	$	11.4	$	22.6	$	22.8
Renewal	48.7		45.0		97.5		89.7
Total life insurance	60.0		56.4		120.1		112.5
Health (all renewal):
Medicare supplement	.8		.9		1.6		1.9
Other health	.1		.1		.2		.2
Total health	.9		1.0		1.8		2.1
Collections on insurance products:
Total first-year premium collections on insurance products	11.3		11.4		22.6		22.8
Total renewal premium collections on insurance products	49.6		46.0		99.3		91.8
Total collections on insurance products	$	60.9	$	57.4	$	121.9	$	114.6

Life products in this segment are sold primarily to the senior market. Life premiums collected in this segment increased 6.4 percent, to $60.0 million, in the second quarter of 2014, and 6.8 percent, to $120.1 million, in the first six months of 2014, as compared to the same periods in 2013. Graded benefit life products sold through our direct response marketing channel accounted for $59.5 million and $55.7 million of our total collected premiums in the second quarters of 2014 and 2013, respectively, and $119.0 million and $111.2 million in the first six months of 2014 and 2013, respectively.

Health products include Medicare supplement and other insurance products. Our profits on health policies depend on the overall level of sales, the length of time the business remains inforce, investment yields, claims experience and expense management. Premiums collected on these products have decreased as we do not currently market these products through this segment.

Other CNO Business (dollars in millions)

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Premiums collected by product:
Health:
Long-term care (all renewal)	$	—	$	6.1	$	—	$	12.4

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The Other CNO Business segment reflects the long-term care premiums collected prior to the reinsurance agreement with BRe effective December 31, 2013. Refer to the note to the consolidated financial statements entitled "Reinsurance" for additional information.

LIQUIDITY AND CAPITAL RESOURCES

Our capital structure as of June 30, 2014 and December 31, 2013 was as follows (dollars in millions):

	June 30, 2014			December 31, 2013
Total capital:
Corporate notes payable	$	827.3		$	856.4
Shareholders’ equity:
Common stock	2.1			2.2
Additional paid-in capital	3,963.9			4,092.8
Accumulated other comprehensive income	926.1			731.8
Retained earnings (accumulated deficit)	(47.8		)	128.4
Total shareholders’ equity	4,844.3			4,955.2
Total capital	$	5,671.6		$	5,811.6

The following table summarizes certain financial ratios as of and for the six months ended June 30, 2014 and as of and for the year ended December 31, 2013:

	June 30, 2014			December 31, 2013
Book value per common share	$	22.66		$	22.49
Book value per common share, excluding accumulated other comprehensive income (a)	18.33			19.17
Ratio of earnings to fixed charges	(b)			1.87X
Debt to total capital ratios:
Corporate debt to total capital	14.6		%	14.7		%
Corporate debt to total capital, excluding accumulated other comprehensive income (a)	17.4		%	16.9		%

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(a) This non-GAAP measure differs from the corresponding GAAP measure presented immediately above, because accumulated other comprehensive income 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 accumulated other comprehensive income.  Such volatility is often caused by changes in the estimated fair value of our investment portfolio resulting from changes in general market interest rates rather than the business decisions made by management.  However, this measure does not replace the corresponding GAAP measure.

(b) For such ratio, earnings were $55.2 million less than fixed charges primarily due to the pre-tax loss recognized on the sale of CLIC of $278.6 million.

Liquidity for Insurance Operations

Our insurance companies generally receive adequate cash flows from premium collections and investment income to meet their obligations.  Life insurance, long-term care insurance and annuity liabilities are generally long-term in nature.  Life and annuity policyholders may, however, withdraw funds or surrender their policies, subject to any applicable penalty provisions; there are generally no withdrawal or surrender benefits for long-term care insurance.  We actively manage the relationship between the duration of our invested assets and the estimated duration of benefit payments arising from contract liabilities.

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Two of the Company's insurance subsidiaries (Washington National and Bankers Life) are members of the FHLB.  As members of the FHLB, Washington National and Bankers Life have the ability to borrow on a collateralized basis from the FHLB.  Washington National and Bankers Life are required to hold certain minimum amounts of FHLB common stock as a condition of membership in the FHLB, and additional amounts based on the amount of the borrowings.  At June 30, 2014, the carrying value of the FHLB common stock was $73.5 million.  As of June 30, 2014, collateralized borrowings from the FHLB totaled $1.5 billion and the proceeds were used to purchase fixed maturity securities.  The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet.  The borrowings are collateralized by investments with an estimated fair value of $1.8 billion at June 30, 2014, which are maintained in custodial accounts for the benefit of the FHLB.  

CLIC was also a member of the FHLB and "Assets of subsidiary being sold" included FHLB common stock of $22.5 million and "Liabilities of subsidiary being sold" included collateralized borrowings of $383.4 million, both as of June 30, 2014. These borrowings are collateralizd by investments with an estimated fair value of $503.9 million included in the "Assets of subsidiary being sold".

The following summarizes the terms of the borrowings from the FHLB by Washington National and Bankers Life(dollars in millions):

Amount		Maturity	Interest rate at
borrowed		date	June 30, 2014
$	50.0	September 2015	Variable rate – 0.528%
50.0		October 2015	Variable rate – 0.502%
100.0		June 2016	Variable rate – 0.592%
75.0		June 2016	Variable rate – 0.394%
100.0		October 2016	Variable rate – 0.412%
50.0		November 2016	Variable rate – 0.497%
50.0		November 2016	Variable rate – 0.622%
57.7		June 2017	Variable rate – 0.581%
50.0		August 2017	Variable rate – 0.424%
75.0		August 2017	Variable rate – 0.377%
100.0		October 2017	Variable rate – 0.656%
50.0		November 2017	Variable rate – 0.737%
50.0		January 2018	Variable rate – 0.578%
50.0		January 2018	Variable rate – 0.566%
50.0		February 2018	Variable rate – 0.533%
50.0		February 2018	Variable rate – 0.315%
22.0		February 2018	Variable rate – 0.559%
100.0		May 2018	Variable rate – 0.600%
50.0		July 2018	Variable rate – 0.698%
50.0		August 2018	Variable rate – 0.344%
50.0		January 2019	Variable rate – 0.649%
50.0		February 2019	Variable rate – 0.315%
100.0		March 2019	Variable rate – 0.634%
21.8		June 2020	Fixed rate – 1.960%
27.2		March 2023	Fixed rate – 2.160%
20.5		June 2025	Fixed rate – 2.940%
$	1,499.2

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The following summarizes the terms of the borrowings classified as "Liabilities of subsidiary being sold" (dollars in millions):

Amount		Maturity	Interest rate at
borrowed		date	June 30, 2014
$	146.4	November 2015	Fixed rate – 5.300%
100.0		December 2015	Fixed rate – 4.710%
100.0		July 2017	Fixed rate – 3.900%
37.0		November 2017	Fixed rate – 3.750%
$	383.4

State laws generally give state insurance regulatory agencies broad authority to protect policyholders in their jurisdictions. Regulators have used this authority in the past to restrict the ability of our insurance subsidiaries to pay any dividends or other amounts without prior approval. We cannot be assured that the regulators will not seek to assert greater supervision and control over our insurance subsidiaries' businesses and financial affairs.

Our consolidated statutory RBC ratio of 437 percent at June 30, 2014, reflects consolidated statutory operating earnings of $225 million and net dividends to the holding company of $115 million during the first six months of 2014. Statutory earnings will often fluctuate on a quarterly basis due to the application of statutory accounting principles.

Financial Strength Ratings of our Insurance Subsidiaries

Financial strength ratings provided by S&P, Fitch, Moody's and A.M. Best and are the rating agency's opinions of the ability of our insurance subsidiaries to pay policyholder claims and obligations when due.

On July 2, 2014, S&P upgraded the financial strength ratings of our primary insurance subsidiaries (except CLIC which was sold on July 1, 2014) to "BBB+" from "BBB" and the outlook for these ratings is stable. On July 24, 2013, S&P upgraded the financial strength ratings of our primary insurance subsidiaries (except CLIC) to "BBB" from "BBB-". S&P financial strength ratings range from "AAA" to "R" and some companies are not rated.  An insurer rated "BBB" or higher is regarded as having financial security characteristics that outweigh any vulnerabilities, and is highly likely to have the ability to meet financial commitments. An insurer rated "BBB", in S&P's opinion, has good financial security characteristics, but is more likely to be affected by adverse business conditions than are higher rated insurers.  Pluses and minuses show the relative standing within a category.  S&P has twenty-one possible ratings.  There are seven ratings above the "BBB+" rating of our primary insurance subsidiaries (other than CLIC) and thirteen ratings that are below that rating.

On May 5, 2014, Fitch affirmed the financial strength ratings of "BBB" of our primary insurance subsidiaries (except CLIC) and revised the outlook for these ratings to positive from stable. A "BBB" rating, in Fitch's opinion, indicates that there is currently a low expectation of ceased or interrupted payments. The capacity to meet policyholder and contract obligations on a timely basis is considered adequate, but adverse changes in circumstances and economic conditions are more likely to impact this capacity. Fitch ratings for the industry range from "AAA Exceptionally Strong" to "C Distressed" and some companies are not rated. Pluses and minuses show the relative standing within a category. Fitch has nineteen possible ratings. There are eight ratings above the "BBB" rating of our primary insurance subsidiaries (other than CLIC) and ten ratings that are below that rating.

On March 27, 2014, Moody's upgraded the financial strength ratings of our primary insurance subsidiaries (except CLIC) to "Baa2" from "Baa3" and the outlook for these ratings is positive. A "positive" designation indicates a higher likelihood of a rating change over the medium term.  Moody’s financial strength ratings range from "Aaa" to "C".  These ratings may be supplemented with numbers "1", "2", or "3" to show relative standing within a category.  In Moody's view, an insurer rated "Baa" offers adequate financial security, however, certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Moody's has twenty-one possible ratings.  There are eight ratings above the "Baa2" rating of our primary insurance subsidiaries (other than CLIC) and twelve ratings that are below the rating.

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CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

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On September 27, 2013, A.M. Best affirmed the financial strength rating of "B++" of our primary insurance subsidiaries (except CLIC) and the outlook for these ratings is stable. On September 4, 2012, A.M. Best upgraded the financial strength ratings of our primary insurance subsidiaries (except CLIC) to "B++" from "B+".  A "stable" designation means that there is a low likelihood of a rating change due to stable financial market trends.  The "B++" rating is assigned to companies that have a good ability, in A.M. Best's opinion, to meet their ongoing obligations to policyholders.  A.M. Best ratings for the industry currently range from "A++ (Superior)" to "F (In Liquidation)" and some companies are not rated.  An "A++" rating indicates a superior ability to meet ongoing obligations to policyholders.  A.M. Best has sixteen possible ratings.  There are four ratings above the "B++" rating of our primary insurance subsidiaries (other than CLIC) and eleven ratings that are below that rating.

Rating agencies have increased the frequency and scope of their credit reviews and requested additional information from the companies that they rate, including us.  They may also adjust upward the capital and other requirements employed in the rating agency models for maintenance of certain ratings levels.  We cannot predict what actions rating agencies may take, or what actions we may take in response.  Accordingly, downgrades and outlook revisions related to us or the life insurance industry may occur in the future at any time and without notice by any rating agency.  These could increase policy surrenders and withdrawals, adversely affect relationships with our distribution channels, reduce new sales, reduce our ability to borrow and increase our future borrowing costs.

Liquidity of the Holding Companies

Availability and Sources and Uses of Holding Company Liquidity; Limitations on Ability of Insurance Subsidiaries to Make Dividend and Surplus Debenture Interest Payments to the Holding Companies; Limitations on Holding Company Activities

At June 30, 2014, CNO, CDOC, Inc. ("CDOC", our wholly owned subsidiary and the immediate parent of Washington National, CLIC and Conseco Life Insurance Company of Texas ("CLTX")) and our other non-insurance subsidiaries held: (i) unrestricted cash and cash equivalents of $116.0 million; (ii) fixed income investments of $66.6 million; and (iii) equity securities and other invested assets totaling $94.2 million.  CNO and CDOC are holding companies with no business operations of their own; they depend on their operating subsidiaries for cash to make principal and interest payments on debt, and to pay administrative expenses and income taxes.  CNO and CDOC receive cash from insurance subsidiaries, consisting of dividends and distributions, interest payments on surplus debentures and tax-sharing payments, as well as cash from non-insurance subsidiaries consisting of dividends, distributions, loans and advances.  The principal non-insurance subsidiaries that provide cash to CNO and CDOC are 40|86 Advisors, Inc. ("40|86 Advisors"), which receives fees from the insurance subsidiaries for investment services, and CNO Services which receives fees from the insurance subsidiaries for providing administrative services.  The agreements between our insurance subsidiaries and CNO Services and 40|86 Advisors, respectively, were previously approved by the domestic insurance regulator for each insurance company, and any payments thereunder do not require further regulatory approval.

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The following summarizes the current ownership structure of CNO’s primary subsidiaries reflecting the sale of CLIC on July 1, 2014:

The ability of our insurance subsidiaries to pay dividends is subject to state insurance department regulations and is based on the financial statements of our insurance subsidiaries prepared in accordance with statutory accounting practices prescribed or permitted by regulatory authorities, which differ from GAAP.  These regulations generally permit dividends to be paid from statutory earned surplus of the insurance company for any 12-month period in amounts equal to the greater of (or in a few states, the lesser of):  (i) statutory net gain from operations or net income for the prior year; or (ii) 10 percent of statutory capital and surplus as of the end of the preceding year. This type of dividend is referred to as an "ordinary dividend". Any dividend in excess of these levels or from an insurance company that has negative earned surplus requires the approval of the director or commissioner of the applicable state insurance department and is referred to as an "extraordinary dividend".  Each of the direct insurance subsidiaries of CDOC has significant negative earned surplus and any dividend payments from the subsidiaries of CDOC would be considered extraordinary dividends and, therefore, require the approval of the director or commissioner of the applicable state insurance department.  In the first six months of 2014, our insurance subsidiaries paid extraordinary dividends to CDOC totaling $140.0 million.  We expect to receive regulatory approval for future dividends from our subsidiaries, but there can be no assurance that such payments will be approved or that the financial condition of our insurance subsidiaries will not change, making future approvals less likely.

We generally maintain capital and surplus levels in our insurance subsidiaries in an amount that is sufficient to maintain a minimum consolidated RBC ratio of 350 percent and may seek to have our insurance subsidiaries pay ordinary dividends or request regulatory approval for extraordinary dividends when the consolidated RBC ratio exceeds such level and we have concluded the capital level in each of our insurance subsidiaries is adequate to support their business and projected growth.  The consolidated RBC ratio of our insurance subsidiaries was 437 percent at June 30, 2014.  

CDOC holds surplus debentures from CLTX with an aggregate principal amount of $749.6 million.  Interest payments on those surplus debentures do not require additional approval provided the RBC ratio of CLTX exceeds 100 percent (but do require prior written notice to the Texas state insurance department).  The RBC ratio of CLTX was 355 percent at June 30, 2014.  CDOC also holds a surplus debenture from Colonial Penn with an outstanding principal balance of $160.0 million. Interest payments on that surplus debenture require prior approval by the Pennsylvania state insurance department. Dividends and other payments from our non-insurance subsidiaries, including 40|86 Advisors and CNO Services, to CNO or CDOC do not require approval by any regulatory authority or other third party.  However, insurance regulators may prohibit payments by our insurance subsidiaries to parent companies if they determine that such payments could be adverse to our policyholders or contractholders.

The insurance subsidiaries of CDOC receive funds to pay dividends primarily from:  (i) the earnings of their direct businesses; (ii) tax sharing payments received from subsidiaries (if applicable); and (iii) with respect to CLTX, dividends received from subsidiaries.  At June 30, 2014, the subsidiaries of CLTX had earned surplus (deficit) as summarized below (dollars in millions):

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Subsidiary of CDOC	Earned surplus (deficit)			Additional information
Subsidiaries of CLTX:
Bankers Life	$	359.2		(a)
Colonial Penn	(259.9		)	(b)

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(a) Bankers Life paid ordinary dividends of $95.0 million to CLTX in the first six months of 2014.

(b) The deficit is primarily due to transactions which occurred several years ago, including a tax planning transaction and the fee paid to recapture a block of business previously ceded to an unaffiliated insurer.

A significant deterioration in the financial condition, earnings or cash flow of the material subsidiaries of CNO or CDOC for any reason could hinder such subsidiaries' ability to pay cash dividends or other disbursements to CNO and/or CDOC, which, in turn, could limit CNO's ability to meet debt service requirements and satisfy other financial obligations.  In addition, we may choose to retain capital in our insurance subsidiaries or to contribute additional capital to our insurance subsidiaries to strengthen their surplus, and these decisions could limit the amount available at our top tier insurance subsidiaries to pay dividends to the holding companies. CDOC made a $25.0 million capital contribution to its insurance subsidiaries in the first six months of 2014.

In the first six months of 2014, we repurchased 7.8 million shares of common stock for $136.6 million under our securities repurchase program. The Company had remaining repurchase authority of $260.8 million as of June 30, 2014. We currently anticipate repurchasing securities in the range of $350 million to $400 million during 2014, absent compelling alternatives. The amount and timing of the securities repurchases will be based on business and market conditions and other factors.

In the first six months of 2014, we paid dividends on common stock of $26.3 million ($0.12 per common share). In March 2014, we increased our quarterly common stock dividend to $0.06 per share from $0.03 per share.

In the first six months of 2014, we made $26.0 million of scheduled quarterly principal payments due under the Senior Secured Credit Agreement.

On May 30, 2014, the Company completed an amendment to the Senior Secured Credit Agreement to waive the requirement that the net proceeds in excess of $125 million to be received from the sale of CLIC be used to prepay amounts outstanding under the Senior Secured Credit Agreement. In the second quarter of 2014, we recognized expenses related to the amendment of the Senior Secured Credit Agreement totaling $.4 million which are included in the loss on extinguishment or modification of debt.

The amendment to the Senior Secured Credit Agreement did not impact the restrictions set forth in the 6.375% Indenture regarding the Company’s use of the proceeds from the sale of CLIC. Under the Indenture, the net proceeds received by the Company from the sale of CLIC (defined as "Net Available Cash" under the Indenture) may be used to: (i) reinvest in or acquire assets to be used in the insurance business or a related business; or (ii) repay the Senior Secured Credit Agreement. Under the Indenture, any Net Available Cash not so reinvested or applied within 365 days after the closing of the sale of CLIC must be used to make an offer to purchase the outstanding notes at par and, in the interim, may only be invested as set forth in the Indenture. The Company currently plans to reinvest the cash received from the sale of CLIC in its business including the payment on July 1, 2014, of $28.0 million to recapture a block of life insurance business from Wilton Re.

Mandatory prepayments of the Senior Secured Credit Agreement will be required, subject to certain exceptions, in an amount equal to: (i) 100% of the net cash proceeds from certain asset sales or casualty events; (ii) 100% of the net cash proceeds received by the Company or any of its restricted subsidiaries from certain debt issuances; and (iii) 100% of the amount of certain restricted payments made (including any common stock dividends and share repurchases) as defined in the Senior Secured Credit Agreement provided that if, as of the end of the fiscal quarter immediately preceding such restricted payment, the debt to total capitalization ratio is: (x) equal to or less than 25.0%, but greater than 20.0%, the prepayment requirement shall be reduced to 33.33%; or (y) equal to or less than 20.0%, the prepayment requirement shall not apply.

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Notwithstanding the foregoing, no mandatory prepayments pursuant to item (i) in the preceding paragraph shall be required if: (x) the debt to total capitalization ratio is equal or less than 20% and (y) either (A) the financial strength rating of certain of the Company's insurance subsidiaries is equal or better than A- (stable) from A.M. Best or (B) the Senior Secured Credit Agreement is rated equal or better than BBB- (stable) from S&P and Baa3 (stable) by Moody's.

The Senior Secured Credit Agreement requires the Company to maintain (each as calculated in accordance with the Senior Secured Credit Agreement): (i) a debt to total capitalization ratio of not more than 27.5 percent (such ratio was 17.6 percent at June 30, 2014); (ii) an interest coverage ratio of not less than 2.50 to 1.00 for each rolling four quarters (or, if less, the number of full fiscal quarters commencing after the effective date of the Senior Secured Credit Agreement) (such ratio was 9.81 to 1.00 for the four quarters ended June 30, 2014); (iii) an aggregate ratio of total adjusted capital to company action level risk-based capital for the Company's insurance subsidiaries of not less than 250 percent (such ratio was 437 percent at June 30, 2014); and (iv) a combined statutory capital and surplus for the Company's insurance subsidiaries of at least $1,300.0 million (combined statutory capital and surplus at June 30, 2014, was $2,057 million).

Under the 6.375% Indenture, the Company can make Restricted Payments (as such term is defined in the 6.375% Indenture) up to a calculated limit, provided that the Company's pro forma risk-based capital ratio exceeds 225% after giving effect to the Restricted Payment and certain other conditions are met. Restricted Payments include, among other items, repurchases of common stock and cash dividends on common stock (to the extent such dividends exceed $30 million in the aggregate in any calendar year).

The limit of Restricted Payments permitted under the 6.375% Indenture is the sum of (x) 50% of the Company's "Net Excess Cash Flow" (as defined in the 6.375% Indenture) for the period (taken as one accounting period) from July 1, 2012 to the end of the Company's most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment, (y) $175.0 million and (z) certain other amounts specified in the 6.375% Indenture. Based on the provisions set forth in the 6.375% Indenture and the Company's Net Excess Cash Flow for the period from July 1, 2012 through June 30, 2014, the Company could have made additional Restricted Payments under this 6.375% Indenture covenant of approximately $178 million as of June 30, 2014. This limitation on Restricted Payments does not apply if the Debt to Total Capitalization Ratio (as defined in the 6.375% Indenture) as of the last day of the Company's most recently ended fiscal quarter for which financial statements are available that immediately precedes the date of any Restricted Payment, calculated immediately after giving effect to such Restricted Payment and any related transactions on a pro forma basis, is equal to or less than 17.5%.

On May 30, 2014, we repurchased the remaining $3.5 million principal amount of the 7.0% Debentures for a purchase price of $3.7 million and recognized a loss on the extinguishment of debt of $.2 million.

The scheduled principal payments on our direct corporate obligations are as follows at June 30, 2014 (dollars in millions):

Year ending June 30,	Principal
2015	$	73.0
2016	79.3
2017	23.0
2018	4.2
2019	376.0
2021	275.0
	$	830.5

On July 2, 2014, S&P upgraded our issuer credit and senior secured debt ratings to "BB+" from "BB" and the outlook for these ratings is stable. On July 24, 2013, S&P upgraded such ratings to "BB" from "BB-". In S&P's view, an obligation rated "BB" is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. Pluses and minuses show the relative standing within a category. S&P has a total of

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22 possible ratings ranging from "AAA (Extremely Strong)" to "D (Payment Default)". There are ten ratings above CNO's  "BB+" rating and eleven ratings that are below its rating.

On May 5, 2014, Fitch upgraded our issuer credit and senior secured debt ratings to "BB+" from "BB" and the outlook for these ratings is positive. The rating outlook indicates the direction a rating is likely to move over a one to two year period. In Fitch's view, an obligation rated "BB" indicates an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists which supports the servicing of financial commitments. Pluses and minuses show the relative standing within a category. Fitch has a total of 21 possible ratings ranging from "AAA" to "D". There are ten ratings above CNO's "BB+" rating and ten ratings that are below its rating.

On March 27, 2014, Moody's upgraded our issuer credit and senior secured debt ratings to "Ba2" from "Ba3" and the outlook for these ratings is positive. A positive designation indicates a higher likelihood of a ratings change over the medium term. In Moody's view, obligations rated "Ba" are judged to have speculative elements and are subject to substantial credit risk. A rating is supplemented with numerical modifiers "1", "2" or "3" to show the relative standing within a category. Moody's has a total of 21 possible ratings ranging from "Aaa" to "C". There are eleven ratings above CNO's "Ba2" rating and nine ratings that are below its rating.

We believe that the existing cash available to the holding company, the cash flows to be generated from operations and other transactions will be sufficient to allow us to meet our debt service obligations, pay corporate expenses and satisfy other financial obligations.  Furthermore, our accumulated deficit at June 30, 2014, primarily resulting from the loss on the sale of CLIC recognized in the first quarter of 2014, is not expected to affect our future ability to pay quarterly dividends on our common stock given our expected future profitability and strong financial position. However, our cash flow is affected by a variety of factors, many of which are outside of our control, including insurance regulatory issues, competition, financial markets and other general business conditions.  We cannot provide assurance that we will possess sufficient income and liquidity to meet all of our debt service requirements and other holding company obligations.

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INVESTMENTS

At June 30, 2014, the amortized cost, gross unrealized gains and losses and estimated fair value of fixed maturities, available for sale, and equity securities were as follows (dollars in millions):

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Investment grade (a):
Corporate securities	$	11,048.9	$	1,626.9	$	(11.3	)	$	12,664.5
United States Treasury securities and obligations of United States government corporations and agencies	149.6		10.7		(.2		)	160.1
States and political subdivisions	1,939.2		212.9		(6.0		)	2,146.1
Asset-backed securities	715.3		46.5		(.8		)	761.0
Collateralized debt obligations	306.5		4.9		(.8		)	310.6
Commercial mortgage-backed securities	1,173.9		92.5		(.2		)	1,266.2
Mortgage pass-through securities	8.4		.5		—			8.9
Collateralized mortgage obligations	593.5		24.8		(.6		)	617.7
Total investment grade fixed maturities, available for sale	15,935.3		2,019.7		(19.9		)	17,935.1
Below-investment grade (a):
Corporate securities	1,168.5		61.1		(12.5		)	1,217.1
States and political subdivisions	5.1		—		(.3		)	4.8
Asset-backed securities	529.2		37.7		(1.8		)	565.1
Collateralized debt obligations	13.4		.3		(.1		)	13.6
Collateralized mortgage obligations	732.3		65.9		(.3		)	797.9
Total below-investment grade fixed maturities, available for sale	2,448.5		165.0		(15.0		)	2,598.5
Total fixed maturities, available for sale	$	18,383.8	$	2,184.7	$	(34.9	)	$	20,533.6
Equity securities	$	272.6	$	16.2	$	(1.3	)	$	287.5

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(a) Investment ratings – Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organizations ("NRSROs") (Moody's, S&P or Fitch), or if not rated by such firms, the rating assigned by the National Association of Insurance Commissioners (the "NAIC").  NAIC designations of "1" or "2" include fixed maturities generally rated investment grade (rated "Baa3" or higher by Moody's or rated "BBB-" or higher by S&P and Fitch).  NAIC designations of "3" through "6" are referred to as below-investment grade (which generally are rated "Ba1" or lower by Moody's or rated "BB+" or lower by S&P and Fitch).  References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above.

The NAIC evaluates the fixed maturity investments of insurers for regulatory and capital assessment purposes and assigns securities to one of six credit quality categories called NAIC designations, which are used by insurers when preparing their annual statements based on statutory accounting principles. The NAIC designations are generally similar to the credit quality designations of the NRSROs for marketable fixed maturity securities, except for certain structured securities. However, certain structured securities rated below investment grade by the NRSROs can be assigned NAIC 1 or NAIC 2 designations dependent on the cost basis of the holding relative to estimated recoverable amounts as determined by the NAIC. The following summarizes the NAIC designations and NRSRO equivalent ratings:

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NAIC Designation	NRSRO Equivalent Rating
1	AAA/AA/A
2	BBB
3	BB
4	B
5	CCC and lower
6	In or near default

A summary of our fixed maturity securities, available for sale, by NAIC designations (or for fixed maturity securities held by non-regulated entities, based on NRSRO ratings) as of June 30, 2014 is as follows (dollars in millions):

NAIC designation	Amortized cost		Estimated fair value		Percentage of total estimated fair value
1	$	8,985.0	$	10,036.9	48.9	%
2	8,176.4		9,223.9		44.9
3	868.2		907.2		4.4
4	323.6		334.3		1.6
5	30.6		31.0		.2
6	—		.3		—
	$	18,383.8	$	20,533.6	100.0	%

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Concentration of Fixed Maturity Securities, Available for Sale

The following table summarizes the carrying values and gross unrealized losses of our fixed maturity securities, available for sale, by category as of June 30, 2014 (dollars in millions):

	Carrying value		Percent of fixed maturities		Gross unrealized losses		Percent of gross unrealized losses
States and political subdivisions	$	2,150.9	10.5	%	$	6.3	17.8	%
Energy/pipelines	2,127.6		10.4		3.0		8.6
Utilities	1,698.6		8.3		.2		.5
Collateralized mortgage obligations	1,415.6		6.9		.9		2.5
Insurance	1,390.9		6.8		.2		.6
Asset-backed securities	1,326.1		6.5		2.6		7.5
Commercial mortgage-backed securities	1,266.2		6.2		.2		.6
Healthcare/pharmaceuticals	1,131.3		5.5		2.8		8.0
Food/beverage	932.6		4.5		2.5		7.2
Cable/media	826.2		4.0		2.8		8.1
Real estate/REITs	728.5		3.5		.1		.2
Banks	665.9		3.2		.3		.7
Capital goods	574.5		2.8		—		—
Aerospace/defense	401.6		1.9		—		—
Chemicals	380.2		1.9		1.1		3.0
Transportation	372.7		1.8		—		—
Telecom	368.2		1.8		.1		.3
Collateralized debt obligations	324.2		1.6		.9		2.7
Building materials	313.8		1.5		3.7		10.5
Metals and mining	281.9		1.4		.9		2.6
Paper	270.5		1.3		.1		.3
Brokerage	234.5		1.1		—		.1
Technology	231.2		1.1		—		.1
Business services	228.6		1.1		5.4		15.5
Other	891.2		4.4		.8		2.6
Total fixed maturities, available for sale	$	20,533.5	100.0	%	$	34.9	100.0	%

Below-Investment Grade Securities

At June 30, 2014, the amortized cost of the Company's below-investment grade fixed maturity securities was $2,448.5 million, or 13 percent of the Company's fixed maturity portfolio. The estimated fair value of the below-investment grade portfolio was $2,598.5 million, or 106 percent of the amortized cost.

Below-investment grade corporate debt securities typically have different characteristics than investment grade corporate debt securities.  Based on historical performance, probability of default by the borrower is significantly greater for below-investment grade corporate debt securities and in many cases severity of loss is relatively greater as such securities are generally unsecured and often subordinated to other indebtedness of the issuer.  Also, issuers of below-investment grade corporate debt securities frequently have higher levels of debt relative to investment-grade issuers, hence, all other things being equal, are generally more sensitive to adverse economic conditions.  The Company attempts to reduce the overall risk related to its investment in below-investment grade securities, as in all investments, through careful credit analysis, strict investment policy guidelines, and diversification by issuer and/or guarantor and by industry.

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Net Realized Investment Gains (Losses)

The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Fixed maturity securities, available for sale:
Gross realized gains on sale	$	4.9		$	10.8		$	46.4		$	27.4
Gross realized losses on sale	(3.0		)	(1.4		)	(8.5		)	(3.4		)
Impairments:
Total other-than-temporary impairment losses	—			—			—			—
Other-than-temporary impairment losses recognized in accumulated other comprehensive income	—			—			—			—
Net impairment losses recognized	—			—			—			—
Net realized investment gains from fixed maturities	1.9			9.4			37.9			24.0
Equity securities	7.9			—			7.9			—
Commercial mortgage loans	1.1			—			1.1			.7
Impairments of mortgage loans and other investments	—			(.6		)	(11.9		)	(.6		)
Other	1.5			(5.6		)	.8			(5.6		)
Net realized investment gains	$	12.4		$	3.2		$	35.8		$	18.5

During the first six months of 2014, we recognized net realized investment gains of $35.8 million, which were comprised of $41.8 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $1.4 billion, the increase in fair value of certain fixed maturity investments with embedded derivatives of $5.9 million and $11.9 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

During the first six months of 2013, we recognized net realized investment gains of $18.5 million, which were comprised of $29.6 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $.9 billion and the decrease in fair value of certain fixed maturity investments with embedded derivatives of $10.5 million and $.6 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

At June 30, 2014, fixed maturity securities in default or considered nonperforming had an aggregate amortized cost and a carrying value of nil and $.5 million, respectively.

During the first six months of 2014, the $8.5 million of realized losses on sales of $156.9 million of fixed maturity securities, available for sale, included:  (i) $.5 million of losses related to the sales of securities issued by state and political subdivisions; and (ii) $8.0 million of additional losses related to various corporate securities.  Securities are generally sold at a loss following unforeseen issue-specific events or conditions or shifts in perceived risks.  These reasons include but are not limited to:  (i) changes in the investment environment; (ii) expectation that the market value could deteriorate further; (iii) desire to reduce our exposure to an asset class, an issuer or an industry; (iv) prospective or actual changes in credit quality; or (v) changes in expected cash flows.

During the first six months of 2013, the $3.4 million of realized losses on sales of $181.3 million of fixed maturity securities, available for sale, included: (i) $1.0 million of losses related to the sales of mortgage-backed securities and asset-backed securities; and (ii) $2.4 million of additional losses primarily related to various corporate securities.

Our fixed maturity investments are generally purchased in the context of various long-term strategies, including funding insurance liabilities, so we do not generally seek to generate short-term realized gains through the purchase and sale of such securities.  In certain circumstances, including those in which securities are selling at prices which exceed our view of their

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underlying economic value, or when it is possible to reinvest the proceeds to better meet our long-term asset-liability objectives, we may sell certain securities.

We regularly evaluate all of our investments with unrealized losses for possible impairment.  Our assessment of whether unrealized losses are "other than temporary" requires significant judgment.  Factors considered include:  (i) the extent to which fair value is less than the cost basis; (ii) the length of time that the fair value has been less than cost; (iii) whether the unrealized loss is event driven, credit-driven or a result of changes in market interest rates or risk premium; (iv) the near-term prospects for specific events, developments or circumstances likely to affect the value of the investment; (v) the investment's rating and whether the investment is investment-grade and/or has been downgraded since its purchase; (vi) whether the issuer is current on all payments in accordance with the contractual terms of the investment and is expected to meet all of its obligations under the terms of the investment; (vii) whether we intend to sell the investment or it is more likely than not that circumstances will require us to sell the investment before recovery occurs; (viii) the underlying current and prospective asset and enterprise values of the issuer and the extent to which the recoverability of the carrying value of our investment may be affected by changes in such values; (ix) projections of, and unfavorable changes in, cash flows on structured securities including mortgage-backed and asset-backed securities; (x) our best estimate of the value of any collateral; and (xi) other objective and subjective factors.

Future events may occur, or additional information may become available, which may necessitate future realized losses in our portfolio.  Significant losses could have a material adverse effect on our consolidated financial statements in future periods.

The following table sets forth the amortized cost and estimated fair value of those fixed maturities, available for sale, with unrealized losses at June 30, 2014, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.  Structured securities frequently include provisions for periodic principal payments and permit periodic unscheduled payments.

	Amortized cost		Estimated fair value
	(Dollars in millions)
Due in one year or less	$	1.7	$	1.7
Due after one year through five years	46.7		46.5
Due after five years through ten years	167.2		163.2
Due after ten years	569.2		543.1
Subtotal	784.8		754.5
Structured securities	388.0		383.4
Total	$	1,172.8	$	1,137.9

The following summarizes the investments in our portfolio rated below-investment grade which have been continuously in an unrealized loss position exceeding 20 percent of the cost basis for the period indicated as of June 30, 2014 (dollars in millions):

	Cost basis		Unrealized loss			Estimated fair value
Greater than or equal to 6 months and less than 12 months	$	4.4	$	(.9	)	$	3.5
Greater than 12 months	19.5		(4.5		)	15.0
	$	23.9	$	(5.4	)	$	18.5

The investments summarized above were issued by one company.

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The following table summarizes the gross unrealized losses of our fixed maturity securities, available for sale, by category and ratings category as of June 30, 2014 (dollars in millions):

	Investment grade				Below-investment grade
	AAA/AA/A		BBB		BB		B+ and below		Total gross unrealized losses
States and political subdivisions	$	2.5	$	3.5	$	.3	$	—	$	6.3
Business services	—		—		5.4		—		5.4
Building materials	—		—		3.7		—		3.7
Energy/pipelines	—		2.0		.1		.9		3.0
Cable/media	—		2.6		.2		—		2.8
Healthcare/pharmaceuticals	—		2.8		—		—		2.8
Asset-backed securities	.2		.6		.4		1.4		2.6
Food/beverage	.6		.3		1.6		—		2.5
Chemicals	—		1.1		—		—		1.1
Collateralized debt obligations	.4		.4		.1		—		.9
Metals and mining	—		.6		.3		—		.9
Collateralized mortgage obligations	.5		.1		.2		.1		.9
Retail	—		.5		—		—		.5
Banks	.2		.1		—		—		.3
Commercial mortgage-backed securities	—		.2		—		—		.2
Insurance	—		.2		—		—		.2
United States Treasury securities and obligations of United States government corporations and agencies	.2		—		—		—		.2
Utilities	—		.2		—		—		.2
Consumer products	—		—		.1		—		.1
Telecom	.1		—		—		—		.1
Paper	—		—		—		.1		.1
Real estate/REITs	—		—		.1		—		.1
Total fixed maturities, available for sale	$	4.7	$	15.2	$	12.5	$	2.5	$	34.9

Our investment strategy is to maximize, over a sustained period and within acceptable parameters of quality and risk, investment income and total investment return through active investment management.  Accordingly, we may sell securities at a gain or a loss to enhance the projected total return of the portfolio as market opportunities change, to reflect changing perceptions of risk, or to better match certain characteristics of our investment portfolio with the corresponding characteristics of our insurance liabilities.

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The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at June 30, 2014 (dollars in millions):

	Less than 12 months					12 months or greater					Total
Description of securities	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
United States Treasury securities and obligations of United States government corporations and agencies	$	—	$	—		$	18.4	$	(.2	)	$	18.4	$	(.2	)
States and political subdivisions	15.6		(.6		)	124.1		(5.7		)	139.7		(6.3		)
Corporate securities	173.3		(1.1		)	423.2		(22.7		)	596.5		(23.8		)
Asset-backed securities	76.9		(.5		)	91.5		(2.1		)	168.4		(2.6		)
Collateralized debt obligations	64.2		(.7		)	11.7		(.2		)	75.9		(.9		)
Commercial mortgage-backed securities	14.8		—			19.2		(.2		)	34.0		(.2		)
Mortgage pass-through securities	1.2		—			.8		—			2.0		—
Collateralized mortgage obligations	82.4		(.4		)	20.6		(.5		)	103.0		(.9		)
Total fixed maturities, available for sale	$	428.4	$	(3.3	)	$	709.5	$	(31.6	)	$	1,137.9	$	(34.9	)
Equity securities	$	34.3	$	(.4	)	$	20.3	$	(.9	)	$	54.6	$	(1.3	)

Based on management's current assessment of investments with unrealized losses at June 30, 2014, the Company believes the issuers of the securities will continue to meet their obligations (or with respect to equity-type securities, the investment value will recover to its cost basis).  While we do not have the intent to sell securities with unrealized losses and it is not more likely than not that we will be required to sell securities with unrealized losses prior to their anticipated recovery, our intent on an individual security may change, based upon market or other unforeseen developments.  In such instances, if a loss is recognized from a sale subsequent to a balance sheet date due to these unexpected developments, the loss is recognized in the period in which we had the intent to sell the security before its anticipated recovery.

Structured Securities

At June 30, 2014 fixed maturity investments included structured securities with an estimated fair value of $4.3 billion (or 21.1 percent of all fixed maturity securities).  The yield characteristics of structured securities generally differ in some respects from those of traditional corporate fixed-income securities or government securities.  For example, interest and principal payments on structured securities may occur more frequently, often monthly.  In many instances, we are subject to variability in the amount and timing of principal and interest payments.  For example, in many cases, partial prepayments may occur at the option of the issuer and prepayment rates are influenced by a number of factors that cannot be predicted with certainty, including:  the relative sensitivity of prepayments on the underlying assets backing the security to changes in interest rates and asset values; the availability of alternative financing; a variety of economic, geographic and other factors; the timing, pace and proceeds of liquidations of defaulted collateral; and various security-specific structural considerations (for example, the repayment priority of a given security in a securitization structure).  In addition, the total amount of payments for non-agency structured securities may be affected by changes to cumulative default rates or loss severities of the related collateral.

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The following table sets forth the par value, amortized cost and estimated fair value of structured securities, summarized by interest rates on the underlying collateral, at June 30, 2014 (dollars in millions):

	Par value		Amortized cost		Estimated fair value
Below 4 percent	$	1,154.4	$	949.7	$	975.2
4 percent – 5 percent	707.1		664.5		700.4
5 percent – 6 percent	1,914.3		1,785.4		1,924.2
6 percent – 7 percent	588.7		547.8		602.3
7 percent – 8 percent	94.7		96.3		109.4
8 percent and above	28.0		28.8		29.5
Total structured securities	$	4,487.2	$	4,072.5	$	4,341.0

The amortized cost and estimated fair value of structured securities at June 30, 2014, summarized by type of security, were as follows (dollars in millions):

			Estimated fair value
Type	Amortized cost		Amount		Percent of fixed maturities
Pass-throughs, sequential and equivalent securities	$	1,058.0	$	1,127.8	5.5	%
Planned amortization classes, target amortization classes and accretion-directed bonds	243.1		263.7		1.3
Commercial mortgage-backed securities	1,173.9		1,266.2		6.1
Asset-backed securities	1,244.5		1,326.1		6.4
Collateralized debt obligations	319.9		324.2		1.6
Other	33.1		33.0		.2
Total structured securities	$	4,072.5	$	4,341.0	21.1	%

Pass-throughs, sequentials and equivalent securities have unique prepayment variability characteristics.  Pass-through securities typically return principal to the holders based on cash payments from the underlying mortgage obligations. Sequential securities return principal to tranche holders in a detailed hierarchy.  Planned amortization classes, targeted amortization classes and accretion-directed bonds adhere to fixed schedules of principal payments as long as the underlying mortgage loans experience prepayments within certain estimated ranges.  In most circumstances, changes in prepayment rates are first absorbed by support or companion classes insulating the timing of receipt of cash flows from the consequences of both faster prepayments (average life shortening) and slower prepayments (average life extension).

Commercial mortgage-backed securities are secured by commercial real estate mortgages, generally income producing properties that are managed for profit.  Property types include multi-family dwellings including apartments, retail centers, hotels, restaurants, hospitals, nursing homes, warehouses, and office buildings.  While most commercial mortgage-backed securities have call protection features whereby underlying borrowers may not prepay their mortgages for stated periods of time without incurring prepayment penalties, recoveries on defaulted collateral may result in involuntary prepayments.

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Commercial Mortgage Loans

The following table provides the carrying value and estimated fair value of our outstanding mortgage loans and the underlying collateral as of June 30, 2014 (dollars in millions):

			Estimated fair value
Loan-to-value ratio (a)	Carrying value		Mortgage loans		Collateral
Less than 60%	$	597.6	$	627.9	$	1,403.9
60% to 70%	396.4		408.2		611.8
Greater than 70% to 80%	439.4		445.4		593.7
Greater than 80% to 90%	138.0		143.5		160.3
Greater than 90%	24.5		22.1		27.0
Total	$	1,595.9	$	1,647.1	$	2,796.7

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(a) Loan-to-value ratios are calculated as the ratio of:  (i) the carrying value of the commercial mortgage loans; to (ii) the estimated fair value of the underlying collateral.

INVESTMENTS IN VARIABLE INTEREST ENTITIES

The following table provides supplemental information about the revenues and expenses of the VIEs which have been consolidated in accordance with authoritative guidance, after giving effect to the elimination of our investment in the VIEs and investment management fees earned by a subsidiary of the Company (dollars in millions):

	Three months ended					Six months ended
	June 30,					June 30,
	2014		2013			2014			2013
Revenues:
Net investment income – policyholder and reinsurer accounts and other special-purpose portfolios	$	10.5	$	10.9		$	20.9		$	20.4
Fee revenue and other income	.1		.5			.2			1.3
Total revenues	10.6		11.4			21.1			21.7
Expenses:
Interest expense	6.4		6.8			12.9			12.2
Other operating expenses	.4		.8			.6			.9
Total expenses	6.8		7.6			13.5			13.1
Income before net realized investment losses and income taxes	3.8		3.8			7.6			8.6
Net realized investment losses	—		(.4		)	(2.0		)	(.3		)
Income before income taxes	$	3.8	$	3.4		$	5.6		$	8.3

During the first six months of 2014, we recognized net realized investment losses on the VIE investments of $2.0 million.  During the first six months of 2013, we recognized net realized investment losses on the VIE investments of $.3 million, which were comprised of $.3 million of net gains from the sales of fixed maturities, and $.6 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

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Supplemental Information on Investments Held by VIEs

The following table summarizes the carrying values of the investments held by the VIEs by category as of June 30, 2014 (dollars in millions):

	Carrying value		Percent of fixed maturities		Gross unrealized losses		Percent of gross unrealized losses
Cable/media	$	135.4	10.9	%	$	.7	20.0	%
Healthcare/pharmaceuticals	120.5		9.7		.1		2.3
Technology	118.0		9.5		.3		6.7
Food/beverage	107.3		8.6		.2		6.3
Autos	87.0		7.0		.2		4.3
Energy/pipelines	54.0		4.4		.2		4.9
Entertainment/hotels	50.8		4.1		.2		4.7
Capital goods	49.4		4.0		—		.7
Utilities	47.2		3.8		.4		11.0
Brokerage	45.8		3.7		.4		10.7
Paper	44.8		3.6		.1		1.6
Aerospace/defense	44.0		3.6		.2		3.8
Consumer products	40.2		3.2		—		1.0
Chemicals	37.5		3.0		—		1.2
Building materials	35.8		2.9		—		.8
Transportation	33.8		2.7		.1		3.8
Gaming	29.8		2.4		.1		2.6
Insurance	27.2		2.2		.1		2.2
Retail	25.8		2.1		.1		3.5
Metals and mining	23.8		1.9		—		.4
Real estate/REITs	16.8		1.4		.1		2.2
Telecom	10.9		.9		.1		3.4
Textiles	5.3		.4		—		.4
Other	50.0		4.0		.1		1.5
Total	$	1,241.1	100.0	%	$	3.7	100.0	%

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The following table sets forth the amortized cost and estimated fair value of those investments held by the VIEs with unrealized losses at June 30, 2014, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

	Amortized cost		Estimated fair value
	(Dollars in millions)
Due in one year or less	$	2.0	$	2.0
Due after one year through five years	143.1		142.3
Due after five years through ten years	483.9		481.0
Total	$	629.0	$	625.3

There were no investments held by the VIEs rated below-investment grade which had been continuously in an unrealized loss position exceeding 20 percent of the cost basis as of June 30, 2014.

NEW ACCOUNTING STANDARDS

See "Recently Issued Accounting Standards" in the notes to consolidated financial statements for a discussion of recently issued accounting standards.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Our market risks, and the ways we manage them, are summarized in "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in our Annual Report on Form 10-K for the year ended December 31, 2013.  There have been no material changes in the first six months of 2014 to such risks or our management of such risks.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.  CNO's management, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of CNO's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended).  Based on its evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2014, CNO's disclosure controls and procedures were effective to ensure that information required to be disclosed by CNO in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.  Disclosure controls and procedures are also designed to reasonably assure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes to Internal Control Over Financial Reporting.  There were no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the three months ended June 30, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

Information required for Part II, Item 1 is incorporated by reference to the discussion under the heading "Litigation and Other Legal Proceedings" in the footnotes to our consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

ITEM 1A.  RISK FACTORS.

CNO and its businesses are subject to a number of risks including general business and financial risk factors.  Any or all of such factors could have a material adverse effect on the business, financial condition or results of operations of CNO.  Refer to "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2013, for further discussion of such risk factors.  There have been no material changes from such previously disclosed risk factors.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Issuer Purchases of Equity Securities

Period	Total number of shares (or units)	Average price paid per share (or unit)		Total number of shares (or units) purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (a)
					(dollars in millions)
April 1 through April 30	1,773,127	$	17.58	1,773,127	$	325.2
May 1 through May 31	2,108,666	16.34		2,108,279	290.8
June 1 through June 30	1,754,658	17.12		1,751,858	260.8
Total	5,636,451	16.97		5,633,264	260.8

_________________

(a) In May 2011, the Company announced a securities repurchase program of up to $100.0 million. In February 2012, June 2012, December 2012 and December 2013, the Company's Board of Directors approved, in aggregate, an additional $800.0 million to repurchase the Company's outstanding securities.

110

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

___________________

ITEM 6. EXHIBITS.

12.1	Computation of Ratio of Earnings to Fixed Charges.
31.1	Certification Pursuant to the Securities Exchange Act Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification Pursuant to the Securities Exchange Act Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

111

SIGNATURE

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 thereunto duly authorized.

CNO FINANCIAL GROUP, INC.

Dated:  August 5, 2014

By:	/s/ Frederick J. Crawford
	Frederick J. Crawford
	Executive Vice President and Chief Financial Officer
	(authorized officer and principal financial officer)

112

EX-12.1

Exhibit 12.1

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Computation of Ratio of Earnings to Fixed Charges

(Dollars in millions)

	Six months
	ended			Year ended
	June 30, 2014			December 31, 2013
Pretax income (loss) from operations:
Net income (loss)	$	(149.9	)	$	478.0
Add income tax expense (benefit)	94.7			(173.2		)
Pretax income (loss) from operations	(55.2		)	304.8
Add fixed charges:
Interest expense on corporate debt	22.2			51.3
Interest expense on investment borrowings and borrowings related to variable interest entities	26.7			54.0
Interest added to policyholder account balances	54.0			232.5
Portion of rental (a)	6.8			13.3
Fixed charges	109.7			351.1
Adjusted earnings	$	54.5		$	655.9
Ratio of earnings to fixed charges	(b)			1.87X

____________________

(a) Interest portion of rental is estimated to be 33 percent.

(b) For such ratio, earnings were $55.2 million less than fixed charges.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Edward J. Bonach, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CNO Financial Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 5, 2014

/s/ Edward J. Bonach

Edward J. Bonach

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Frederick J. Crawford, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CNO Financial Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 5, 2014

/s/ Frederick J. Crawford

Frederick J. Crawford

Executive Vice President

and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CNO Financial Group, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Edward J. Bonach, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my actual knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Edward J. Bonach

Edward J. Bonach

Chief Executive Officer

August 5, 2014

A signed original of this written statement required by Section 906 has been provided to CNO Financial Group, Inc. and will be retained by CNO Financial Group, Inc. and furnished to the Securities and Exchange Commission upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CNO Financial Group, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frederick J. Crawford, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my actual knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Frederick J. Crawford

Frederick J. Crawford

Executive Vice President

and Chief Financial Officer

August 5, 2014

A signed original of this written statement required by Section 906 has been provided to CNO Financial Group, Inc. and will be retained by CNO Financial Group, Inc. and furnished to the Securities and Exchange Commission upon request.

XML

INVESTMENTS IN VARIABLE INTEREST ENTITIES (TABLES)

6 Months Ended

Jun. 30, 2014

Investments in Variable Interest Entities [Abstract]

Schedule of impact on balance sheet of consolidating variable interest entities

The following table provides supplemental information about the assets and liabilities of the VIEs which have been consolidated in accordance with authoritative guidance (dollars in millions):

	June 30, 2014
	VIEs		Eliminations			Net effect on consolidated balance sheet
Assets:
Investments held by variable interest entities	$	1,241.1	$	—		$	1,241.1
Notes receivable of VIEs held by insurance subsidiaries	—		(116.0		)	(116.0		)
Cash and cash equivalents held by variable interest entities	101.8		—			101.8
Accrued investment income	2.5		—			2.5
Income tax assets, net	6.8		(2.2		)	4.6
Other assets	14.2		(.9		)	13.3
Total assets	$	1,366.4	$	(119.1	)	$	1,247.3
Liabilities:
Other liabilities	$	148.2	$	(3.2	)	$	145.0
Borrowings related to variable interest entities	1,110.8		—			1,110.8
Notes payable of VIEs held by insurance subsidiaries	120.1		(120.1		)	—
Total liabilities	$	1,379.1	$	(123.3	)	$	1,255.8

	December 31, 2013
	VIEs		Eliminations			Net effect on consolidated balance sheet
Assets:
Investments held by variable interest entities	$	1,046.7	$	—		$	1,046.7
Notes receivable of VIEs held by insurance subsidiaries	—		(108.5		)	(108.5		)
Cash and cash equivalents held by variable interest entities	104.3		—			104.3
Accrued investment income	1.9		—			1.9
Income tax assets, net	5.4		(2.5		)	2.9
Other assets	22.6		(.9		)	21.7
Total assets	$	1,180.9	$	(111.9	)	$	1,069.0
Liabilities:
Other liabilities	$	66.0	$	(4.0	)	$	62.0
Borrowings related to variable interest entities	1,012.3		—			1,012.3
Notes payable of VIEs held by insurance subsidiaries	112.5		(112.5		)	—
Total liabilities	$	1,190.8	$	(116.5	)	$	1,074.3

Summary of variable interest entities by contractual maturity

The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at June 30, 2014, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

	Amortized cost		Estimated fair value
	(Dollars in millions)
Due in one year or less	$	2.8	$	2.8
Due after one year through five years	353.8		354.1
Due after five years through ten years	884.9		884.2
Total	$	1,241.5	$	1,241.1

XML

BUSINESS SEGMENTS (DETAILS) (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Revenues:
Fee revenue and other income	$ 7.0		$ 6.4		$ 13.4		$ 12.9
Total revenues	969.7		961.4		1,920.3		1,969.2
Benefits and expenses:
Insurance policy benefits	691.1		673.2		1,381.4		1,427.3
Other operating costs and expenses	201.5		179.8		395.6		369.4
Total expenses	872.8		863.2		1,731.4		1,799.7
Pre-tax operating earnings	96.9		98.2		188.9		169.5
Gain related to reinsurance transaction	(3.8)		0		(3.8)		0
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Total segment revenues	969.7		961.4		1,920.3		1,969.2
Net realized investment gains	11.7		1.6		33.0		14.8
Revenues related to certain non-strategic investments and earnings attributable to VIEs	7.3		8.2		13.6		15.1
Revenues of CLIC being sold	104.3		110.3		210.8		225.0
Total revenues	1,093.0		1,081.5		2,177.7		2,224.1
Insurance policy benefits - fair value changes in embedded derivative liabilities	10.1		(29.0)		25.3		(32.1)
Amortization related to fair value changes in embedded derivative liabilities	(2.7)		10.5		(6.9)		11.5
Amortization related to net realized investment gains	0.1		0.4		0.5		1.2
Expenses related to certain non-strategic investments and earnings attributable to VIEs	10.2		11.1		19.8		19.9
Loss on extinguishment or modification of debt	0.6		7.7		0.6		65.4
Loss on sale of subsidiary	0		0		278.6		0
Expenses of CLIC being sold	91.3		102.9		187.4		209.2
Total benefits and expenses	978.6		966.8		2,232.9		2,074.8
Income (loss) before income taxes	114.4		114.7		(55.2)		149.3
Tax expense on period income	40.3		42.6		79.3		75.8
Valuation allowance for deferred taxes and other tax items	(4.0)		(5.0)		15.4		(15.5)
Net income (loss)	78.1		77.1		(149.9)		89.0
Bankers Life
Revenues:
Annuities	7.7		8.6		15.2		16.5
Health	320.5		334.1		651.0		666.7
Life	79.9		76.4		158.2		153.9
Net investment income (loss)	247.6	[1]	226.6	[1]	472.0	[1]	488.3	[1]
Fee revenue and other income	5.8	[1]	4.0	[1]	11.1	[1]	7.7	[1]
Total revenues	661.5		649.7		1,307.5		1,333.1
Benefits and expenses:
Insurance policy benefits	427.9		434.1		842.9		904.6
Amortization	45.4		45.7		93.6		100.2
Interest expense on investment borrowings	1.9		1.7		3.8		3.1
Other operating costs and expenses	98.9		89.1		195.6		184.0
Total expenses	574.1		570.6		1,135.9		1,191.9
Pre-tax operating earnings	87.4		79.1		171.6		141.2
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Total segment revenues	661.5		649.7		1,307.5		1,333.1
Washington National
Revenues:
Annuities	1.4		1.7		2.4		3.2
Health	148.8		145.8		297.7		291.2
Life	6.5		5.6		12.2		11.6
Net investment income (loss)	71.8	[1]	69.8	[1]	140.8	[1]	147.7	[1]
Fee revenue and other income	0.2	[1]	0.2	[1]	0.4	[1]	0.4	[1]
Total revenues	228.7		223.1		453.5		454.1
Benefits and expenses:
Insurance policy benefits	132.8		130.3		264.6		268.0
Amortization	16.0		16.2		32.3		33.3
Interest expense on investment borrowings	0.5		0.5		0.9		1.0
Other operating costs and expenses	47.1		40.3		92.3		82.0
Total expenses	196.4		187.3		390.1		384.3
Pre-tax operating earnings	32.3		35.8		63.4		69.8
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Total segment revenues	228.7		223.1		453.5		454.1
Colonial Penn
Revenues:
Health	0.9		1.1		1.9		2.2
Life	60.8		56.9		120.3		112.7
Net investment income (loss)	10.5	[1]	9.9	[1]	21.2	[1]	19.8	[1]
Fee revenue and other income	0.3	[1]	0.2	[1]	0.5	[1]	0.4	[1]
Total revenues	72.5		68.1		143.9		135.1
Benefits and expenses:
Insurance policy benefits	43.2		41.2		87.9		84.2
Amortization	3.8		3.7		7.8		7.4
Other operating costs and expenses	21.7		22.0		50.6		47.7
Total expenses	68.7		66.9		146.3		139.3
Pre-tax operating earnings	3.8		1.2		(2.4)		(4.2)
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Total segment revenues	72.5		68.1		143.9		135.1
Other CNO Business
Revenues:
Health	0		6.1		0		12.3
Net investment income (loss)	0	[1]	8.4	[1]	0	[1]	16.8	[1]
Total revenues	0		14.5		0		29.1
Benefits and expenses:
Insurance policy benefits	0		15.3		0		30.9
Other operating costs and expenses	0		6.4		0		12.7
Total expenses	0		21.7		0		43.6
Pre-tax operating earnings	0		(7.2)		0		(14.5)
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Total segment revenues	0		14.5		0		29.1
Corporate operations
Revenues:
Net investment income (loss)	5.7		4.5		12.7		14.6
Fee revenue and other income	1.3		1.5		2.7		3.2
Total revenues	7.0		6.0		15.4		17.8
Benefits and expenses:
Interest expense on investment borrowings	0		0		0		0.1
Interest expense on corporate debt	11.1		13.1		22.2		28.2
Other operating costs and expenses	22.5		3.6		36.9		12.3
Total expenses	33.6		16.7		59.1		40.6
Pre-tax operating earnings	(26.6)		(10.7)		(43.7)		(22.8)
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Total segment revenues	$ 7.0		$ 6.0		$ 15.4		$ 17.8

[1] It is not practicable to provide additional components of revenue by product or services.

XML

INVESTMENTS - SUMMARY OF INVESTMENTS BY CONTRACTUAL MATURITY (DETAILS) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Amortized Cost
Due in one year or less	$ 164.7
Due after one year through five years	1,762.1
Due after five years through ten years	2,906.4
Due after ten years	9,478.1
Subtotal	14,311.3
Structured securities	4,072.5
Total fixed maturities, available for sale	18,383.8	21,860.6
Estimated Fair Value
Due in one year or less	169.5
Due after one year through five years	1,957.6
Due after five years through ten years	3,192.2
Due after ten years	10,873.3
Subtotal	16,192.6
Structured securities	4,341.0
Total fixed maturities, available for sale	$ 20,533.6	$ 23,178.3

XML

ASSETS AND LIABILITIES SUBJECT TO OFFSETTING DISCLOSURE REQUIREMENTS (Details) (Call option, USD $) In Millions, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Offsetting Assets [Line Items]
Gross amounts of recognized assets	$ 130.7	[1]	$ 156.2
Derivative Asset, Collateral, Obligation to Return Cash, Offset	0	[1]	0
Derivative Asset	130.7	[1]	156.2
Gross amounts not offset in the balance sheet, financial instruments	0	[1]	0
Gross amounts not offset in the balance sheet, cash collateral received	0	[1]	0
Derivative Asset, Fair Value, Amount Offset Against Collateral	130.7	[1]	156.2
Assets of CLIC being sold
Offsetting Assets [Line Items]
Gross amounts of recognized assets	$ 4.3	[1]

[1] Includes $4.3 million classified as "Assets of subsidiary being sold".

XML

ACCOUNTING FOR DERIVATIVES (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Derivative [Line Items]
Gain (Loss) on Reinsurance Transaction	$ 3.8	$ 0	$ 3.8	$ 0
Fixed maturity securities that contain embedded derivatives classified as trading securities	221.1		221.1		180.6
Assets of CLIC being sold
Derivative [Line Items]
Fixed maturity securities that contain embedded derivatives classified as trading securities	24.3		24.3
Equity swap
Derivative [Line Items]
Estimated fair value	130.7		130.7		156.2
Equity swap | Investment income
Derivative [Line Items]
Increase (decrease) in earnings due to sale of trading portfolio			36.7	75.9
Equity swap | Assets of CLIC being sold
Derivative [Line Items]
Estimated fair value	4.3		4.3
Embedded derivative financial instruments
Derivative [Line Items]
Increase (decrease) in earnings due to sale of trading portfolio	7.4	18.5	18.4	20.6
Fair value of derivatives	$ 980.3		$ 980.3		$ 903.7

XML

FAIR VALUE MEASUREMENTS - RECURRING BASIS (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents - unrestricted	$ 378.8		$ 699.0		$ 280.0	$ 582.5
Cash and cash equivalents held by variable interest entities	101.8		104.3
Fair value, measurements, recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans	1,595.9		1,729.5
Policy loans	99.7		277.0
Company-owned life insurance	149.4		144.8
Alternative investment funds	86.6		67.6
Cash and cash equivalents - unrestricted	378.8		699.0
Cash and cash equivalents held by variable interest entities	101.8		104.3
Assets of subsidiary being sold	503.8
Policyholder account balances	10,649.7	[1]	12,776.4	[1]
Investment borrowings	1,507.6		1,900.0
Borrowings related to variable interest entities	1,110.8		1,012.3
Notes payable – direct corporate obligations	827.3		856.4
Liabilities of subsidiary being sold	2,453.4
Fair value, measurements, recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans	0		0
Policy loans	0		0
Company-owned life insurance	0		0
Alternative investment funds	0		0
Cash and cash equivalents - unrestricted	167.8		457.8
Cash and cash equivalents held by variable interest entities	101.8		104.3
Assets of subsidiary being sold	164.7
Policyholder account balances	0	[1]	0	[1]
Investment borrowings	0		0
Borrowings related to variable interest entities	0		0
Notes payable – direct corporate obligations	0		0
Liabilities of subsidiary being sold	0
Fair value, measurements, recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans	0		0
Policy loans	0		0
Company-owned life insurance	149.4		144.8
Alternative investment funds	86.6		67.6
Cash and cash equivalents - unrestricted	211.0		241.2
Cash and cash equivalents held by variable interest entities	0		0
Assets of subsidiary being sold	0
Policyholder account balances	0	[1]	0	[1]
Investment borrowings	1,507.0		1,948.5
Borrowings related to variable interest entities	955.9		993.7
Notes payable – direct corporate obligations	852.4		872.5
Liabilities of subsidiary being sold	412.9
Fair value, measurements, recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans	1,647.1		1,749.5
Policy loans	99.7		277.0
Company-owned life insurance	0		0
Alternative investment funds	0		0
Cash and cash equivalents - unrestricted	0		0
Cash and cash equivalents held by variable interest entities	0		0
Assets of subsidiary being sold	351.0
Policyholder account balances	10,649.7	[1]	12,776.4	[1]
Investment borrowings	0		0
Borrowings related to variable interest entities	0		0
Notes payable – direct corporate obligations	0		0
Liabilities of subsidiary being sold	2,070.0
Fair value, measurements, recurring | Estimate of fair value measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage loans	1,647.1		1,749.5
Policy loans	99.7		277.0
Company-owned life insurance	149.4		144.8
Alternative investment funds	86.6		67.6
Cash and cash equivalents - unrestricted	378.8		699.0
Cash and cash equivalents held by variable interest entities	101.8		104.3
Assets of subsidiary being sold	515.7
Policyholder account balances	10,649.7	[1]	12,776.4	[1]
Investment borrowings	1,507.0		1,948.5
Borrowings related to variable interest entities	955.9		993.7
Notes payable – direct corporate obligations	852.4		872.5
Liabilities of subsidiary being sold	$ 2,482.9

[1] The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value at June 30, 2014 and December 31, 2013. This was because interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year.

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INVESTMENTS - SCHEDULE OF UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS INCLUDED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (DETAILS) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014		Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized	$ 8.5		$ 6.5
Net unrealized gains on all other investments	2,157.8		1,322.6
Adjustment to present value of future profits	(157.6)	[1]	(47.7)	[1]
Adjustment to deferred acquisition costs	(395.5)		(137.0)
Adjustment to insurance liabilities	(168.1)		0
Unrecognized net loss related to deferred compensation plan	(6.4)		(7.1)
Deferred income tax liabilities	(512.6)		(405.5)
Accumulated other comprehensive income	$ 926.1		$ 731.8

[1] The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003 (the date Conseco, Inc., an Indiana corporation (our "Predecessor"), emerged from bankruptcy.

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INCOME TAXES (TABLES)

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Schedule of components of income tax expense

The components of income tax expense are as follows (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Current tax expense	$	3.9		$	2.7		$	6.1		$	5.4
Deferred tax expense	36.4			40.8			73.2			71.8
Income tax expense calculated based on estimated annual effective tax rate	40.3			43.5			79.3			77.2
Income tax expense (benefit) on discrete items:
Related to the sale of CLIC:
Tax expense related to tax gain on sale	8.4			—			21.6			—
Previously unrecognized tax benefit recognized as a result of the gain	—			—			(7.4		)	—
Valuation allowance release related to the gain	(8.4		)	—			(14.2		)	—
Valuation allowance increase related to the decrease in projected future taxable income	—			—			19.4			—
Valuation allowance reduction resulting from the realization of capital gains and utilization of loss carryforwards	(4.0		)	(5.0		)	(4.0		)	(15.5		)
Deferred tax benefit related to loss on extinguishment or modification of debt	—			(.9		)	—			(1.4		)
Total income tax expense	$	36.3		$	37.6		$	94.7		$	60.3

Schedule of effective income tax rate reconciliation

A reconciliation of the U.S. statutory corporate tax rate to the estimated annual effective rate, before discrete items, reflected in the consolidated statement of operations is as follows:

	Six months ended
	June 30,
	2014		2013
U.S. statutory corporate rate	35.0	%	35.0	%
Non-taxable income and nondeductible benefits, net	(1.0	)	(.5	)
State taxes	1.5		1.4
Estimated annual effective tax rate	35.5	%	35.9	%

Schedule of deferred tax assets and liabilities

The components of the Company's income tax assets and liabilities are summarized below (dollars in millions):

	June 30, 2014			December 31, 2013
Deferred tax assets:
Net federal operating loss carryforwards	$	1,141.8		$	1,240.2
Net state operating loss carryforwards	18.4			20.0
Tax credits	40.6			43.9
Capital loss carryforwards	.6			13.4
Deductible temporary differences:
Investments	68.2			74.3
Insurance liabilities	622.2			723.8
Other	(1.7		)	64.7
Gross deferred tax assets	1,890.1			2,180.3
Deferred tax liabilities:
Present value of future profits and deferred acquisition costs	(318.1		)	(306.8		)
Accumulated other comprehensive income	(512.6		)	(405.5		)
Gross deferred tax liabilities	(830.7		)	(712.3		)
Net deferred tax assets before valuation allowance	1,059.4			1,468.0
Valuation allowance	(296.0		)	(294.8		)
Net deferred tax assets	763.4			1,173.2
Current income taxes accrued	(32.9		)	(26.0		)
Income tax assets, net	$	730.5		$	1,147.2

Summary of operating loss carryforwards

As of June 30, 2014, we had $3.3 billion of federal NOLs and $1.8 million of capital loss carryforwards. The following table summarizes the expiration dates of our loss carryforwards assuming the IRS ultimately agrees with the position we have taken with respect to the loss on our investment in CSHI (dollars in millions):

Year of expiration	Net operating loss carryforwards						Capital loss		Total loss
	Life			Non-life			carryforwards		carryforwards
2018	$	120.6		$	—		$	—	$	120.6
2021	30.0			—			—		30.0
2022	152.0			—			—		152.0
2023	742.6			2,126.1			—		2,868.7
2025	—			115.3			—		115.3
2027	—			202.6			—		202.6
2028	—			.5			—		.5
2029	—			272.3			—		272.3
2032	—			44.0			—		44.0
Subtotal	1,045.2			2,760.8			—		3,806.0
Less:
Unrecognized tax benefits	(344.7		)	(199.0		)	1.8		(541.9		)
Total	$	700.5		$	2,561.8		$	1.8	$	3,264.1

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FAIR VALUE MEASUREMENTS - BALANCE SHEET RECURRING (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	$ (934.2)		$ (799.4)		$ (905.5)		$ (739.5)
Purchases, sales, issuances and settlements, net	(35.3)	[1]	(30.2)	[2]	(48.0)	[1],[3]	(92.9)	[4]
Total realized and unrealized gains (losses) included in net income	(10.8)		30.7		(26.8)		33.5
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	0		0		0		0
Transfers into level 3	0	[5]	0	[5]	0	[5]	0	[5]
Transfers out of level 3	0	[5]	0	[5]	0	[5]	0	[5]
Amounts classified as Assets of subsidiary being sold					0
Fair value, measurement with unobservable inputs reconciliation, ending balance	(980.3)		(798.9)		(980.3)		(798.9)
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	(10.8)		30.7		(26.8)		33.5
Available-for-sale securities | Corporate debt securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Purchases, sales, issuances and settlements, net	47.7		2.2		41.2		63.6
Available-for-sale securities | Corporate debt securities | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	336.8		356.3		359.6		355.5
Purchases, sales, issuances and settlements, net	47.7	[1]	2.2	[2]	41.2	[1],[3]	63.6	[4]
Total realized and unrealized gains (losses) included in net income	0		(0.3)		0		(0.3)
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	4.0		(9.6)		13.4		(13.4)
Transfers into level 3	16.3	[5]	44.5	[5]	26.8	[5]	0	[5]
Transfers out of level 3	(15.0)	[5]	0	[5]	0	[5]	(12.3)	[5]
Amounts classified as Assets of subsidiary being sold					(51.2)
Fair value, measurement with unobservable inputs reconciliation, ending balance	389.8		393.1		389.8		393.1
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	0		0		0		0
Available-for-sale securities | US states and political subdivisions debt securities | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	0		15.0		0		13.1
Purchases, sales, issuances and settlements, net	0	[1]	0	[2]	0	[3]	0	[4]
Total realized and unrealized gains (losses) included in net income	0		0		0		0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	0.7		0		2.0		0
Transfers into level 3	28.0	[5]	0	[5]	28.9	[5]	0	[5]
Transfers out of level 3	0	[5]	(15.0)	[5]	0	[5]	(13.1)	[5]
Amounts classified as Assets of subsidiary being sold					(2.2)
Fair value, measurement with unobservable inputs reconciliation, ending balance	28.7		0		28.7		0
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	0		0		0		0
Available-for-sale securities | Asset-backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Purchases, sales, issuances and settlements, net	(0.5)		(0.2)		9.0		7.2
Available-for-sale securities | Asset-backed securities | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	42.2		46.6		42.2		44.0
Purchases, sales, issuances and settlements, net	(0.5)	[1]	(0.2)	[2]	9.0	[1],[3]	7.2	[4]
Total realized and unrealized gains (losses) included in net income	0		0		0		0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	1.1		(2.5)		3.3		(3.3)
Transfers into level 3	9.9	[5]	2.0	[5]	7.9	[5]	2.0	[5]
Transfers out of level 3	0	[5]	(0.5)	[5]	0	[5]	(4.5)	[5]
Amounts classified as Assets of subsidiary being sold					(9.7)
Fair value, measurement with unobservable inputs reconciliation, ending balance	52.7		45.4		52.7		45.4
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	0		0		0		0
Available-for-sale securities | Collateralized debt obligations
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Purchases, sales, issuances and settlements, net	(0.1)		(33.7)		(4.4)		(42.0)
Available-for-sale securities | Collateralized debt obligations | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	14.1		309.7		246.7		324.0
Purchases, sales, issuances and settlements, net	(0.1)	[1]	(33.7)	[2]	(4.4)	[1],[3]	(42.0)	[4]
Total realized and unrealized gains (losses) included in net income	0		(0.1)		0		0.1
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	0.2		0.9		0		5.5
Transfers into level 3	0	[5]	10.8	[5]	12.6	[5]	0	[5]
Transfers out of level 3	0	[5]	0	[5]	(240.7)	[5]	0	[5]
Amounts classified as Assets of subsidiary being sold					0
Fair value, measurement with unobservable inputs reconciliation, ending balance	14.2		287.6		14.2		287.6
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	0		0		0		0
Available-for-sale securities | Commercial mortgage backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Purchases, sales, issuances and settlements, net			(0.5)				(0.7)
Available-for-sale securities | Commercial mortgage backed securities | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance			3.8				6.2
Purchases, sales, issuances and settlements, net			(0.5)	[2]			(0.7)	[4]
Total realized and unrealized gains (losses) included in net income			0				0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			0				0.1
Transfers into level 3			0	[5]			0	[5]
Transfers out of level 3			0	[5]			(2.3)	[5]
Fair value, measurement with unobservable inputs reconciliation, ending balance			3.3				3.3
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date			0				0
Available-for-sale securities | Mortgage pass through securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Purchases, sales, issuances and settlements, net	0.9				(0.3)		(0.1)
Available-for-sale securities | Mortgage pass through securities | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	0.4		1.8		1.6		1.9
Purchases, sales, issuances and settlements, net	0.9	[1]	0	[2]	(0.3)	[1],[3]	(0.1)	[4]
Total realized and unrealized gains (losses) included in net income	0		0		0		0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	0		0		0		0
Transfers into level 3	0	[5]	0	[5]	0	[5]	0	[5]
Transfers out of level 3	0	[5]	0	[5]	0	[5]	0	[5]
Amounts classified as Assets of subsidiary being sold					0
Fair value, measurement with unobservable inputs reconciliation, ending balance	1.3		1.8		1.3		1.8
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	0		0		0		0
Available-for-sale securities | Collateralized mortgage obligations
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Purchases, sales, issuances and settlements, net							(0.1)
Available-for-sale securities | Collateralized mortgage obligations | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	0		36.6		0		16.9
Purchases, sales, issuances and settlements, net	0	[1]	0	[2]	0	[3]	(0.1)	[4]
Total realized and unrealized gains (losses) included in net income	0		0		0		0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	(0.1)		0		0		0
Transfers into level 3	0.2	[5]	0	[5]	0.1	[5]	0	[5]
Transfers out of level 3	0	[5]	(36.5)	[5]	0	[5]	(16.7)	[5]
Amounts classified as Assets of subsidiary being sold					0
Fair value, measurement with unobservable inputs reconciliation, ending balance	0.1		0.1		0.1		0.1
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	0		0		0		0
Available-for-sale securities | Total fixed maturities, available for sale
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Purchases, sales, issuances and settlements, net	48.0		(32.2)		45.5		27.9
Available-for-sale securities | Total fixed maturities, available for sale | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	393.5		769.8		650.1		761.6
Purchases, sales, issuances and settlements, net	48.0	[1]	(32.2)	[2]	45.5	[1],[3]	27.9	[4]
Total realized and unrealized gains (losses) included in net income	0		(0.4)		0		(0.2)
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	5.9		(11.2)		18.7		(11.1)
Transfers into level 3	54.4	[5]	57.3	[5]	76.3	[5]	2.0	[5]
Transfers out of level 3	(15.0)	[5]	(52.0)	[5]	(240.7)	[5]	(48.9)	[5]
Amounts classified as Assets of subsidiary being sold					(63.1)
Fair value, measurement with unobservable inputs reconciliation, ending balance	486.8		731.3		486.8		731.3
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	0		0		0		0
Equity securities classification | Corporate debt securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance			0.1				0.1
Purchases, sales, issuances and settlements, net	0.8		0	[2]	1.7		0	[4]
Total realized and unrealized gains (losses) included in net income			0				0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			0				0
Transfers into level 3			0	[5]			0	[5]
Transfers out of level 3			0	[5]			0	[5]
Fair value, measurement with unobservable inputs reconciliation, ending balance			0.1				0.1
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date			0				0
Equity securities classification | Corporate debt securities | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	25.4				24.5
Purchases, sales, issuances and settlements, net	0.8	[1]			1.7	[1],[3]
Total realized and unrealized gains (losses) included in net income	0				0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	0				0
Transfers into level 3	0	[5]			0	[5]
Transfers out of level 3	0	[5]			0	[5]
Amounts classified as Assets of subsidiary being sold					0
Fair value, measurement with unobservable inputs reconciliation, ending balance	26.2				26.2
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	0				0
Equity securities classification | Venture capital funds
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance			3.1				2.8
Purchases, sales, issuances and settlements, net			0	[2]			0	[4]
Total realized and unrealized gains (losses) included in net income			0				0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			0				0.3
Transfers into level 3			0	[5]			0	[5]
Transfers out of level 3			0	[5]			0	[5]
Fair value, measurement with unobservable inputs reconciliation, ending balance			3.1				3.1
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date			0				0
Equity securities classification | Equity securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance			3.2				2.9
Purchases, sales, issuances and settlements, net			0	[2]			0	[4]
Total realized and unrealized gains (losses) included in net income			0				0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			0				0.3
Transfers into level 3			0	[5]			0	[5]
Transfers out of level 3			0	[5]			0	[5]
Fair value, measurement with unobservable inputs reconciliation, ending balance			3.2				3.2
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date			0				0
Trading securities | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance			6.3				13.7
Purchases, sales, issuances and settlements, net			0	[2]			(7.7)	[4]
Total realized and unrealized gains (losses) included in net income			0				0.6
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			(0.1)				(0.5)
Transfers into level 3			4.8	[5]			4.9	[5]
Transfers out of level 3			(0.6)	[5]			(0.6)	[5]
Fair value, measurement with unobservable inputs reconciliation, ending balance			10.4				10.4
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date			0				0
Trading securities | Collateralized debt obligations
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Purchases, sales, issuances and settlements, net							(7.7)
Collateralized mortgage obligations | Trading securities | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	5.9		5.7		0		5.8
Purchases, sales, issuances and settlements, net	0	[1]	0	[2]	0	[1],[3]	0	[4]
Total realized and unrealized gains (losses) included in net income	0		0		0		0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	0		(0.1)		0.1		(0.3)
Transfers into level 3	0	[5]	4.8	[5]	5.8	[5]	4.9	[5]
Transfers out of level 3	0	[5]	0	[5]	0	[5]	0	[5]
Amounts classified as Assets of subsidiary being sold					0
Fair value, measurement with unobservable inputs reconciliation, ending balance	5.9		10.4		5.9		10.4
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	0		0		0.1		0
Collateralized debt obligations | Trading securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance							7.3
Purchases, sales, issuances and settlements, net							(7.7)	[4]
Total realized and unrealized gains (losses) included in net income							0.6
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)							(0.2)
Transfers into level 3							0	[5]
Transfers out of level 3							0	[5]
Fair value, measurement with unobservable inputs reconciliation, ending balance			0				0
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date							0
US states and political subdivisions debt securities | Trading securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance			0.6				0.6
Purchases, sales, issuances and settlements, net			0	[2]			0	[4]
Total realized and unrealized gains (losses) included in net income			0				0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			0				0
Transfers into level 3			0	[5]			0	[5]
Transfers out of level 3			(0.6)	[5]			(0.6)	[5]
Fair value, measurement with unobservable inputs reconciliation, ending balance			0				0
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date			0				0
Interest sensitive products
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	(930.8)		(794.3)		(903.7)		(734.0)
Purchases, sales, issuances and settlements, net	(38.7)	[1]	(32.7)	[2]	(49.8)	[1],[3]	(95.8)	[4]
Total realized and unrealized gains (losses) included in net income	(10.8)		30.7		(26.8)		33.5
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	0		0		0		0
Transfers into level 3	0	[5]	0	[5]	0	[5]	0	[5]
Transfers out of level 3	0	[5]	0	[5]	0	[5]	0	[5]
Amounts classified as Assets of subsidiary being sold					0
Fair value, measurement with unobservable inputs reconciliation, ending balance	(980.3)		(796.3)		(980.3)		(796.3)
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	(10.8)		30.7		(26.8)		33.5
Interest sensitive products modified coinsurance agreement
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance	(3.4)		(5.1)		(1.8)		(5.5)
Purchases, sales, issuances and settlements, net	3.4	[1]	2.5	[2]	1.8	[1],[3]	2.9	[4]
Total realized and unrealized gains (losses) included in net income	0		0		0		0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)	0		0		0		0
Transfers into level 3	0	[5]	0	[5]	0	[5]	0	[5]
Transfers out of level 3	0	[5]	0	[5]	0	[5]	0	[5]
Amounts classified as Assets of subsidiary being sold					0
Fair value, measurement with unobservable inputs reconciliation, ending balance	0		(2.6)		0		(2.6)
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date	0		0		0		0
Assets of CLIC being sold | Fair value, measurements, recurring | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, measurement with unobservable inputs reconciliation, beginning balance					0
Purchases, sales, issuances and settlements, net					0	[3]
Total realized and unrealized gains (losses) included in net income					0
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)					0
Transfers into level 3					0	[5]
Transfers out of level 3					0	[5]
Amounts classified as Assets of subsidiary being sold					63.1
Fair value, measurement with unobservable inputs reconciliation, ending balance	63.1				63.1
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Amount of total gains (losses) for the year ended December 31 included in our net income relating to assets and liabilities still held as of the reporting date					$ 0

[1] Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended June 30, 2014 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, netAssets: Fixed maturities, available for sale: Corporate securities$51.0 $(3.3) $— $— $47.7Asset-backed securities— (.5) — — (.5)Collateralized debt obligations— (.1) — — (.1)Mortgage pass-through securities1.1 (.2) — — .9Total fixed maturities, available for sale52.1 (4.1) — — 48.0Equity securities - corporate securities.8 — — — .8Liabilities: Liabilities for insurance products: Interest-sensitive products - embedded derivatives associated with fixed index annuity products(31.1) .5 (22.5) 14.4 (38.7)Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement— 3.4 — — 3.4Total liabilities for insurance products(31.1) 3.9 (22.5) 14.4 (35.3)

[2] Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended June 30, 2013 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, netAssets: Fixed maturities, available for sale: Corporate securities$10.0 $(7.8) $— $— $2.2Asset-backed securities— (.2) — — (.2)Collateralized debt obligations— (33.7) — — (33.7)Commercial mortgage-backed securities— (.5) — — (.5)Total fixed maturities, available for sale10.0 (42.2) — — (32.2)Liabilities: Liabilities for insurance products: Interest-sensitive products - embedded derivatives associated with fixed index annuity products(27.7) — (14.0) 9.0 (32.7)Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement— 2.5 — — 2.5Total liabilities for insurance products(27.7) 2.5 (14.0) 9.0 (30.2)

[3] Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the six months ended June 30, 2014 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, netAssets: Fixed maturities, available for sale: Corporate securities$51.0 $(9.8) $— $— $41.2Asset-backed securities9.9 (.9) — — 9.0Collateralized debt obligations.9 (5.3) — — (4.4)Mortgage pass-through securities1.1 (1.4) — — (.3)Total fixed maturities, available for sale62.9 (17.4) — — 45.5Equity securities - corporate securities1.7 — — — 1.7Liabilities: Liabilities for insurance products: Interest-sensitive products - embedded derivatives associated with fixed index annuity products(57.7) 3.6 (24.6) 28.9 (49.8)Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement— 3.4 (1.6) — 1.8Total liabilities for insurance products(57.7) 7.0 (26.2) 28.9 (48.0)

[4] Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the six months ended June 30, 2013 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, netAssets: Fixed maturities, available for sale: Corporate securities$71.5 $(7.9) $— $— $63.6Asset-backed securities7.6 (.4) — — 7.2Collateralized debt obligations13.3 (55.3) — — (42.0)Commercial mortgage-backed securities— (.7) — — (.7)Mortgage pass-through securities— (.1) — — (.1)Collateralized mortgage obligations— (.1) — — (.1)Total fixed maturities, available for sale92.4 (64.5) — — 27.9Trading securities - collateralized debt obligations— (7.7) — — (7.7)Liabilities: Liabilities for insurance products: Interest-sensitive products - embedded derivatives associated with fixed index annuity products(52.8) 1.4 (64.2) 19.8 (95.8)Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement— 2.9 — — 2.9Total liabilities for insurance products(52.8) 4.3 (64.2) 19.8 (92.9)

[5] Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

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CONSOLIDATED STATEMENT CASH FLOWS (DETAILS) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014		Jun. 30, 2013
Cash flows from operating activities:
Net income (loss)	$ 78.1	$ 77.1	$ (149.9)		$ 89.0
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization and depreciation			146.2		172.6
Income taxes			92.7		57.4
Insurance liabilities			155.2		205.3
Accrual and amortization of investment income			(77.5)		(125.0)
Deferral of policy acquisition costs			(116.9)		(107.2)
Net realized investment gains			(35.8)		(18.5)
Payment to reinsurer pursuant to long-term care business reinsured			(590.3)		0
Loss on sale of subsidiary	0	0	278.6		0
Gain related to reinsurance transaction	(3.8)	0	(3.8)		0
Loss on extinguishment or modification of debt	0.6	7.7	0.6		65.4
Other			(14.0)		(49.1)
Net cash from operating activities			(314.9)	[1]	289.9
Other Noncash Investing and Financing Items [Abstract]
Stock options, restricted stock and performance units			$ 8.1		$ 7.2

[1] Cash flows from operating activities reflect outflows in the 2014 period due to the payment to reinsurer to transfer certain long-term care business.

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INCOME TAXES INCOME TAXES - COMPONENTS OF TAX EXPENSE (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Tax Disclosure [Abstract]
Current tax expense	$ 3.9	$ 2.7	$ 6.1	$ 5.4
Deferred tax expense	36.4	40.8	73.2	71.8
Income tax expense calculated based on estimated annual effective tax rate	40.3	43.5	79.3	77.2
Tax expense related to tax gain on sale	8.4	0	21.6	0
Previously unrecognized tax benefit now recognized as a result of the gain	0	0	(7.4)	0
Valuation allowance related to the gain	(8.4)	0	(14.2)	0
Valuation allowance increase related to the decrease in projected future taxable income	0	0	19.4	0
Valuation allowance reduction resulting from the realization of capital gains and utilization of loss carryforwards	(4.0)	(5.0)	(4.0)	(15.5)
Deferred tax benefit related to loss on extinguishment or modification of debt	0	(0.9)	0	(1.4)
Total income tax expense	$ 36.3	$ 37.6	$ 94.7	$ 60.3

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INVESTMENTS IN VARIABLE INTEREST ENTITIES - SCHEDULE OF VIEs (DETAILS) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014
Investment Holdings [Line Items]
Total amortized cost	$ 1,241.5
Total fair value	1,241.1
Amortized cost
Investment Holdings [Line Items]
Due in one year or less	2.8
Due after one year through five years	353.8
Due after five years through ten years	884.9
Total amortized cost	1,241.5
Estimated fair value
Investment Holdings [Line Items]
Due in one year or less	2.8
Due after one year through five years	354.1
Due after five years through ten years	884.2
Total fair value	$ 1,241.1

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FAIR VALUE MEASUREMENTS - FAIR VALUE INPUTS (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2014		Dec. 31, 2013
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments	$ 24,411.3		$ 27,151.7
Other invested assets	426.1		423.3
Policyholder account balances	10,649.7		12,776.4
Level 3 | Interest sensitive products
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Weighted average projected portfolio yields	5.60%		5.60%
Weighted average discount rates	2.04%		2.47%
Weighted average surrender rates	14.39%		14.39%
Level 3 | Corporate debt securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Weighted average discount rate	2.44%		2.36%
Level 3 | Asset-backed securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Weighted average discount rate	2.81%		3.09%
Level 3 | Collateralized debt obligations
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Weighted average discount rate			1.32%
Weighted average recoveries			65.80%
Weighted average constant prepayment rate			20.00%
Weighted average annual default rate			3.05%
Weighted average portfolio CCC percent			12.57%
Minimum | Level 3 | Interest sensitive products
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Projected Portfolio Yields	5.35%		5.35%
Discount rates	0.00%		0.00%
Surrender rates	2.80%		2.80%
Minimum | Level 3 | Corporate debt securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	1.50%		1.65%
Minimum | Level 3 | Asset-backed securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	1.72%		2.03%
Minimum | Level 3 | Collateralized debt obligations
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate			0.95%
Debt obligation, recovery rate			64.00%
Annual default rate			1.14%
Portfolio CCC Percent			1.52%
Maximum | Level 3 | Interest sensitive products
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Projected Portfolio Yields	6.63%		6.63%
Discount rates	3.78%		4.64%
Surrender rates	54.60%		54.60%
Maximum | Level 3 | Corporate debt securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	5.00%		2.90%
Maximum | Level 3 | Asset-backed securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	4.30%		4.20%
Maximum | Level 3 | Collateralized debt obligations
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate			2.00%
Debt obligation, recovery rate			67.00%
Annual default rate			5.57%
Portfolio CCC Percent			21.79%
Assets of CLIC being sold | Level 3 | Corporate debt securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Weighted average discount rate	1.96%
Assets of CLIC being sold | Level 3 | Asset-backed securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	3.50%
Assets of CLIC being sold | Minimum | Level 3 | Corporate debt securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	1.50%
Assets of CLIC being sold | Maximum | Level 3 | Corporate debt securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Discount rate	2.45%
Estimate of fair value measurement | Level 3
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments	582.0		674.6
Other invested assets	235.3	[1]	114.0	[1]
Policyholder account balances	980.3	[2]	905.5	[2]
Estimate of fair value measurement | Level 3 | Corporate debt securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments	254.5	[3]	260.3	[3]
Estimate of fair value measurement | Level 3 | Asset-backed securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments	29.1	[4]	35.1	[4]
Estimate of fair value measurement | Level 3 | Collateralized debt obligations
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments			240.7	[5]
Estimate of fair value measurement | Level 3 | Equity securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments			24.5	[6]
Estimate of fair value measurement | Assets of CLIC being sold | Level 3 | Corporate debt securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments	19.1	[3]
Estimate of fair value measurement | Assets of CLIC being sold | Level 3 | Asset-backed securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments	8.7	[4]
Estimate of fair value measurement | Assets of CLIC being sold | Level 3 | Collateralized debt obligations
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Investments	$ 35.3

[1] Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.

[2] Interest-sensitive products - The significant unobservable inputs used in the fair value measurement of our interest-sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

[3] Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

[4] Asset-backed securities - The significant unobservable input used in the fair value measurement of our asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

[5] Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes.

[6] Equity security - The significant unobservable input used in the fair value measurement of this equity security is historical cost as that is the amount that would be required to replace the security with a comparable security. The amount represents an investment in an entity that is currently in the construction phase of a manufacturing facility. The fair value measurement is sensitive to the construction phase and operational risk of the security.

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FAIR VALUE MEASUREMENTS - MEASUREMENTS BY INPUT LEVEL (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	$ 20,533.6	$ 23,178.3
Trading securities	227.4	247.6
Investments held by variable interest entities	1,241.1	1,046.7
Assets held in separate accounts	9.4	10.3
Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	2.0	2.4
Investments held by variable interest entities	0	0
Assets held in separate accounts	0	0
Assets of subsidiary being sold	0
Total assets carried at fair value by category	55.8	82.6
Liabilities For Interest Sensitive Products, Fair Value Disclosure	0	0
Total liabilities carried at fair value by category	0	0
Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	219.5	245.2
Investments held by variable interest entities	1,241.1	1,046.7
Assets held in separate accounts	9.4	10.3
Assets of subsidiary being sold	3,458.6
Total assets carried at fair value by category	25,310.2	24,131.8
Liabilities For Interest Sensitive Products, Fair Value Disclosure	0	0
Total liabilities carried at fair value by category	0	0
Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	5.9	0
Investments held by variable interest entities	0	0
Assets held in separate accounts	0	0
Assets of subsidiary being sold	63.1
Total assets carried at fair value by category	582.0	674.6
Liabilities For Interest Sensitive Products, Fair Value Disclosure	980.3	905.5
Total liabilities carried at fair value by category	980.3	905.5
Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	227.4	247.6
Investments held by variable interest entities	1,241.1	1,046.7
Assets held in separate accounts	9.4	10.3
Assets of subsidiary being sold	3,521.7
Total assets carried at fair value by category	25,948.0	24,889.0
Liabilities For Interest Sensitive Products, Fair Value Disclosure	980.3	905.5
Total liabilities carried at fair value by category	980.3	905.5
Corporate debt securities | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0	0
Equity securities - corporate securities	52.9	79.6
Trading securities	0	0
Corporate debt securities | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	13,491.8	15,313.8
Equity securities - corporate securities	208.4	145.2
Trading securities	23.8	45.2
Corporate debt securities | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	389.8	359.6
Equity securities - corporate securities	26.2	24.5
Trading securities	0	0
Corporate debt securities | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	13,881.6	15,673.4
Equity securities - corporate securities	287.5	249.3
Trading securities	23.8	45.2
US treasury and government | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0	0
Trading securities	0	0
US treasury and government | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	160.1	73.1
Trading securities	4.2	4.6
US treasury and government | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0	0
Trading securities	0	0
US treasury and government | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	160.1	73.1
Trading securities	4.2	4.6
US states and political subdivisions debt securities | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0	0
Trading securities		0
US states and political subdivisions debt securities | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	2,122.2	2,204.4
Trading securities		14.1
US states and political subdivisions debt securities | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	28.7	0
Trading securities		0
US states and political subdivisions debt securities | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	2,150.9	2,204.4
Trading securities		14.1
Asset-backed securities | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0	0
Trading securities	0	0
Asset-backed securities | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	1,273.4	1,419.9
Trading securities	20.9	24.3
Asset-backed securities | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	52.7	42.2
Trading securities	0	0
Asset-backed securities | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	1,326.1	1,462.1
Trading securities	20.9	24.3
Collateralized debt obligations | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0	0
Collateralized debt obligations | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	310.0	47.3
Collateralized debt obligations | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	14.2	246.7
Collateralized debt obligations | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	324.2	294.0
Commercial mortgage backed securities | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0	0
Trading securities	0	0
Commercial mortgage backed securities | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	1,266.2	1,609.0
Trading securities	146.6	125.8
Commercial mortgage backed securities | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0	0
Trading securities	0	0
Commercial mortgage backed securities | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	1,266.2	1,609.0
Trading securities	146.6	125.8
Mortgage pass through securities | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0	0
Trading securities	0	0
Mortgage pass through securities | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	7.6	11.8
Trading securities	0.1	0.1
Mortgage pass through securities | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	1.3	1.6
Trading securities	0	0
Mortgage pass through securities | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	8.9	13.4
Trading securities	0.1	0.1
Collateralized mortgage obligations | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0	0
Trading securities	0	0
Collateralized mortgage obligations | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	1,415.5	1,848.9
Trading securities	23.9	31.1
Collateralized mortgage obligations | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0.1	0
Trading securities	5.9	0
Collateralized mortgage obligations | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	1,415.6	1,848.9
Trading securities	29.8	31.1
Total fixed maturities, available for sale | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	0	0
Total fixed maturities, available for sale | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	20,046.8	22,528.2
Total fixed maturities, available for sale | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	486.8	650.1
Total fixed maturities, available for sale | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed maturities, available for sale	20,533.6	23,178.3
Equity securities | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	2.0	2.4
Equity securities | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	0	0
Equity securities | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	0	0
Equity securities | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	2.0	2.4
Derivatives | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other invested assets - derivatives	0.9	0.6
Derivatives | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other invested assets - derivatives	126.4	156.2
Derivatives | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other invested assets - derivatives	0	0
Derivatives | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other invested assets - derivatives	127.3	156.8
Embedded derivatives associated with fixed index annuity products | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities For Interest Sensitive Products, Fair Value Disclosure	0	0
Embedded derivatives associated with fixed index annuity products | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities For Interest Sensitive Products, Fair Value Disclosure	0	0
Embedded derivatives associated with fixed index annuity products | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities For Interest Sensitive Products, Fair Value Disclosure	980.3	903.7
Embedded derivatives associated with fixed index annuity products | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities For Interest Sensitive Products, Fair Value Disclosure	980.3	903.7
Embedded derivative associated with modified coinsurance agreement | Level 1 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities For Interest Sensitive Products, Fair Value Disclosure		0
Embedded derivative associated with modified coinsurance agreement | Level 2 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities For Interest Sensitive Products, Fair Value Disclosure		0
Embedded derivative associated with modified coinsurance agreement | Level 3 | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities For Interest Sensitive Products, Fair Value Disclosure		1.8
Embedded derivative associated with modified coinsurance agreement | Estimate of fair value measurement | Fair value, measurements, recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Liabilities For Interest Sensitive Products, Fair Value Disclosure		$ 1.8

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ASSETS AND LIABILITIES SUBJECT TO OFFSETTING DISCLOSURE REQUIREMENTS Schedule of Repurchase Agreements (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Offsetting [Abstract]
Gross amounts of recognized liabilities	$ 8.4
Gross amounts offset in the balance sheet	0
Net amounts of liabilities presented in the balance sheet	8.4
Gross amounts not offset in the balance sheet, Financial instruments	0
Gross amounts not offset in the balance sheet, Cash collateral pledged	0
Net amount	8.4
Securities sold under agreements to repurchase, fair value of collateral	$ 10.5	$ 0

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CONSOLIDATED STATEMENT CASH FLOWS

6 Months Ended

Jun. 30, 2014

Supplemental Cash Flow Elements [Abstract]

CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CASH FLOWS

The following disclosures supplement our consolidated statement of cash flows.

The following reconciles net income to net cash provided by operating activities (dollars in millions):

	Six months ended
	June 30,
	2014				2013
Cash flows from operating activities:
Net income (loss)	$	(149.9	)		$	89.0
Adjustments to reconcile net income to net cash from operating activities:
Amortization and depreciation	146.2				172.6
Income taxes	92.7				57.4
Insurance liabilities	155.2				205.3
Accrual and amortization of investment income	(77.5		)		(125.0		)
Deferral of policy acquisition costs	(116.9		)		(107.2		)
Net realized investment gains	(35.8		)		(18.5		)
Payment to reinsurer pursuant to long-term care business reinsured	(590.3		)		—
Loss on sale of subsidiary	278.6				—
Gain related to reinsurance transaction	(3.8		)		—
Loss on extinguishment or modification of debt	.6				65.4
Other	(14.0		)		(49.1		)
Net cash from operating activities	$	(314.9	)	(a)	$	289.9

______________________

(a) Cash flows from operating activities reflect outflows in the 2014 period due to the payment to reinsurer to transfer certain long-term care business.

Non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions):

	Six months ended
	June 30,
	2014		2013
Stock options, restricted stock and performance units	$	8.1	$	7.2

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INVESTMENTS - SCHEDULE OF OTHER THAN TEMPORARY IMPAIRMENT (DETAILS) (Available-for-sale securities, USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Available-for-sale securities
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Credit losses on fixed maturity securities, available for sale, beginning of period	$ (1.3)		$ (1.5)		$ (1.3)		$ (1.6)
Add: credit losses on other-than-temporary impairments not previously recognized	0		0		0		0
Less: credit losses on securities sold	0.1		0		0.1		0.1
Less: credit losses on securities impaired due to intent to sell	0	[1]	0	[1]	0	[1]	0	[1]
Add: credit losses on previously impaired securities	0		0		0		0
Less: increases in cash flows expected on previously impaired securities	0		0		0		0
Credit losses on fixed maturity securities, available for sale, end of period	$ (1.2)		$ (1.5)		$ (1.2)		$ (1.5)

[1] Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis.

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AGREEMEENT TO SELL SUBSIDIARY - ESTIMATED LOSS ON SALE (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net assets being sold:
Loss before taxes	$ 0	$ 0	$ (278.6)	$ 0
Tax expense related to tax gain on sale	8.4	0	21.6	0
Previously unrecognized tax benefit now recognized as a result of the gain	0	0	(7.4)	0
Valuation allowance release related to the gain	8.4	0	14.2	0
Valuation allowance increase related to the decrease in projected future taxable income	0	0	(19.4)	0
Assets of CLIC being sold
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net cash proceeds	216.0		216.0
Net assets being sold:
Investments	3,863.8		3,863.8
Cash and cash equivalents	164.7		164.7
Accrued investment income	42.7		42.7
Present value of future profits	15.5		15.5
Deferred acquisition costs	37.6		37.6
Reinsurance receivables	307.4		307.4
Income tax assets, net	84.4		84.4
Other assets	2.8		2.8
Liabilities for insurance products	(3,201.3)		(3,201.3)
Other liabilities	(199.1)		(199.1)
Investment borrowings	(383.4)		(383.4)
Accumulated other comprehensive income	(240.5)		(240.5)
Net assets being sold	494.6		494.6
Loss before taxes			(278.6)
Tax expense related to tax gain on sale			21.6
Previously unrecognized tax benefit now recognized as a result of the gain			(7.4)
Valuation allowance release related to the gain			(14.2)
Valuation allowance increase related to the decrease in projected future taxable income			19.4
Net loss			$ 298.0

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INVESTMENTS IN VARIABLE INTEREST ENTITIES - BALANCE SHEET ITEMS (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Variable Interest Entity [Line Items]
Investments held by variable interest entities	$ 1,241.1	$ 1,046.7
Cash and cash equivalents held by variable interest entities	101.8	104.3
Borrowings related to variable interest entities	1,110.8	1,012.3
VIEs
Variable Interest Entity [Line Items]
Investments held by variable interest entities	1,241.1	1,046.7
Notes receivable of VIEs held by insurance subsidiaries	0	0
Cash and cash equivalents held by variable interest entities	101.8	104.3
Accrued investment income	2.5	1.9
Income tax assets, net	6.8	5.4
Other assets	14.2	22.6
Total assets	1,366.4	1,180.9
Other liabilities	148.2	66.0
Borrowings related to variable interest entities	1,110.8	1,012.3
Notes payable of VIEs held by insurance subsidiaries	120.1	112.5
Total liabilities	1,379.1	1,190.8
Eliminations
Variable Interest Entity [Line Items]
Investments held by variable interest entities	0	0
Notes receivable of VIEs held by insurance subsidiaries	(116.0)	(108.5)
Cash and cash equivalents held by variable interest entities	0	0
Accrued investment income	0	0
Income tax assets, net	(2.2)	(2.5)
Other assets	(0.9)	(0.9)
Total assets	(119.1)	(111.9)
Other liabilities	(3.2)	(4.0)
Borrowings related to variable interest entities	0	0
Notes payable of VIEs held by insurance subsidiaries	(120.1)	(112.5)
Total liabilities	(123.3)	(116.5)
Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Investments held by variable interest entities	1,241.1	1,046.7
Notes receivable of VIEs held by insurance subsidiaries	(116.0)	(108.5)
Cash and cash equivalents held by variable interest entities	101.8	104.3
Accrued investment income	2.5	1.9
Income tax assets, net	4.6	2.9
Other assets	13.3	21.7
Total assets	1,247.3	1,069.0
Other liabilities	145.0	62.0
Borrowings related to variable interest entities	1,110.8	1,012.3
Notes payable of VIEs held by insurance subsidiaries	0	0
Total liabilities	$ 1,255.8	$ 1,074.3

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ASSETS AND LIABILITIES SUBJECT TO OFFSETTING DISCLOSURE REQUIREMENTS (Tables)

6 Months Ended

Jun. 30, 2014

Offsetting [Abstract]

Schedule of offsetting call options

The following table summarizes information related to call options as of June 30, 2014 and December 31, 2013 (dollars in millions):

								Gross amounts not offset in the balance sheet
		Gross amounts of recognized assets		Gross amounts offset in the balance sheet		Net amounts of assets presented in the balance sheet		Financial instruments		Cash collateral received		Net amount
June 30, 2014:
	Call Options (a)	$	130.7	$	—	$	130.7	$	—	$	—	$	130.7
December 31, 2013:
	Call Options	156.2		—		156.2		—		—		156.2

___________________________

(a) Includes $4.3 million classified as "Assets of subsidiary being sold".

Schedule of Repurchase Agreements

The following table summarizes information related to repurchase agreements as of June 30, 2014 (dollars in millions):

								Gross amounts not offset in the balance sheet
		Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet		Net amounts of liabilities presented in the balance sheet		Financial instruments		Cash collateral pledged		Net amount
June 30, 2014:
	Repurchase agreements (a)	$	8.4	$	—	$	8.4	$	—	$	—	$	8.4

_________________

(a) As of June 30, 2014, these agreements were collateralized by investment securities with a fair value of $10.5 million. There were no repurchase agreements outstanding at December 31, 2013.

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EARNINGS PER SHARE (Details) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract]
Net income (loss)	$ 78.1	$ 77.1	$ (149.9)	$ 89.0
Add: interest expense on 7.0% Senior Debentures due 2016 (the 7.0% Debentures), net of income taxes	0	0.4	0	1.6
Net income (loss) for diluted earnings per share	$ 78.1	$ 77.5	$ (149.9)	$ 90.6
Shares:
Weighted average shares outstanding for basic earnings per share (in shares)	216,538	220,498	218,422	221,290
Effect of dilutive securities on weighted average shares:
7.0% Debentures (in shares)	0	5,692	0	11,141
Stock options, restricted stock and performance units (in shares)	2,390	2,412	0	2,620
Warrants (in shares)	3,180	2,291	0	2,129
Dilutive potential common shares (in shares)	5,570	10,395	0	15,890
Weighted average shares outstanding for diluted earnings per share (in shares)	222,108	230,893	218,422	237,180
Convertible subordinated debt
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract]
Interest rate	7.00%		7.00%

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INVESTMENT BORROWINGS (Details) (USD $) In Millions, unless otherwise specified			6 Months Ended																													6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Federal Home Loan Bank advances	Jun. 30, 2013 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due September 2015 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due October 2015 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due June 2016 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due June 2016 rate two Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due October 2016 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due November 2016 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due November 2016 rate two Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due June 2017 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due August 2017 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due August 2017 rate two Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due October 2017 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due November 2017 rate two Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due January 2018 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due January 2018 rate two Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due February 2018 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due February 2018 rate two Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due February 2018 rate three Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due May 2018 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due July 2018 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due August 2018 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due January 2019 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due February 2019 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due March 2019 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due June 2020 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due March 2023 Federal Home Loan Bank advances	Jun. 30, 2014 Borrowings due June 2025 Federal Home Loan Bank advances	Jun. 30, 2014 Assets of CLIC being sold Federal Home Loan Bank advances	Jun. 30, 2014 Assets of CLIC being sold Borrowings due November 2015 rate two Federal Home Loan Bank advances	Jun. 30, 2014 Assets of CLIC being sold Borrowings due December 2015 Federal Home Loan Bank advances	Jun. 30, 2014 Assets of CLIC being sold Borrowings due July 2017 Federal Home Loan Bank advances	Jun. 30, 2014 Assets of CLIC being sold Borrowings due November 2017 Federal Home Loan Bank advances
Schedule of Trading Securities and Other Trading Assets [Line Items]
Federal Home Loan Bank stock			$ 73.5																												$ 22.5
Federal Home Loan Bank, Advances, collateral pledged			1,800.0																												503.9
Investment borrowings	1,507.6	1,900.0	1,499.2		50.0	50.0	100.0	75.0	100.0	50.0	50.0	57.7	50.0	75.0	100.0	50.0	50.0	50.0	50.0	50.0	22.0	100.0	50.0	50.0	50.0	50.0	100.0	21.8	27.2	20.5	383.4	146.4	100.0	100.0	37.0
Maturity date					Sep. 30, 2015	Oct. 31, 2015	Jun. 30, 2016	Jun. 30, 2016	Oct. 31, 2016	Nov. 30, 2016	Nov. 30, 2016	Jun. 30, 2017	Aug. 31, 2017	Aug. 31, 2017	Oct. 31, 2017	Nov. 30, 2017	Jan. 31, 2018	Jan. 31, 2018	Feb. 28, 2018	Feb. 28, 2018	Feb. 28, 2018	May 30, 2018	Jul. 31, 2018	Aug. 31, 2018	Jan. 31, 2019	Feb. 28, 2019	Mar. 31, 2019	Jun. 30, 2020	Mar. 31, 2023	Jun. 30, 2025		Nov. 30, 2015	Dec. 31, 2015	Jul. 31, 2017	Nov. 30, 2017
Interest rate					0.528%	0.502%	0.592%	0.394%	0.412%	0.497%	0.622%	0.581%	0.424%	0.377%	0.656%	0.737%	0.578%	0.566%	0.533%	0.315%	0.559%	0.60%	0.698%	0.344%	0.649%	0.315%	0.634%	1.96%	2.16%	2.94%		5.30%	4.71%	3.90%	3.75%
Aggregate Fee to Prepay All Fixed Rate FHLB Borrowings			29.5
Interest Expense on FHLB Borrowings			13.8	13.6
Secured Debt, Repurchase Agreements	$ 8.4

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INCOME TAXES INCOME TAXES - NARRATIVE (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Dec. 31, 2008
Operating Loss Carryforwards [Line Items]
Loss on sale of subsidiary	$ 0	$ 0	$ 278.6	$ 0
Loss on extinguishment or modification of debt	(0.6)	(7.7)	(0.6)	(65.4)
Deferred tax assets more likely than not to be realized through future taxable earnings	763.4		763.4
Assumed growth rate for the next five years included in deferred tax valuation analysis	3.00%		3.00%
Valuation allowance increase related to the decrease in projected future taxable income	0	0	(19.4)	0
Valuation allowance for deferred taxes and other tax items	(4.0)	(5.0)	15.4	(15.5)
Estimated normalized annual taxable income for the current year			315.0
Loss limitation based on income of life insurance company, percent	35.00%		35.00%
Loss limitation based on loss of non-life entities, percent	35.00%		35.00%
Federal long-term tax exempt rate	3.32%		3.32%
Ownership change threshold restricting NOL usage	50.00%		50.00%
Capital loss carryforwards, net of unrecognized tax benefits	1.8		1.8
Net state operating loss carryforwards	18.4		18.4		20.0
Loss on investment in senior health						878
Income Tax Examination, Expired Capital Loss Carryforwards if IRS position is correct					473
Unrecognized tax benefit related to loss on investment in Senior Health			166.0
Increase in valuation allowance if unrecognized tax benefit is recognized	41.0		41.0
Non life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	2,760.8		2,760.8
Loss on investment in senior health						136
Life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	1,045.2		1,045.2
Loss on investment in senior health						742
Internal Revenue Service
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 3,300.0		$ 3,300.0

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INVESTMENTS - SCHEDULE OF AMORTIZED COST, GROSS UNREALIZED GAINS AND LOSSES, ESTIMATED FAIR VALUE, AND OTHER-THAN-TEMPORARY IMPAIRMENTS (DETAILS) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	$ 18,383.8
Gross unrealized gains	2,184.7
Gross unrealized losses	(34.9)
Estimated fair value	20,533.6
Other-than-temporary impairments included in accumulated other comprehensive income	(3.7)
Corporate debt securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	12,217.4
Gross unrealized gains	1,688.0
Gross unrealized losses	(23.8)
Estimated fair value	13,881.6
Other-than-temporary impairments included in accumulated other comprehensive income	0
US treasury and government
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	149.6
Gross unrealized gains	10.7
Gross unrealized losses	(0.2)
Estimated fair value	160.1
Other-than-temporary impairments included in accumulated other comprehensive income	0
US states and political subdivisions debt securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	1,944.3
Gross unrealized gains	212.9
Gross unrealized losses	(6.3)
Estimated fair value	2,150.9
Other-than-temporary impairments included in accumulated other comprehensive income	0
Asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	1,244.5
Gross unrealized gains	84.2
Gross unrealized losses	(2.6)
Estimated fair value	1,326.1
Other-than-temporary impairments included in accumulated other comprehensive income	0
Collateralized debt obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	319.9
Gross unrealized gains	5.2
Gross unrealized losses	(0.9)
Estimated fair value	324.2
Other-than-temporary impairments included in accumulated other comprehensive income	0
Commercial mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	1,173.9
Gross unrealized gains	92.5
Gross unrealized losses	(0.2)
Estimated fair value	1,266.2
Other-than-temporary impairments included in accumulated other comprehensive income	0
Mortgage pass through securities
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	8.4
Gross unrealized gains	0.5
Gross unrealized losses	0
Estimated fair value	8.9
Other-than-temporary impairments included in accumulated other comprehensive income	0
Collateralized mortgage obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	1,325.8
Gross unrealized gains	90.7
Gross unrealized losses	(0.9)
Estimated fair value	1,415.6
Other-than-temporary impairments included in accumulated other comprehensive income	(3.7)
Assets of CLIC being sold | Fixed Maturities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized cost	3,470.7
Gross unrealized gains	0
Gross unrealized losses	0
Estimated fair value	3,470.7
Other-than-temporary impairments included in accumulated other comprehensive income	$ 0

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BUSINESS AND BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BUSINESS AND BASIS OF PRESENTATION

BUSINESS AND BASIS OF PRESENTATION

The following notes should be read together with the notes to the consolidated financial statements included in our 2013 Annual Report on Form 10-K.

CNO Financial Group, Inc., a Delaware corporation ("CNO"), is a holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance products.  The terms "CNO Financial Group, Inc.", "CNO", the "Company", "we", "us", and "our" as used in these financial statements refer to CNO and its subsidiaries.  Such terms, when used to describe insurance business and products, refer to the insurance business and products of CNO's insurance subsidiaries.

We focus on serving middle-income pre-retiree and retired Americans, which we believe are attractive, underserved, high growth markets.  We sell our products through three distribution channels: career agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing.

Our unaudited consolidated financial statements reflect normal recurring adjustments that, in the opinion of management, are necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented.  As permitted by rules and regulations of the Securities and Exchange Commission (the "SEC") applicable to quarterly reports on Form 10-Q, we have condensed or omitted certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").  We have reclassified certain amounts from the prior periods to conform to the 2014 presentation.  These reclassifications have no effect on net income or shareholders' equity.  Results for interim periods are not necessarily indicative of the results that may be expected for a full year.

The balance sheet at December 31, 2013, presented herein, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

When we prepare financial statements in conformity with GAAP, we are required to make estimates and assumptions that significantly affect reported amounts of various assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods.  For example, we use significant estimates and assumptions to calculate values for deferred acquisition costs, the present value of future profits, fair value measurements of certain investments (including derivatives), other-than-temporary impairments of investments, assets and liabilities related to income taxes, liabilities for insurance products, liabilities related to litigation and guaranty fund assessment accruals.  If our future experience differs from these estimates and assumptions, our financial statements would be materially affected.

The accompanying financial statements include the accounts of the Company and its subsidiaries. Our consolidated financial statements exclude transactions between us and our consolidated affiliates, or among our consolidated affiliates.

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NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS OUTSTANDING (DETAILS) (USD $)	Jun. 30, 2014	Dec. 31, 2013	Sep. 28, 2012
Debt Instruments [Abstract]
Direct corporate obligations	$ 827,300,000	$ 856,400,000
Convertible subordinated debt
Debt Instruments [Abstract]
Interest rate	7.00%
Senior secured credit agreement
Debt Instruments [Abstract]
Direct corporate obligations	555,500,000	581,500,000
Unamortized Discount	(3,200,000)	(3,600,000)
Senior secured note 6.375 percent
Debt Instruments [Abstract]
Interest rate	6.375%
Debentures
Debt Instruments [Abstract]
Direct corporate obligations	0	3,500,000
Senior notes | Senior secured note 6.375 percent
Debt Instruments [Abstract]
Direct corporate obligations	$ 275,000,000	$ 275,000,000	$ 275,000,000
Interest rate			6.375%

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AGREEMENT TO SELL SUBSIDIARY - ASSETS/LIABILITIES SOLD (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets of subsidiary being sold	$ 4,518.9	$ 0
Liabilities of subsidiary being sold	4,298.3	0
Assets of CLIC being sold
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Investments	3,863.8
Cash and cash equivalents - unrestricted	164.7
Accrued investment income	42.7
Deferred acquisition costs	37.6
Reinsurance receivables	307.4
Income tax assets, net	84.4
Liabilities for insurance products	3,201.3
Other liabilities	199.1
Investment borrowings	383.4
Assets Held-for-sale [Member] | Assets of CLIC being sold
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Investments	3,863.8
Cash and cash equivalents - unrestricted	164.7
Accrued investment income	42.7
Present value of future profits	15.5
Deferred acquisition costs	37.6
Reinsurance receivables	307.4
Income tax assets, net	84.4
Other assets	2.8
Assets of subsidiary being sold	4,518.9
Liabilities for insurance products	3,201.3
Other liabilities	199.1
Investment borrowings	383.4
Loss accrual	514.5
Liabilities of subsidiary being sold	$ 4,298.3

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AGREEMENT TO SELL SUBSIDIARY (Tables)

6 Months Ended

Jun. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Carrying Amount of CLIC Business Being Sold

The following summarizes the assets and liabilities held for sale as of June 30, 2014 (dollars in millions):

	June 30, 2014
Investments	$	3,863.8
Cash and cash equivalents - unrestricted	164.7
Accrued investment income	42.7
Present value of future profits	15.5
Deferred acquisition costs	37.6
Reinsurance receivables	307.4
Income tax assets, net	84.4
Other assets	2.8
Assets of subsidiary being sold	$	4,518.9
Liabilities for insurance products	$	3,201.3
Other liabilities	199.1
Investment borrowings	383.4
Loss accrual	514.5
Liabilities of subsidiary being sold	$	4,298.3

As the carrying amount of the CLIC business being sold exceeded its costs to sell, we have recognized a loss on the sale of CLIC in the six months ended June 30, 2014, as summarized below (dollars in millions):

Net cash proceeds	$	216.0
Net assets being sold:
Investments	3,863.8
Cash and cash equivalents	164.7
Accrued investment income	42.7
Present value of future profits	15.5
Deferred acquisition costs	37.6
Reinsurance receivables	307.4
Income tax assets, net	84.4
Other assets	2.8
Liabilities for insurance products	(3,201.3		)
Other liabilities	(199.1		)
Investment borrowings	(383.4		)
Accumulated other comprehensive income	(240.5		)
Net assets being sold	494.6
Loss before taxes	(278.6		)
Tax expense related to tax gain on sale	21.6
Previously unrecognized tax benefit now recognized as a result of the gain	(7.4		)
Valuation allowance release related to the gain	(14.2		)
Valuation allowance increase related to the decrease in projected future taxable income	19.4
Net loss	$	(298.0	)

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FAIR VALUE MEASUREMENTS (Policies)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and, therefore, represents an exit price, not an entry price.  We carry certain assets and liabilities at fair value on a recurring basis, including fixed maturities, equity securities, trading securities, investments held by VIEs, derivatives, cash and cash equivalents, separate account assets and embedded derivatives.  We carry our company-owned life insurance policy, which is backed by a series of mutual funds, at its cash surrender value and our hedge fund investments at their net asset values; in both cases, we believe these values approximate their fair values. In addition, we disclose fair value for certain financial instruments, including mortgage loans and policy loans, insurance liabilities for interest-sensitive products, investment borrowings, notes payable and borrowings related to VIEs.

The degree of judgment utilized in measuring the fair value of financial instruments is largely dependent on the level to which pricing is based on observable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information.  Financial instruments with readily available active quoted prices would be considered to have fair values based on the highest level of observable inputs, and little judgment would be utilized in measuring fair value.  Financial instruments that rarely trade would often have fair value based on a lower level of observable inputs, and more judgment would be utilized in measuring fair value.

Valuation Hierarchy

There is a three-level hierarchy for valuing assets or liabilities at fair value based on whether inputs are observable or unobservable.

• Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities.  Our Level 1 assets primarily include cash and exchange traded securities.

• Level 2 – includes assets and liabilities valued using inputs that are quoted prices for similar assets in an active market, quoted prices for identical or similar assets in a market that is not active, observable inputs, or observable inputs that can be corroborated by market data.  Level 2 assets and liabilities include those financial instruments that are valued by independent pricing services using models or other valuation methodologies.  These models consider various inputs such as interest rate, credit or issuer spreads, reported trades and other inputs that are observable or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace.  Financial assets in this category primarily include:  certain public and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund and hedge fund investments; and most short-term investments; and non-exchange-traded derivatives such as call options to hedge liabilities related to our fixed index annuity products. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs.

• Level 3 – includes assets and liabilities valued using unobservable inputs that are used in model-based valuations that contain management assumptions.  Level 3 assets and liabilities include those financial instruments whose fair value is estimated based on broker/dealer quotes, pricing services or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information.  Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities.  Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) since their values include significant unobservable inputs including actuarial assumptions.

At each reporting date, we classify assets and liabilities into the three input levels based on the lowest level of input that is significant to the measurement of fair value for each asset and liability reported at fair value.  This classification is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions.  Our assessment of the significance of a particular input to the fair value measurement and the ultimate classification of each asset and liability requires judgment and is subject to change from period to period based on the observability of the valuation inputs. Any transfers between levels are reported as having occurred at the beginning of the period. There were no transfers between Level 1 and Level 2 in both the first six months of 2014 and 2013.

The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs, short-term and separate account assets use Level 2 inputs for the determination of fair value.  These fair values are obtained primarily from independent pricing services, which use Level 2 inputs for the determination of fair value.  Substantially all of our Level 2 fixed maturity securities and separate account assets were valued from independent pricing services.  Third party pricing services normally derive the security prices through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information.  If there are no recently reported trades, the third party pricing services may use matrix or model processes to develop a security price where future cash flow expectations are discounted at an estimated risk-adjusted market rate.  The number of prices obtained for a given security is dependent on the Company's analysis of such prices as further described below.

For securities that are not priced by pricing services and may not be reliably priced using pricing models, we obtain broker quotes.  These broker quotes are non-binding andrepresent an exit price, but assumptions used to establish the fair value may not be observable and therefore represent Level 3 inputs.  Approximately 43 percent of our Level 3 fixed maturity securities were valued using unadjusted broker quotes or broker-provided valuation inputs.  The remaining Level 3 fixed maturity investments do not have readily determinable market prices and/or observable inputs.  For these securities, we use internally developed valuations.  Key assumptions used to determine fair value for these securities may include risk-free rates, risk premiums, performance of underlying collateral and other factors involving significant assumptions which may not be reflective of an active market.  For certain investments, we use a matrix or model process to develop a security price where future cash flow expectations are discounted at an estimated market rate.  The pricing matrix incorporates term interest rates as well as a spread level based on the issuer's credit rating and other factors relating to the issuer and the security's maturity.  In some instances issuer-specific spread adjustments, which can be positive or negative, are made based upon internal analysis of security specifics such as liquidity, deal size, and time to maturity.

As the Company is responsible for the determination of fair value, we have control processes designed to ensure that the fair values received from third-party pricing sources are reasonable and the valuation techniques and assumptions used appear reasonable and consistent with prevailing market conditions. Additionally, when inputs are provided by third-party pricing sources, we have controls in place to review those inputs for reasonableness. As part of these controls, we perform monthly quantitative and qualitative analysis on the prices received from third parties to determine whether the prices are reasonable estimates of fair value.  The Company's analysis includes:  (i) a review of the methodology used by third party pricing services; (ii) where available, a comparison of multiple pricing services' valuations for the same security; (iii) a review of month to month price fluctuations; (iv) a review to ensure valuations are not unreasonably dated; and (v) back testing to compare actual purchase and sale transactions with valuations received from third parties.  As a result of such procedures, the Company may conclude the prices received from third parties are not reflective of current market conditions.  In those instances, we may request additional pricing quotes or apply internally developed valuations.  However, the number of instances is insignificant and the aggregate change in value of such investments is not materially different from the original prices received.

The categorization of the fair value measurements of our investments priced by independent pricing services was based upon the Company's judgment of the inputs or methodologies used by the independent pricing services to value different asset classes.  Such inputs include:  benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data.  The Company categorizes such fair value measurements based upon asset classes and the underlying observable or unobservable inputs used to value such investments.

The fair value measurements for derivative instruments, including embedded derivatives requiring bifurcation, are determined based on the consideration of several inputs including closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options; market interest rates; and non-performance risk.  For certain embedded derivatives, we use actuarial assumptions in the determination of fair value.

For those financial instruments disclosed at fair value, we use the following methods and assumptions to determine the estimated fair values:

Mortgage loans and policy loans.  We discount future expected cash flows for loans included in our investment portfolio based on interest rates currently being offered for similar loans to borrowers with similar credit ratings.  We aggregate loans with similar characteristics in our calculations.  The fair value of policy loans approximates their carrying value.

Company-owned life insurance is backed by a series of mutual funds and is carried at cash surrender value which approximates estimated fair value.

Alternative investment funds are carried at their net asset values which approximates estimated fair value.

Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value.

Liabilities for policyholder account balances.  We discount future expected cash flows based on interest rates currently being offered for similar contracts with similar maturities.

Investment borrowings, notes payable and borrowings related to variable interest entities.  For publicly traded debt, we use current fair values.  For other notes, we use discounted cash flow analyses based on our current incremental borrowing rates for similar types of borrowing arrangements.

Assets of subsidiary being sold include mortgage loans, policy loans, and cash and cash equivalents. The estimated fair value of these financial instruments is determined in the same manner as described above.

Liabilities of subsidiary being sold include liabilities for policyholder account balances and investment borrowings. The estimated fair value of these financial instruments is determined in the same manner as described above.

Realized and unrealized gains (losses) on Level 3 assets are primarily reported in either net investment income for policyholder and reinsurer accounts and other special-purpose portfolios, net realized investment gains (losses) or insurance policy benefits within the consolidated statement of operations or accumulated other comprehensive income within shareholders' equity based on the appropriate accounting treatment for the instrument.

The amount presented for gains (losses) included in our net loss for assets and liabilities still held as of the reporting date primarily represents impairments for fixed maturities, available for sale, changes in fair value of trading securities and certain derivatives and changes in fair value of embedded derivative instruments included in liabilities for insurance products that exist as of the reporting date.

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REINSURANCE (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Ceded premiums written		$ 55.4	$ 55.1	$ 107.5	$ 107.1
Reinsurance effect on claims and benefits incurred, amount ceded		61.2	39.1	120.8	92.7
Assumed premiums written		3.8	15.4	14.7	29.1
Ceded long-term reserves	495
Additional premiums paid by subsidiaries to enter into coinsurance agreement	96.9
Over-collateralization rate of market-value trusts	7.00%
Gain (Loss) on Reinsurance Transaction		3.8	0	3.8	0
Coventry health care marketing and quota share agreements
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Assumed premiums written		$ 0	$ 10.8	$ 6.8	$ 19.7

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OUT OF PERIOD ADJUSTMENTS (Details) (Out of period adjustment, USD $) In Millions, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Out of period adjustment
Out of period adjustment, increase in other operating costs and expenses	$ 2.4
Out of period adjustment, decrease in tax expense	0.8	3.2
Out of period adjustment, effect on net loss	1.6	6.0
Out of period adjustment, effect on earnings per diluted share (in dollars per share)	$ (0.01)	$ (0.03)
Out of period adjustment, increase in insurance policy benefits		6.7
Out of period adjustment, increase in amortization expense		$ (2.5)

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INVESTMENTS (TABLES)

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Schedule of accumulated other comprehensive income (loss)

Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments.  These amounts, included in shareholders' equity as of June 30, 2014 and December 31, 2013, were as follows (dollars in millions):

	June 30, 2014			December 31, 2013
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized	$	8.5		$	6.5
Net unrealized gains on all other investments	2,157.8			1,322.6
Adjustment to present value of future profits (a)	(157.6		)	(47.7		)
Adjustment to deferred acquisition costs	(395.5		)	(137.0		)
Adjustment to insurance liabilities	(168.1		)	—
Unrecognized net loss related to deferred compensation plan	(6.4		)	(7.1		)
Deferred income tax liabilities	(512.6		)	(405.5		)
Accumulated other comprehensive income	$	926.1		$	731.8

________

(a) The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003 (the date Conseco, Inc., an Indiana corporation (our "Predecessor"), emerged from bankruptcy.

Schedule of fixed maturities for available for sale and equity securities

At June 30, 2014, the amortized cost, gross unrealized gains and losses, estimated fair value, other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, were as follows (dollars in millions):

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Other-than-temporary impairments included in accumulated other comprehensive income
Corporate securities	$	12,217.4	$	1,688.0	$	(23.8	)	$	13,881.6	$	—
United States Treasury securities and obligations of United States government corporations and agencies	149.6		10.7		(.2		)	160.1		—
States and political subdivisions	1,944.3		212.9		(6.3		)	2,150.9		—
Asset-backed securities	1,244.5		84.2		(2.6		)	1,326.1		—
Collateralized debt obligations	319.9		5.2		(.9		)	324.2		—
Commercial mortgage-backed securities	1,173.9		92.5		(.2		)	1,266.2		—
Mortgage pass-through securities	8.4		.5		—			8.9		—
Collateralized mortgage obligations	1,325.8		90.7		(.9		)	1,415.6		(3.7		)
Total fixed maturities, available for sale	$	18,383.8	$	2,184.7	$	(34.9	)	$	20,533.6	$	(3.7	)
Fixed maturities of CLIC being sold	$	3,470.7	$	—	$	—		$	3,470.7	$	—

Schedule of investments classified by contractual maturity date

In addition, structured securities (such as asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments.

	Amortized cost		Estimated fair value
	(Dollars in millions)
Due in one year or less	$	164.7	$	169.5
Due after one year through five years	1,762.1		1,957.6
Due after five years through ten years	2,906.4		3,192.2
Due after ten years	9,478.1		10,873.3
Subtotal	14,311.3		16,192.6
Structured securities	4,072.5		4,341.0
Total fixed maturities, available for sale	$	18,383.8	$	20,533.6

Schedule of realized gain (loss) on investments

The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Fixed maturity securities, available for sale:
Gross realized gains on sale	$	4.9		$	10.8		$	46.4		$	27.4
Gross realized losses on sale	(3.0		)	(1.4		)	(8.5		)	(3.4		)
Impairments:
Total other-than-temporary impairment losses	—			—			—			—
Other-than-temporary impairment losses recognized in accumulated other comprehensive income	—			—			—			—
Net impairment losses recognized	—			—			—			—
Net realized investment gains from fixed maturities	1.9			9.4			37.9			24.0
Equity securities	7.9			—			7.9			—
Commercial mortgage loans	1.1			—			1.1			.7
Impairments of mortgage loans and other investments	—			(.6		)	(11.9		)	(.6		)
Other	1.5			(5.6		)	.8			(5.6		)
Net realized investment gains	$	12.4		$	3.2		$	35.8		$	18.5

Schedule of credit losses recognized in earnings

The following table summarizes the amount of credit losses recognized in earnings on fixed maturity securities, available for sale, held at the beginning of the period, for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income for the three and six months ended June 30, 2014, and 2013 (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Credit losses on fixed maturity securities, available for sale, beginning of period	$	(1.3	)	$	(1.5	)	$	(1.3	)	$	(1.6	)
Add:  credit losses on other-than-temporary impairments not previously recognized	—			—			—			—
Less:  credit losses on securities sold	.1			—			.1			.1
Less:  credit losses on securities impaired due to intent to sell (a)	—			—			—			—
Add:  credit losses on previously impaired securities	—			—			—			—
Less:  increases in cash flows expected on previously impaired securities	—			—			—			—
Credit losses on fixed maturity securities, available for sale, end of period	$	(1.2	)	$	(1.5	)	$	(1.2	)	$	(1.5	)

__________

(a) Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis.

Schedule of unrealized loss on investments

The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at June 30, 2014 (dollars in millions):

	Less than 12 months					12 months or greater					Total
Description of securities	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
United States Treasury securities and obligations of United States government corporations and agencies	$	—	$	—		$	18.4	$	(.2	)	$	18.4	$	(.2	)
States and political subdivisions	15.6		(.6		)	124.1		(5.7		)	139.7		(6.3		)
Corporate securities	173.3		(1.1		)	423.2		(22.7		)	596.5		(23.8		)
Asset-backed securities	76.9		(.5		)	91.5		(2.1		)	168.4		(2.6		)
Collateralized debt obligations	64.2		(.7		)	11.7		(.2		)	75.9		(.9		)
Commercial mortgage-backed securities	14.8		—			19.2		(.2		)	34.0		(.2		)
Mortgage pass-through securities	1.2		—			.8		—			2.0		—
Collateralized mortgage obligations	82.4		(.4		)	20.6		(.5		)	103.0		(.9		)
Total fixed maturities, available for sale	$	428.4	$	(3.3	)	$	709.5	$	(31.6	)	$	1,137.9	$	(34.9	)
Preferred stock	$	34.3	$	(.4	)	$	20.3	$	(.9	)	$	54.6	$	(1.3	)

The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2013 (dollars in millions):

	Less than 12 months					12 months or greater					Total
Description of securities	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
United States Treasury securities and obligations of United States government corporations and agencies	$	23.8	$	(.6	)	$	—	$	—		$	23.8	$	(.6	)
States and political subdivisions	473.6		(30.3		)	79.2		(8.7		)	552.8		(39.0		)
Corporate securities	2,406.1		(132.8		)	170.3		(20.8		)	2,576.4		(153.6		)
Asset-backed securities	308.4		(6.5		)	32.5		(.7		)	340.9		(7.2		)
Collateralized debt obligations	46.7		(.5		)	—		—			46.7		(.5		)
Commercial mortgage-backed securities	161.8		(5.8		)	—		—			161.8		(5.8		)
Mortgage pass-through securities	1.6		—			1.6		—			3.2		—
Collateralized mortgage obligations	121.8		(1.6		)	2.2		—			124.0		(1.6		)
Total fixed maturities, available for sale	$	3,543.8	$	(178.1	)	$	285.8	$	(30.2	)	$	3,829.6	$	(208.3	)
Preferred stock	$	26.8	$	(4.9	)	$	—	$	—		$	26.8	$	(4.9	)

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Schedule of earnings per share reconciliation

A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands):

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014			2013
Net income (loss) for basic earnings per share	$	78.1	$	77.1	$	(149.9	)	$	89.0
Add:  interest expense on 7.0% Senior Debentures due 2016 (the "7.0% Debentures"), net of income taxes	—		.4		—			1.6
Net income (loss) for diluted earnings per share	$	78.1	$	77.5	$	(149.9	)	$	90.6
Shares:
Weighted average shares outstanding for basic earnings per share	216,538		220,498		218,422			221,290
Effect of dilutive securities on weighted average shares:
7.0% Debentures	—		5,692		—			11,141
Stock options, restricted stock and performance units	2,390		2,412		—			2,620
Warrants	3,180		2,291		—			2,129
Dilutive potential common shares	5,570		10,395		—			15,890
Weighted average shares outstanding for diluted earnings per share	222,108		230,893		218,422			237,180

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CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013
Cash flows from operating activities:
Insurance policy income	$ 1,185.3		$ 1,230.1
Net investment income	686.1		685.1
Fee revenue and other income	13.4		12.9
Insurance policy benefits	(1,049.1)		(1,070.1)
Payment to reinsurer pursuant to long-term care business reinsured	(590.3)		0
Interest expense	(45.2)		(48.9)
Deferrable policy acquisition costs	(116.9)		(107.2)
Other operating costs	(396.2)		(409.1)
Taxes	(2.0)		(2.9)
Net cash from operating activities	(314.9)	[1]	289.9
Cash flows from investing activities:
Sales of investments	1,377.2		943.5
Maturities and redemptions of investments	1,007.1		1,335.3
Purchases of investments	(2,072.4)		(2,992.8)
Net sales of trading securities	12.1		25.3
Change in cash and cash equivalents held by variable interest entities	2.5		(156.5)
Cash and cash equivalents held by subsidiary being sold	(164.7)		0
Other	(15.0)		(10.6)
Net cash provided (used) by investing activities	146.8		(855.8)
Cash flows from financing activities:
Payments on notes payable	(29.5)		(101.9)
Expenses related to extinguishment or modification of debt	(0.5)		(61.3)
Amount paid to extinguish the beneficial conversion feature associated with repurchase of convertible debentures	0		(12.6)
Issuance of common stock	3.6		12.7
Payments to repurchase common stock	(133.6)		(50.0)
Common stock dividends paid	(26.3)		(11.1)
Amounts received for deposit products	677.7		634.0
Withdrawals from deposit products	(732.5)		(749.9)
Issuance of investment borrowings:
Federal Home Loan Bank	300.0		400.0
Related to variable interest entities	141.6		376.3
Payments on investment borrowings:
Federal Home Loan Bank	(317.4)		(200.2)
Related to variable interest entities and other	(43.6)		(0.2)
Investment borrowings - repurchase agreements, net	8.4		27.6
Net cash provided (used) by financing activities	(152.1)		263.4
Net decrease in cash and cash equivalents	(320.2)		(302.5)
Cash and cash equivalents, beginning of period	699.0		582.5
Cash and cash equivalents, end of period	$ 378.8		$ 280.0

[1] Cash flows from operating activities reflect outflows in the 2014 period due to the payment to reinsurer to transfer certain long-term care business.

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BUSINESS SEGMENTS (TABLES)

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Schedule of segment reporting information by segment

Operating information by segment was as follows (dollars in millions):

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Revenues:
Bankers Life:
Insurance policy income:
Annuities	$	7.7	$	8.6	$	15.2	$	16.5
Health	320.5		334.1		651.0		666.7
Life	79.9		76.4		158.2		153.9
Net investment income (a)	247.6		226.6		472.0		488.3
Fee revenue and other income (a)	5.8		4.0		11.1		7.7
Total Bankers Life revenues	661.5		649.7		1,307.5		1,333.1
Washington National:
Insurance policy income:
Annuities	1.4		1.7		2.4		3.2
Health	148.8		145.8		297.7		291.2
Life	6.5		5.6		12.2		11.6
Net investment income (a)	71.8		69.8		140.8		147.7
Fee revenue and other income (a)	.2		.2		.4		.4
Total Washington National revenues	228.7		223.1		453.5		454.1
Colonial Penn:
Insurance policy income:
Health	.9		1.1		1.9		2.2
Life	60.8		56.9		120.3		112.7
Net investment income (a)	10.5		9.9		21.2		19.8
Fee revenue and other income (a)	.3		.2		.5		.4
Total Colonial Penn revenues	72.5		68.1		143.9		135.1
Other CNO Business:
Insurance policy income - health	—		6.1		—		12.3
Net investment income (a)	—		8.4		—		16.8
Total Other CNO Business revenues	—		14.5		—		29.1
Corporate operations:
Net investment income	5.7		4.5		12.7		14.6
Fee and other income	1.3		1.5		2.7		3.2
Total corporate revenues	7.0		6.0		15.4		17.8
Total revenues	969.7		961.4		1,920.3		1,969.2

(continued on next page)

(continued from previous page)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Expenses:
Bankers Life:
Insurance policy benefits	$	427.9		$	434.1		$	842.9		$	904.6
Amortization	45.4			45.7			93.6			100.2
Interest expense on investment borrowings	1.9			1.7			3.8			3.1
Other operating costs and expenses	98.9			89.1			195.6			184.0
Total Bankers Life expenses	574.1			570.6			1,135.9			1,191.9
Washington National:
Insurance policy benefits	132.8			130.3			264.6			268.0
Amortization	16.0			16.2			32.3			33.3
Interest expense on investment borrowings	.5			.5			.9			1.0
Other operating costs and expenses	47.1			40.3			92.3			82.0
Total Washington National expenses	196.4			187.3			390.1			384.3
Colonial Penn:
Insurance policy benefits	43.2			41.2			87.9			84.2
Amortization	3.8			3.7			7.8			7.4
Other operating costs and expenses	21.7			22.0			50.6			47.7
Total Colonial Penn expenses	68.7			66.9			146.3			139.3
Other CNO Business:
Insurance policy benefits	—			15.3			—			30.9
Other operating costs and expenses	—			6.4			—			12.7
Total Other CNO Business expenses	—			21.7			—			43.6
Corporate operations:
Interest expense on corporate debt	11.1			13.1			22.2			28.2
Interest expense on investment borrowings	—			—			—			.1
Other operating costs and expenses	22.5			3.6			36.9			12.3
Total corporate expenses	33.6			16.7			59.1			40.6
Total expenses	872.8			863.2			1,731.4			1,799.7
Pre-tax operating earnings by segment:
Bankers Life	87.4			79.1			171.6			141.2
Washington National	32.3			35.8			63.4			69.8
Colonial Penn	3.8			1.2			(2.4		)	(4.2		)
Other CNO Business	—			(7.2		)	—			(14.5		)
Corporate operations	(26.6		)	(10.7		)	(43.7		)	(22.8		)
Pre-tax operating earnings	$	96.9		$	98.2		$	188.9		$	169.5

___________________

(a) It is not practicable to provide additional components of revenue by product or services.

Reconciliation of operating profit (loss) from segments to consolidated

A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income (loss) is as follows (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Total segment revenues	$	969.7		$	961.4		$	1,920.3		$	1,969.2
Net realized investment gains	11.7			1.6			33.0			14.8
Revenues related to certain non-strategic investments and earnings attributable to VIEs	7.3			8.2			13.6			15.1
Revenues of CLIC being sold	104.3			110.3			210.8			225.0
Consolidated revenues	1,093.0			1,081.5			2,177.7			2,224.1
Total segment expenses	872.8			863.2			1,731.4			1,799.7
Gain related to reinsurance transaction	(3.8		)	—			(3.8		)	—
Insurance policy benefits - fair value changes in embedded derivative liabilities	10.1			(29.0		)	25.3			(32.1		)
Amortization related to fair value changes in embedded derivative liabilities	(2.7		)	10.5			(6.9		)	11.5
Amortization related to net realized investment gains	.1			.4			.5			1.2
Expenses related to certain non-strategic investments and earnings attributable to VIEs	10.2			11.1			19.8			19.9
Loss on extinguishment or modification of debt	.6			7.7			.6			65.4
Loss on sale of subsidiary	—			—			278.6			—
Expenses of CLIC being sold	91.3			102.9			187.4			209.2
Consolidated expenses	978.6			966.8			2,232.9			2,074.8
Income (loss) before tax	114.4			114.7			(55.2		)	149.3
Income tax expense:
Tax expense on period income	40.3			42.6			79.3			75.8
Valuation allowance for deferred taxes and other tax items	(4.0		)	(5.0		)	15.4			(15.5		)
Net income (loss)	$	78.1		$	77.1		$	(149.9	)	$	89.0

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FAIR VALUE MEASUREMENTS (TABLES)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Schedule of financial instruments carried at fair value categorized by input level

The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at June 30, 2014 is as follows (dollars in millions):

	Quoted prices in active markets for identical assets or liabilities (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs  (Level 3)		Total
Assets:
Fixed maturities, available for sale:
Corporate securities	$	—	$	13,491.8	$	389.8	$	13,881.6
United States Treasury securities and obligations of United States government corporations and agencies	—		160.1		—		160.1
States and political subdivisions	—		2,122.2		28.7		2,150.9
Asset-backed securities	—		1,273.4		52.7		1,326.1
Collateralized debt obligations	—		310.0		14.2		324.2
Commercial mortgage-backed securities	—		1,266.2		—		1,266.2
Mortgage pass-through securities	—		7.6		1.3		8.9
Collateralized mortgage obligations	—		1,415.5		.1		1,415.6
Total fixed maturities, available for sale	—		20,046.8		486.8		20,533.6
Equity securities - corporate securities	52.9		208.4		26.2		287.5
Trading securities:
Corporate securities	—		23.8		—		23.8
United States Treasury securities and obligations of United States government corporations and agencies	—		4.2		—		4.2
Asset-backed securities	—		20.9		—		20.9
Commercial mortgage-backed securities	—		146.6		—		146.6
Mortgage pass-through securities	—		.1		—		.1
Collateralized mortgage obligations	—		23.9		5.9		29.8
Equity securities	2.0		—		—		2.0
Total trading securities	2.0		219.5		5.9		227.4
Investments held by variable interest entities - corporate securities	—		1,241.1		—		1,241.1
Other invested assets - derivatives	.9		126.4		—		127.3
Assets held in separate accounts	—		9.4		—		9.4
Assets of subsidiary being sold	—		3,458.6		63.1		3,521.7
Total assets carried at fair value by category	$	55.8	$	25,310.2	$	582.0	$	25,948.0
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	$	—	$	—	$	980.3	$	980.3
Total liabilities for insurance products	—		—		980.3		980.3
Total liabilities carried at fair value by category	$	—	$	—	$	980.3	$	980.3

The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2013 is as follows (dollars in millions):

	Quoted prices in active markets  for identical assets or liabilities (Level 1)		Significant other observable inputs  (Level 2)		Significant unobservable inputs  (Level 3)		Total
Assets:
Fixed maturities, available for sale:
Corporate securities	$	—	$	15,313.8	$	359.6	$	15,673.4
United States Treasury securities and obligations of United States government corporations and agencies	—		73.1		—		73.1
States and political subdivisions	—		2,204.4		—		2,204.4
Asset-backed securities	—		1,419.9		42.2		1,462.1
Collateralized debt obligations	—		47.3		246.7		294.0
Commercial mortgage-backed securities	—		1,609.0		—		1,609.0
Mortgage pass-through securities	—		11.8		1.6		13.4
Collateralized mortgage obligations	—		1,848.9		—		1,848.9
Total fixed maturities, available for sale	—		22,528.2		650.1		23,178.3
Equity securities - corporate securities	79.6		145.2		24.5		249.3
Trading securities:
Corporate securities	—		45.2		—		45.2
United States Treasury securities and obligations of United States government corporations and agencies	—		4.6		—		4.6
States and political subdivisions	—		14.1		—		14.1
Asset-backed securities	—		24.3		—		24.3
Commercial mortgage-backed securities	—		125.8		—		125.8
Mortgage pass-through securities	—		.1		—		.1
Collateralized mortgage obligations	—		31.1		—		31.1
Equity securities	2.4		—		—		2.4
Total trading securities	2.4		245.2		—		247.6
Investments held by variable interest entities - corporate securities	—		1,046.7		—		1,046.7
Other invested assets - derivatives	.6		156.2		—		156.8
Assets held in separate accounts	—		10.3		—		10.3
Total assets carried at fair value by category	$	82.6	$	24,131.8	$	674.6	$	24,889.0
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	$	—	$	—	$	903.7	$	903.7
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—		—		1.8		1.8
Total liabilities for insurance products	—		—		905.5		905.5
Total liabilities carried at fair value by category	$	—	$	—	$	905.5	$	905.5

Schedule of assets and liabilities measured on a recurring fair value basis

The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions):

	June 30, 2014
	Quoted prices in active markets for identical assets or liabilities (Level 1)		Significant other observable inputs  (Level 2)		Significant unobservable inputs  (Level 3)		Total estimated fair value		Total carrying amount
Assets:
Mortgage loans	$	—	$	—	$	1,647.1	$	1,647.1	$	1,595.9
Policy loans	—		—		99.7		99.7		99.7
Other invested assets:
Company-owned life insurance	—		149.4		—		149.4		149.4
Alternative investment funds	—		86.6		—		86.6		86.6
Cash and cash equivalents:
Unrestricted	167.8		211.0		—		378.8		378.8
Held by variable interest entities	101.8		—		—		101.8		101.8
Assets of subsidiary being sold	164.7		—		351.0		515.7		503.8
Liabilities:
Policyholder account balances (a)	—		—		10,649.7		10,649.7		10,649.7
Investment borrowings	—		1,507.0		—		1,507.0		1,507.6
Borrowings related to variable interest entities	—		955.9		—		955.9		1,110.8
Notes payable – direct corporate obligations	—		852.4		—		852.4		827.3
Liabilities of subsidiary being sold	—		412.9		2,070.0		2,482.9		2,453.4

	December 31, 2013
	Quoted prices in active markets for identical assets or liabilities (Level 1)		Significant other observable inputs  (Level 2)		Significant unobservable inputs  (Level 3)		Total estimated fair value		Total carrying amount
Assets:
Mortgage loans	$	—	$	—	$	1,749.5	$	1,749.5	$	1,729.5
Policy loans	—		—		277.0		277.0		277.0
Other invested assets:
Company-owned life insurance	—		144.8		—		144.8		144.8
Alternative investment funds	—		67.6		—		67.6		67.6
Cash and cash equivalents:
Unrestricted	457.8		241.2		—		699.0		699.0
Held by variable interest entities	104.3		—		—		104.3		104.3
Liabilities:
Policyholder account balances (a)	—		—		12,776.4		12,776.4		12,776.4
Investment borrowings	—		1,948.5		—		1,948.5		1,900.0
Borrowings related to variable interest entities	—		993.7		—		993.7		1,012.3
Notes payable – direct corporate obligations	—		872.5		—		872.5		856.4

____________________

(a) The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value at June 30, 2014 and December 31, 2013.  This was because interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year.

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended June 30, 2014 (dollars in millions):

	June 30, 2014
	Beginning balance as of March 31, 2014			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Ending balance as of June 30, 2014			Amount of total gains (losses) for the three months ended June 30, 2014 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	336.8		$	47.7		$	—		$	4.0		$	16.3	$	(15.0	)	$	389.8		$	—
States and political subdivisions	—			—			—			.7			28.0		—			28.7			—
Asset-backed securities	42.2			(.5		)	—			1.1			9.9		—			52.7			—
Collateralized debt obligations	14.1			(.1		)	—			.2			—		—			14.2			—
Mortgage pass-through securities	.4			.9			—			—			—		—			1.3			—
Collateralized mortgage obligations	—			—			—			(.1		)	.2		—			.1			—
Total fixed maturities, available for sale	393.5			48.0			—			5.9			54.4		(15.0		)	486.8			—
Equity securities - corporate securities	25.4			.8			—			—			—		—			26.2			—
Trading securities - collateralized mortgage obligations	5.9			—			—			—			—		—			5.9			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(930.8		)	(38.7		)	(10.8		)	—			—		—			(980.3		)	(10.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(3.4		)	3.4			—			—			—		—			—			—
Total liabilities for insurance products	(934.2		)	(35.3		)	(10.8		)	—			—		—			(980.3		)	(10.8		)

_________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the three months ended June 30, 2014 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	51.0		$	(3.3	)	$	—		$	—	$	47.7
Asset-backed securities	—			(.5		)	—			—		(.5		)
Collateralized debt obligations	—			(.1		)	—			—		(.1		)
Mortgage pass-through securities	1.1			(.2		)	—			—		.9
Total fixed maturities, available for sale	52.1			(4.1		)	—			—		48.0
Equity securities - corporate securities	.8			—			—			—		.8
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(31.1		)	.5			(22.5		)	14.4		(38.7		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			3.4			—			—		3.4
Total liabilities for insurance products	(31.1		)	3.9			(22.5		)	14.4		(35.3		)

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the six months ended June 30, 2014 (dollars in millions):

	June 30, 2014
	Beginning balance as of December 31, 2013			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)		Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Amounts classified as Assets of subsidiary being sold			Ending balance as of June 30, 2014			Amount of total gains (losses) for the six months ended June 30, 2014 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	359.6		$	41.2		$	—		$	13.4	$	26.8	$	—		$	(51.2	)	$	389.8		$	—
States and political subdivisions	—			—			—			2.0		28.9		—			(2.2		)	28.7			—
Asset-backed securities	42.2			9.0			—			3.3		7.9		—			(9.7		)	52.7			—
Collateralized debt obligations	246.7			(4.4		)	—			—		12.6		(240.7		)	—			14.2			—
Mortgage pass-through securities	1.6			(.3		)	—			—		—		—			—			1.3			—
Collateralized mortgage obligations	—			—			—			—		.1		—			—			.1			—
Total fixed maturities, available for sale	650.1			45.5			—			18.7		76.3		(240.7		)	(63.1		)	486.8			—
Equity securities - corporate securities	24.5			1.7			—			—		—		—			—			26.2			—
Trading securities - collateralized mortgage obligations	—			—			—			.1		5.8		—			—			5.9			.1
Assets of subsidiary being sold	—			—			—			—		—		—			63.1			63.1			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(903.7		)	(49.8		)	(26.8		)	—		—		—			—			(980.3		)	(26.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(1.8		)	1.8			—			—		—		—			—			—			—
Total liabilities for insurance products	(905.5		)	(48.0		)	(26.8		)	—		—		—			—			(980.3		)	(26.8		)

_________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the six months ended June 30, 2014 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	51.0		$	(9.8	)	$	—		$	—	$	41.2
Asset-backed securities	9.9			(.9		)	—			—		9.0
Collateralized debt obligations	.9			(5.3		)	—			—		(4.4		)
Mortgage pass-through securities	1.1			(1.4		)	—			—		(.3		)
Total fixed maturities, available for sale	62.9			(17.4		)	—			—		45.5
Equity securities - corporate securities	1.7			—			—			—		1.7
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(57.7		)	3.6			(24.6		)	28.9		(49.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			3.4			(1.6		)	—		1.8
Total liabilities for insurance products	(57.7		)	7.0			(26.2		)	28.9		(48.0		)

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended June 30, 2013 (dollars in millions):

	June 30, 2013
	Beginning balance as of March 31, 2013			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Ending balance as of June 30, 2013			Amount of total gains (losses) for the three months ended June 30, 2013 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	356.3		$	2.2		$	(.3	)	$	(9.6	)	$	44.5	$	—		$	393.1		$	—
States and political subdivisions	15.0			—			—			—			—		(15.0		)	—			—
Asset-backed securities	46.6			(.2		)	—			(2.5		)	2.0		(.5		)	45.4			—
Collateralized debt obligations	309.7			(33.7		)	(.1		)	.9			10.8		—			287.6			—
Commercial mortgage-backed securities	3.8			(.5		)	—			—			—		—			3.3			—
Mortgage pass-through securities	1.8			—			—			—			—		—			1.8			—
Collateralized mortgage obligations	36.6			—			—			—			—		(36.5		)	.1			—
Total fixed maturities, available for sale	769.8			(32.2		)	(.4		)	(11.2		)	57.3		(52.0		)	731.3			—
Equity securities:
Corporate securities	.1			—			—			—			—		—			.1			—
Venture capital investments	3.1			—			—			—			—		—			3.1			—
Total equity securities	3.2			—			—			—			—		—			3.2			—
Trading securities:
States and political subdivisions	.6			—			—			—			—		(.6		)	—			—
Collateralized mortgage obligations	5.7			—			—			(.1		)	4.8		—			10.4			—
Total trading securities	6.3			—			—			(.1		)	4.8		(.6		)	10.4			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(794.3		)	(32.7		)	30.7			—			—		—			(796.3		)	30.7
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(5.1		)	2.5			—			—			—		—			(2.6		)	—
Total liabilities for insurance products	(799.4		)	(30.2		)	30.7			—			—		—			(798.9		)	30.7

____________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the three months ended June 30, 2013 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	10.0		$	(7.8	)	$	—		$	—	$	2.2
Asset-backed securities	—			(.2		)	—			—		(.2		)
Collateralized debt obligations	—			(33.7		)	—			—		(33.7		)
Commercial mortgage-backed securities	—			(.5		)	—			—		(.5		)
Total fixed maturities, available for sale	10.0			(42.2		)	—			—		(32.2		)
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(27.7		)	—			(14.0		)	9.0		(32.7		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			2.5			—			—		2.5
Total liabilities for insurance products	(27.7		)	2.5			(14.0		)	9.0		(30.2		)

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the six months ended June 30, 2013 (dollars in millions):

	June 30, 2013
	Beginning balance as of December 31, 2012			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Ending balance as of June 30, 2013			Amount of total gains (losses) for the six months ended June 30, 2013 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	355.5		$	63.6		$	(.3	)	$	(13.4	)	$	—	$	(12.3	)	$	393.1		$	—
States and political subdivisions	13.1			—			—			—			—		(13.1		)	—			—
Asset-backed securities	44.0			7.2			—			(3.3		)	2.0		(4.5		)	45.4			—
Collateralized debt obligations	324.0			(42.0		)	.1			5.5			—		—			287.6			—
Commercial mortgage-backed securities	6.2			(.7		)	—			.1			—		(2.3		)	3.3			—
Mortgage pass-through securities	1.9			(.1		)	—			—			—		—			1.8			—
Collateralized mortgage obligations	16.9			(.1		)	—			—			—		(16.7		)	.1			—
Total fixed maturities, available for sale	761.6			27.9			(.2		)	(11.1		)	2.0		(48.9		)	731.3			—
Equity securities:
Corporate securities	.1			—			—			—			—		—			.1			—
Venture capital investments	2.8			—			—			.3			—		—			3.1			—
Total equity securities	2.9			—			—			.3			—		—			3.2			—
Trading securities:
States and political subdivisions	.6			—			—			—			—		(.6		)	—			—
Collateralized debt obligations	7.3			(7.7		)	.6			(.2		)	—		—			—			—
Collateralized mortgage obligations	5.8			—			—			(.3		)	4.9		—			10.4			—
Total trading securities	13.7			(7.7		)	.6			(.5		)	4.9		(.6		)	10.4			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(734.0		)	(95.8		)	33.5			—			—		—			(796.3		)	33.5
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(5.5		)	2.9			—			—			—		—			(2.6		)	—
Total liabilities for insurance products	(739.5		)	(92.9		)	33.5			—			—		—			(798.9		)	33.5

____________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the six months ended June 30, 2013 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	71.5		$	(7.9	)	$	—		$	—	$	63.6
Asset-backed securities	7.6			(.4		)	—			—		7.2
Collateralized debt obligations	13.3			(55.3		)	—			—		(42.0		)
Commercial mortgage-backed securities	—			(.7		)	—			—		(.7		)
Mortgage pass-through securities	—			(.1		)	—			—		(.1		)
Collateralized mortgage obligations	—			(.1		)	—			—		(.1		)
Total fixed maturities, available for sale	92.4			(64.5		)	—			—		27.9
Trading securities - collateralized debt obligations	—			(7.7		)	—			—		(7.7		)
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(52.8		)	1.4			(64.2		)	19.8		(95.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			2.9			—			—		2.9
Total liabilities for insurance products	(52.8		)	4.3			(64.2		)	19.8		(92.9		)

Schedule of fair value measurement inputs

The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at June 30, 2014 (dollars in millions):

	Fair value at June 30, 2014		Valuation technique(s)	Unobservable inputs	Range (weighted average)
Assets:
Corporate securities (a)	$	254.5	Discounted cash flow analysis	Discount margins	1.50% - 5.00% (2.44%)
Asset-backed securities (b)	29.1		Discounted cash flow analysis	Discount margins	1.72% - 4.30% (2.81%)
Other assets categorized as Level 3 (c)	235.3		Unadjusted third-party price source	Not applicable	Not applicable
Assets of subsidiary being sold:
Corporate securities (a)	19.1		Discounted cash flow analysis	Discount margins	1.50% - 2.45% (1.96%)
Asset-backed securities (b)	8.7		Discounted cash flow analysis	Discount margins	3.50%
Other assets categorized as Level 3 (c)	35.3		Unadjusted third-party price source	Not applicable	Not applicable
Total	582.0
Liabilities:
Interest-sensitive products (d)	980.3		Discounted projected embedded derivatives	Projected portfolio yields	5.35% - 6.63% (5.60%)
				Discount rates	0.00 - 3.78% (2.04%)
				Surrender rates	2.80% - 54.60% (14.39%)

________________________________

(a) Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(b) Asset-backed securities - The significant unobservable input used in the fair value measurement of our asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(c) Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.

(d) Interest-sensitive products - The significant unobservable inputs used in the fair value measurement of our interest-sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2013 (dollars in millions):

	Fair value at December 31, 2013		Valuation technique(s)	Unobservable inputs	Range (weighted average)
Assets:
Corporate securities (a)	$	260.3	Discounted cash flow analysis	Discount margins	1.65% - 2.90% (2.36%)
Asset-backed securities (b)	35.1		Discounted cash flow analysis	Discount margins	2.03% - 4.20% (3.09%)
Collateralized debt obligations (c)	240.7		Discounted cash flow analysis	Recoveries	64% - 67% (65.8%)
				Constant prepayment rate	20%
				Discount margins	.95% - 2.00% (1.32%)
				Annual default rate	1.14% - 5.57% (3.05%)
				Portfolio CCC %	1.52% - 21.79% (12.57%)
Equity security (d)	24.5		Cost approach	Historical cost	Not applicable
Other assets categorized as Level 3 (e)	114.0		Unadjusted third-party price source	Not applicable	Not applicable
Total	674.6
Liabilities:
Interest-sensitive products (f)	905.5		Discounted projected embedded derivatives	Projected portfolio yields	5.35% - 6.63% (5.60%)
				Discount rates	0.00 - 4.64% (2.47%)
				Surrender rates	2.80% - 54.60% (14.39%)

________________________________

(a) Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(b) Asset-backed securities - The significant unobservable input used in the fair value measurement of our asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(c) Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes.

(d) Equity security - The significant unobservable input used in the fair value measurement of this equity security is historical cost as that is the amount that would be required to replace the security with a comparable security. The amount represents an investment in an entity that is currently in the construction phase of a manufacturing facility.  The fair value measurement is sensitive to the construction phase and operational risk of the security.

(e) Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.

(f) Interest-sensitive products - The significant unobservable inputs used in the fair value measurement of our interest-sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

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EARNINGS PER SHARE - NARRATIVE (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013 Rate
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common shares excluded from diluted shares	5,687
Conversion rate per $1000 principal amount of 7.0% convertible debentures, shares		182.1494
Par value of each 7.0% convertible debenture		$ 1,000
Conversion price (in dollars per share)		$ 5.49
Stock Options, Restricted Stock and Performance Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common shares excluded from diluted shares	2,464
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common shares excluded from diluted shares	3,223
Convertible subordinated debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Interest rate	7.00%

XML

LITIGATION AND OTHER LEGAL PROCEEDINGS (DETAILS)	6 Months Ended
	Jun. 30, 2014 states
Commitments and Contingencies Disclosure [Abstract]
Number of states participating in examination of compliance with unclaimed property laws	38

XML

CONSOLIDATED BALANCE SHEET (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Investments:
Fixed maturities, available for sale, at fair value (amortized cost: June 30, 2014 - $18,383.8; December 31, 2013 - $21,860.6)	$ 20,533.6	$ 23,178.3
Equity securities at fair value (cost: June 30, 2014 - $272.6; December 31, 2013 - $237.9)	287.5	249.3
Mortgage loans	1,595.9	1,729.5
Policy loans	99.7	277.0
Trading securities	227.4	247.6
Investments held by variable interest entities	1,241.1	1,046.7
Other invested assets	426.1	423.3
Total investments	24,411.3	27,151.7
Cash and cash equivalents - unrestricted	378.8	699.0
Cash and cash equivalents held by variable interest entities	101.8	104.3
Accrued investment income	238.2	286.9
Present value of future profits	512.3	679.3
Deferred acquisition costs	698.9	968.1
Reinsurance receivables	2,892.9	3,392.1
Income tax assets, net	730.5	1,147.2
Assets held in separate accounts	9.4	10.3
Other assets	421.3	341.7
Assets of subsidiary being sold	4,518.9	0
Total assets	34,914.3	34,780.6
Liabilities for insurance products:
Policyholder account balances	10,649.7	12,776.4
Future policy benefits	10,372.2	11,222.5
Liability for policy and contract claims	463.3	566.0
Unearned and advanced premiums	270.7	300.6
Liabilities related to separate accounts	9.4	10.3
Other liabilities	560.7	590.6
Payable to reinsurer	0	590.3
Investment borrowings	1,507.6	1,900.0
Borrowings related to variable interest entities	1,110.8	1,012.3
Notes payable – direct corporate obligations	827.3	856.4
Liabilities of subsidiary being sold	4,298.3	0
Total liabilities	30,070.0	29,825.4
Commitments and Contingencies
Shareholders' equity:
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: June 30, 2014 – 213,755,190; December 31, 2013 – 220,323,823)	2.1	2.2
Additional paid-in capital	3,963.9	4,092.8
Accumulated other comprehensive income	926.1	731.8
Retained earnings (accumulated deficit)	(47.8)	128.4
Total shareholders' equity	4,844.3	4,955.2
Total liabilities and shareholders' equity	$ 34,914.3	$ 34,780.6

XML

INVESTMENTS - NARRATIVE (DETAILS) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Trading securities	$ 227.4		$ 227.4		$ 247.6
Premium deficiencies adjustments to present value of future profits	(134.0)		(134.0)
Reduction to deferred acquisition costs due to unrealized gains that would result in premium deficiency if unrealized gains were realized	(143.3)		(143.3)
Accumulated Other Comprehensive Income Adjustment to Insurance Liabilities Due to Unrealized Gains That Would Result in Premium Deficiency if Unrealized Gains Were Realized	(168.1)		(168.1)		0
Increase to deferred tax assets due to unrealized gains that would result in premium deficiency if unrealized gains were realized	158.3		158.3
Net realized investment gains (losses)	12.4	3.2	35.8	18.5
Net realized investment gains, excluding impairment losses	12.4	3.8	47.7	19.1
Sales of investments			1,377.2	943.5
Other than temporary impairments recorded			11.9	0.6
Value of available for sale securities sold			156.9
Impairment losses related to writedown of mortgage loans which losses major tenants			3.9
Impairment losses related to private company investments did not meet expectations of previous valuations			8.0
Other-than-temporary impairments included in accumulated other comprehensive income			3.7
Total fixed maturities, available for sale
Schedule of Available-for-sale Securities [Line Items]
Net realized investment gains (losses)	1.9	9.4	37.9	24.0
Available-for-sale Securities, Gross Realized Losses	3.0	1.4	8.5	3.4
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Net realized investment gains (losses)	7.9	0	7.9	0
Commercial mortgage loan
Schedule of Available-for-sale Securities [Line Items]
Net realized investment gains (losses)	1.1	0	1.1	0.7
Other securities
Schedule of Available-for-sale Securities [Line Items]
Net realized investment gains (losses)	1.5	(5.6)	0.8	(5.6)
US states and political subdivisions debt securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross Realized Losses			0.5
Corporate debt securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross Realized Losses			8.0
Embedded derivative financial instruments
Schedule of Available-for-sale Securities [Line Items]
Embedded Derivative, Gain on Embedded Derivative			5.9	10.5
Marketable securities
Schedule of Available-for-sale Securities [Line Items]
Net realized investment gains, excluding impairment losses			$ 41.8	$ 29.6

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CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (USD $) In Millions, unless otherwise specified	Total	Common stock and additional paid-in capital	Accumulated other comprehensive income	Retained earnings (accumulated deficit)
Balance, beginning of period at Dec. 31, 2012	$ 5,049.3	$ 4,176.9	$ 1,197.4	$ (325.0)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	89.0	0	0	89.0
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense (benefit))	(497.9)	0	(497.9)	0
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense (benefit))	(1.4)	0	(1.4)	0
Extinguishment of beneficial conversion feature related to the repurchase of convertible debentures	(12.6)	(12.6)	0	0
Cost of shares acquired	(50.0)	(50.0)	0	0
Dividends on common stock	(11.1)	0	0	(11.1)
Stock Based Compensation	16.1	16.1	0	0
Balance, end of period at Jun. 30, 2013	4,581.4	4,130.4	698.1	(247.1)
Balance, beginning of period at Dec. 31, 2013	4,955.2	4,095.0	731.8	128.4
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(149.9)	0	0	(149.9)
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense (benefit))	193.7	0	193.7	0
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense (benefit))	0.6	0	0.6	0
Cost of shares acquired	(136.6)	(136.6)	0	0
Dividends on common stock	(26.3)	0	0	(26.3)
Stock Based Compensation	7.6	7.6	0	0
Balance, end of period at Jun. 30, 2014	$ 4,844.3	$ 3,966.0	$ 926.1	$ (47.8)

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INCOME TAXES INCOME TAXES - DEFERRED ASSETS AND LIABILIITES (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Deferred tax assets:
Net federal operating loss carryforwards	$ 1,141.8	$ 1,240.2
Net state operating loss carryforwards	18.4	20.0
Tax credits	40.6	43.9
Capital loss carryforwards	0.6	13.4
Investments	68.2	74.3
Insurance liabilities	622.2	723.8
Other	(1.7)	64.7
Gross deferred tax assets	1,890.1	2,180.3
Deferred tax liabilities:
Present value of future profits and deferred acquisition costs	(318.1)	(306.8)
Accumulated other comprehensive income	(512.6)	(405.5)
Gross deferred tax liabilities	(830.7)	(712.3)
Net deferred tax assets before valuation allowance	1,059.4	1,468.0
Valuation allowance	(296.0)	(294.8)
Net deferred tax assets	763.4	1,173.2
Current income taxes accrued	(32.9)	(26.0)
Income tax assets, net	$ 730.5	$ 1,147.2

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INVESTMENT BORROWINGS (Tables)

6 Months Ended

Jun. 30, 2014

Gain (Loss) on Investments [Line Items]

Schedule of terms of federal home loan bank borrowing

The following summarizes the terms of the borrowings from the FHLB by Washington National and Bankers Life (dollars in millions):

Amount		Maturity	Interest rate at
borrowed		date	June 30, 2014
$	50.0	September 2015	Variable rate – 0.528%
50.0		October 2015	Variable rate – 0.502%
100.0		June 2016	Variable rate – 0.592%
75.0		June 2016	Variable rate – 0.394%
100.0		October 2016	Variable rate – 0.412%
50.0		November 2016	Variable rate – 0.497%
50.0		November 2016	Variable rate – 0.622%
57.7		June 2017	Variable rate – 0.581%
50.0		August 2017	Variable rate – 0.424%
75.0		August 2017	Variable rate – 0.377%
100.0		October 2017	Variable rate – 0.656%
50.0		November 2017	Variable rate – 0.737%
50.0		January 2018	Variable rate – 0.578%
50.0		January 2018	Variable rate – 0.566%
50.0		February 2018	Variable rate – 0.533%
50.0		February 2018	Variable rate – 0.315%
22.0		February 2018	Variable rate – 0.559%
100.0		May 2018	Variable rate – 0.600%
50.0		July 2018	Variable rate – 0.698%
50.0		August 2018	Variable rate – 0.344%
50.0		January 2019	Variable rate – 0.649%
50.0		February 2019	Variable rate – 0.315%
100.0		March 2019	Variable rate – 0.634%
21.8		June 2020	Fixed rate – 1.960%
27.2		March 2023	Fixed rate – 2.160%
20.5		June 2025	Fixed rate – 2.940%
$	1,499.2

Assets of CLIC being sold

Gain (Loss) on Investments [Line Items]

Schedule of terms of federal home loan bank borrowing

The following summarizes the terms of the borrowings classified as "Liabilities of subsidiary being sold" (dollars in millions):

Amount		Maturity	Interest rate at
borrowed		date	June 30, 2014
$	146.4	November 2015	Fixed rate – 5.300%
100.0		December 2015	Fixed rate – 4.710%
100.0		July 2017	Fixed rate – 3.900%
37.0		November 2017	Fixed rate – 3.750%
$	383.4

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NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS NOTES PAYABLE - 7.0% DEBENTURES AND 6.375% NOTES AND 6.375% NOTES (DETAILS) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended			0 Months Ended	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	May 30, 2014 Convertible subordinated debt	May 30, 2014 Senior secured credit agreement	Jun. 30, 2014 Senior secured credit agreement
Debt Instrument [Line Items]
Debt Instrument, Repurchased Face Amount					$ 3.5
Debt Instrument, Repurchase Amount					3.7
Gains (Losses) on Extinguishment of Debt	$ (0.6)	$ (7.7)	$ (0.6)	$ (65.4)		$ (0.2)	$ (0.4)

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ASSETS AND LIABILITIES SUBJECT TO OFFSETTING DISCLOSURE REQUIREMENTS

6 Months Ended

Jun. 30, 2014

Offsetting [Abstract]

ASSETS AND LIABILITIES SUBJECT TO OFFSETTING DISCLOSURE REQUIREMENTS

ASSETS AND LIABILITIES SUBJECT TO OFFSETTING DISCLOSURE REQUIREMENTS

Call options

As further described in the note entitled "Accounting for Derivatives", we buy call options (including call spreads) referenced to applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked. We limit our exposure to the counterparties failing to meet their obligation with respect to the call options by diversifying among several counterparties believed to be strong and credit worthy. The call options are free-standing derivatives and are recorded at fair value in the Company's consolidated balance sheet. The Company and its subsidiaries are parties to master netting arrangements with its counterparties related to entering into various derivative contracts. However, the offsetting of assets and liabilities is not applicable to the derivative contracts that were in place at June 30, 2014 or December 31, 2013. The counterparties do not provide collateral to the Company related to their obligations under the call options.

The following table summarizes information related to call options as of June 30, 2014 and December 31, 2013 (dollars in millions):

								Gross amounts not offset in the balance sheet
		Gross amounts of recognized assets		Gross amounts offset in the balance sheet		Net amounts of assets presented in the balance sheet		Financial instruments		Cash collateral received		Net amount
June 30, 2014:
	Call Options (a)	$	130.7	$	—	$	130.7	$	—	$	—	$	130.7
December 31, 2013:
	Call Options	156.2		—		156.2		—		—		156.2

___________________________

(a) Includes $4.3 million classified as "Assets of subsidiary being sold".

Repurchase agreements

We may enter into agreements under which we sell securities subject to an obligation to repurchase the same securities. These repurchase agreements are accounted for as collateralized financing arrangements and not as a sale and subsequent repurchase of securities. The obligation to repurchase the securities is reflected as investment borrowings in the Company's consolidated balance sheet, while the securities underlying the repurchase agreements remain in the respective investment asset accounts. There is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. In addition, as the Company does not currently have any outstanding reverse repurchase agreements, there is no such offsetting to be done with the repurchase agreements.

The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., fails to make an interest payment to the counterparty). If the counterparty were to default (e.g., declare bankruptcy), the Company could cancel the repurchase agreement (i.e., cease payment of principal and interest), and attempt collection on the amount of collateral value in excess of the repurchase agreement fair value. The collateral is held by a third party financial institution in the counterparty's custodial account. The counterparty has the right to sell or repledge the investment securities.

The following table summarizes information related to repurchase agreements as of June 30, 2014 (dollars in millions):

								Gross amounts not offset in the balance sheet
		Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet		Net amounts of liabilities presented in the balance sheet		Financial instruments		Cash collateral pledged		Net amount
June 30, 2014:
	Repurchase agreements (a)	$	8.4	$	—	$	8.4	$	—	$	—	$	8.4

_________________

(a) As of June 30, 2014, these agreements were collateralized by investment securities with a fair value of $10.5 million. There were no repurchase agreements outstanding at December 31, 2013.

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CHANGES IN COMMON STOCK (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of options activity

Changes in the number of shares of common stock outstanding were as follows (shares in thousands):

Balance, December 31, 2013	220,324
Treasury stock purchased and retired	(7,834	)
Stock options exercised	732
Restricted and performance stock vested	533		(a)
Balance, June 30, 2014	213,755

____________________

(a) Such amount was reduced by 227 thousand shares which were tendered to the Company for the payment of required federal and state tax withholdings owed on the vesting of restricted and performance stock.

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LITIGATION AND OTHER LEGAL PROCEEDINGS

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

LITIGATION AND OTHER LEGAL PROCEEDINGS

LITIGATION AND OTHER LEGAL PROCEEDINGS

Legal Proceedings

The Company and its subsidiaries are involved in various legal actions in the normal course of business, in which claims for compensatory and punitive damages are asserted, some for substantial amounts.  We recognize an estimated loss from these loss contingencies when we believe it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Some of the pending matters have been filed as purported class actions and some actions have been filed in certain jurisdictions that permit punitive damage awards that are disproportionate to the actual damages incurred.  The amounts sought in certain of these actions are often large or indeterminate and the ultimate outcome of certain actions is difficult to predict.  In the event of an adverse outcome in one or more of these matters, there is a possibility that the ultimate liability may be in excess of the liabilities we have established and could have a material adverse effect on our business, financial condition, results of operations and cash flows.  In addition, the resolution of pending or future litigation may involve modifications to the terms of outstanding insurance policies or could impact the timing and amount of rate increases, which could adversely affect the future profitability of the related insurance policies.  Based upon information presently available, and in light of legal, factual and other defenses available to the Company and its subsidiaries, the Company does not believe that it is probable that the ultimate liability from either pending or threatened legal actions, after consideration of existing loss provisions, will have a material adverse effect on the Company's consolidated financial condition, operating results or cash flows. However, given the inherent difficulty in predicting the outcome of legal proceedings, there exists the possibility that such legal actions could have a material adverse effect on the Company's consolidated financial condition, operating results or cash flows.

In addition to the inherent difficulty of predicting litigation outcomes, particularly those that will be decided by a jury, the matters specifically identified below purport to seek substantial or an unspecified amount of damages for unsubstantiated conduct spanning several years based on complex legal theories and damages models. The alleged damages typically are indeterminate or not factually supported in the complaint, and, in any event, the Company's experience indicates that monetary demands for damages often bear little relation to the ultimate loss. In some cases, plaintiffs are seeking to certify classes in the litigation and class certification either has been denied or is pending and we have filed oppositions to class certification or sought to decertify a prior class certification. In addition, for many of these cases: (i) there is uncertainty as to the outcome of pending appeals or motions; (ii) there are significant factual issues to be resolved; and/or (iii) there are novel legal issues presented. Accordingly, the Company cannot reasonably estimate the possible loss or range of loss in excess of amounts accrued, if any, or predict the timing of the eventual resolution of these matters.  The Company reviews these matters on an ongoing basis.  When assessing reasonably possible and probable outcomes, the Company bases its assessment on the expected ultimate outcome following all appeals.

Litigation

On October 25, 2012, a purported nationwide class action was filed in the United States District Court for the Central District of California, William Jeffrey Burnett and Joe H. Camp v. Conseco Life Insurance Company, CNO Financial Group, Inc., CDOC, Inc. and CNO Services, LLC, Case No. EDCV12-01715VAPSPX. The plaintiffs bring this action under Rule 23(B)(3) on behalf of various Lifetrend policyholders who since October 2008 have surrendered their policies or had them lapse. Additionally, plaintiffs seek certification of a subclass of various Lifetrend policyholders who accepted optional benefits and signed a release pursuant to a regulatory settlement. The plaintiffs allege breach of contract and seek declaratory relief, compensatory damages, attorney fees and costs. On November 30, 2012, CLIC and the other defendants filed a motion to dismiss the complaint. On November 18, 2013, the court granted the dismissal, with leave to amend, of CNO Financial Group, Inc., CDOC, Inc. and CNO Services, LLC, and denied the motion to dismiss CLIC. With the completion of the sale of CLIC on July 1, 2014, our consolidated financial statements will no longer include CLIC's liability related to this litigation in future periods.

Regulatory Examinations and Fines

Insurance companies face significant risks related to regulatory investigations and actions.  Regulatory investigations generally result from matters related to sales or underwriting practices, payment of contingent or other sales commissions, claim payments and procedures, product design, product disclosure, additional premium charges for premiums paid on a periodic basis, denial or delay of benefits, charging excessive or impermissible fees on products, procedures related to canceling policies, changing the way cost of insurance charges are calculated for certain life insurance products or recommending unsuitable products to customers.  We are, in the ordinary course of our business, subject to various examinations, inquiries and information requests from state, federal and other authorities.  The ultimate outcome of these regulatory actions (including the costs of complying with information requests and policy reviews) cannot be predicted with certainty.  In the event of an unfavorable outcome in one or more of these matters, the ultimate liability may be in excess of liabilities we have established and we could suffer significant reputational harm as a result of these matters, which could also have a material adverse effect on our business, financial condition, results of operations or cash flows.

In August 2011, we were notified of an examination to be done on behalf of a number of states for the purpose of determining compliance with unclaimed property laws by the Company and its subsidiaries.  Such examination has included inquiries related to the use of data available on the U.S. Social Security Administration's Death Master File to identify instances where benefits under life insurance policies, annuities and retained asset accounts are payable. We are continuing to provide information to the examiners in response to their requests. A total of 38 states and the District of Columbia are currently participating in this examination.

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CHANGES IN COMMON STOCK (Details) (USD $)	3 Months Ended	6 Months Ended		12 Months Ended	6 Months Ended						1 Months Ended	2 Months Ended
	Mar. 31, 2014	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Common stock	Jun. 30, 2014 Common stock Stock options	Jun. 30, 2014 Common stock Restricted and Performance Stock		Jun. 30, 2014 Common stock and additional paid-in capital	Jun. 30, 2013 Common stock and additional paid-in capital	May 31, 2011 Common share repurchase program	Feb. 28, 2014 Previously reported
Number of common shares outstanding
Balance, beginning of year (in shares)	220,323,823	220,323,823			220,324,000
Treasury stock purchased and retired (in shares)					(7,834,000)
Shares issued under employee benefit compensation plans (in shares)						732,000	533,000	[1]
Balance, end of year (in shares)		213,755,190		220,323,823	213,755,000
Number of stock tendered for payment of federal and state taxes owed		227,000
Stock repurchase program, authorized amount											$ 100,000,000.0
Stock repurchase program, increase in authorized amount				800,000,000
Stock retired during period, value		136,600,000	50,000,000						136,600,000	50,000,000
Stock repurchase program, remaining repurchase authorized amount		260,800,000
Common stock dividends paid		$ (26,300,000)	$ (11,100,000)
Dividends (in dollars per share)		$ 0.12
Common Stock, Dividends, Per Share, Declared	$ 0.06											$ 0.03

[1] Such amount was reduced by 227 thousand shares which were tendered to the Company for the payment of required federal and state tax withholdings owed on the vesting of restricted and performance stock.

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CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Parentheticals) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Statement of Stockholders' Equity [Abstract]
Change in unrealized appreciation (depreciation) of investments, applicable income tax expense (benefit)	$ 106.8	$ (270.9)
Change in noncredit component of impairment losses on fixed maturities, available for sale, applicable income tax expense (benefit)	$ 0.3	$ (0.8)

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CONSOLIDATED BALANCE SHEET (Parentheticals) (USD $) In Millions, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Investments:
Fixed maturities, available for sale, amortized cost	$ 18,383.8	$ 21,860.6
Equity securities cost	$ 272.6	$ 237.9
Shareholders' equity:
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	8,000,000,000	8,000,000,000
Common stock, shares issued	213,755,190	220,323,823
Common stock, shares outstanding	213,755,190	220,323,823

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INCOME TAXES

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company's interim tax expense is based upon the estimated annual effective tax rate for the respective period. Under authoritative guidance, certain items are required to be excluded from the estimated annual effective tax rate calculation. Such items include changes in judgment about the realizability of deferred tax assets resulting from changes in projections of income expected to be available in future years, and items deemed to be unusual, infrequent, or that can not be reliably estimated. In these cases, the actual tax expense or benefit applicable to that item is treated discretely and is reported in the same period as the related item. Discrete items include: (i) the loss on the sale of CLIC of $278.6 million in the six months ended June 30, 2014; and (ii) the loss on extinguishment or modification of debt of $7.7 million and $65.4 million in the three and six months ended June 30, 2013, respectively. The components of income tax expense are as follows (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Current tax expense	$	3.9		$	2.7		$	6.1		$	5.4
Deferred tax expense	36.4			40.8			73.2			71.8
Income tax expense calculated based on estimated annual effective tax rate	40.3			43.5			79.3			77.2
Income tax expense (benefit) on discrete items:
Related to the sale of CLIC:
Tax expense related to tax gain on sale	8.4			—			21.6			—
Previously unrecognized tax benefit recognized as a result of the gain	—			—			(7.4		)	—
Valuation allowance release related to the gain	(8.4		)	—			(14.2		)	—
Valuation allowance increase related to the decrease in projected future taxable income	—			—			19.4			—
Valuation allowance reduction resulting from the realization of capital gains and utilization of loss carryforwards	(4.0		)	(5.0		)	(4.0		)	(15.5		)
Deferred tax benefit related to loss on extinguishment or modification of debt	—			(.9		)	—			(1.4		)
Total income tax expense	$	36.3		$	37.6		$	94.7		$	60.3

A reconciliation of the U.S. statutory corporate tax rate to the estimated annual effective rate, before discrete items, reflected in the consolidated statement of operations is as follows:

	Six months ended
	June 30,
	2014		2013
U.S. statutory corporate rate	35.0	%	35.0	%
Non-taxable income and nondeductible benefits, net	(1.0	)	(.5	)
State taxes	1.5		1.4
Estimated annual effective tax rate	35.5	%	35.9	%

The components of the Company's income tax assets and liabilities are summarized below (dollars in millions):

	June 30, 2014			December 31, 2013
Deferred tax assets:
Net federal operating loss carryforwards	$	1,141.8		$	1,240.2
Net state operating loss carryforwards	18.4			20.0
Tax credits	40.6			43.9
Capital loss carryforwards	.6			13.4
Deductible temporary differences:
Investments	68.2			74.3
Insurance liabilities	622.2			723.8
Other	(1.7		)	64.7
Gross deferred tax assets	1,890.1			2,180.3
Deferred tax liabilities:
Present value of future profits and deferred acquisition costs	(318.1		)	(306.8		)
Accumulated other comprehensive income	(512.6		)	(405.5		)
Gross deferred tax liabilities	(830.7		)	(712.3		)
Net deferred tax assets before valuation allowance	1,059.4			1,468.0
Valuation allowance	(296.0		)	(294.8		)
Net deferred tax assets	763.4			1,173.2
Current income taxes accrued	(32.9		)	(26.0		)
Income tax assets, net	$	730.5		$	1,147.2

Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carryforwards and NOLs. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted.

A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred income tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income of the appropriate type during the periods in which our temporary differences become deductible and before our capital loss carryforwards and life and non-life NOLs expire.

Based on our assessment, it appears more likely than not that $763.4 million of our deferred tax assets will be realized through future taxable earnings. We will continue to assess the need for a valuation allowance in the future. If future results are less than projected, a valuation allowance may be required to reduce the deferred tax asset, which could have a material impact on our results of operations in the period in which it is recorded.

Our deferred tax valuation model reflects projections of future taxable income based on a normalized average annual taxable income for the last three years, plus 3 percent growth for the next five years and level income thereafter. Such normalized projected taxable income has been adjusted to reflect the investment trading strategies and the coinsurance agreements to cede certain long-term care business, both completed in 2013. In addition, projected taxable income has been adjusted to reflect the sale of CLIC, which is expected to result in a net reduction to CNO's taxable income in future periods and required us to establish a valuation allowance of $19.4 million in the first six months of 2014. Our current deferred tax valuation model assumes estimated normalized taxable income of approximately $315.0 million in 2014. We have evaluated each component of the deferred tax asset and assessed the effect of limitations and/or interpretations on the value of each component and have concluded that it is more likely than not that the components recognized will be fully realized in the future.

Recovery of our deferred tax asset is dependent on achieving the level of future taxable income projected in our deferred tax valuation model and failure to do so could result in an increase in the valuation allowance in a future period.  Any future increase in the valuation allowance may result in additional income tax expense and reduce shareholders' equity, and such an increase could have a significant impact upon our earnings in the future.  In addition, the use of the Company's NOLs is dependent, in part, on whether the Internal Revenue Service (the "IRS") ultimately agrees with the tax position we have taken in our tax returns with respect to the character of the loss recognized as a result of the transfer of the stock of our former subsidiary, Conseco Senior Health Insurance Company ("CSHI"), to Senior Health Care Oversight Trust, an independent trust (the "Independent Trust").

The Internal Revenue Code (the "Code") limits the extent to which losses realized by a non-life entity (or entities) may offset income from a life insurance company (or companies) to the lesser of:  (i) 35 percent of the income of the life insurance company; or (ii) 35 percent of the total loss of the non-life entities (including NOLs of the non-life entities).  There is no similar limitation on the extent to which losses realized by a life insurance entity (or entities) may offset income from a non-life entity (or entities). This limitation is the primary reason a valuation allowance for NOL carryforwards is required.

Section 382 of the Code imposes limitations on a corporation's ability to use its NOLs when the company undergoes an ownership change.  Future transactions and the timing of such transactions could cause an ownership change for Section 382 income tax purposes.  Such transactions may include, but are not limited to, additional repurchases under our securities repurchase program, issuances of common stock and acquisitions or sales of shares of CNO stock by certain holders of our shares, including persons who have held, currently hold or may accumulate in the future five percent or more of our outstanding common stock for their own account.  Many of these transactions are beyond our control.  If an additional ownership change were to occur for purposes of Section 382, we would be required to calculate an annual restriction on the use of our NOLs to offset future taxable income.  The annual restriction would be calculated based upon the value of CNO's equity at the time of such ownership change, multiplied by a federal long-term tax exempt rate (3.32 percent at June 30, 2014), and the annual restriction could effectively eliminate our ability to use a substantial portion of our NOLs to offset future taxable income.  We regularly monitor ownership change (as calculated for purposes of Section 382) and, as of June 30, 2014, we were below the 50 percent ownership change level that would trigger further impairment of our ability to utilize our NOLs.

As of June 30, 2014, we had $3.3 billion of federal NOLs and $1.8 million of capital loss carryforwards. The following table summarizes the expiration dates of our loss carryforwards assuming the IRS ultimately agrees with the position we have taken with respect to the loss on our investment in CSHI (dollars in millions):

Year of expiration	Net operating loss carryforwards						Capital loss		Total loss
	Life			Non-life			carryforwards		carryforwards
2018	$	120.6		$	—		$	—	$	120.6
2021	30.0			—			—		30.0
2022	152.0			—			—		152.0
2023	742.6			2,126.1			—		2,868.7
2025	—			115.3			—		115.3
2027	—			202.6			—		202.6
2028	—			.5			—		.5
2029	—			272.3			—		272.3
2032	—			44.0			—		44.0
Subtotal	1,045.2			2,760.8			—		3,806.0
Less:
Unrecognized tax benefits	(344.7		)	(199.0		)	1.8		(541.9		)
Total	$	700.5		$	2,561.8		$	1.8	$	3,264.1

We had deferred tax assets related to NOLs for state income taxes of $18.4 million and $20.0 million at June 30, 2014 and December 31, 2013, respectively.  The related state NOLs are available to offset future state taxable income in certain states through 2025.

We recognized an $878 million ordinary loss on our investment in CSHI which was worthless when it was transferred to the Independent Trust in 2008. Of this loss, $742 million has been reported as a life loss and $136 million as a non-life loss. The IRS has disagreed with our ordinary loss treatment and believes that it should be treated as a capital loss, subject to a five year carryover. If the IRS position is ultimately determined to be correct, $473 million would have expired unused in 2013. Due to this uncertainty, we have not recognized a tax benefit of $166.0 million. However, if this unrecognized tax benefit would have been recognized, we would also have established a valuation allowance of $41.0 million at June 30, 2014.

Tax years 2004 and 2008 through 2012 are open to examination by the IRS.  The Company's various state income tax returns are generally open for tax years 2010 through 2012 based on the individual state statutes of limitation. Generally, for tax years which generate NOLs, capital losses or tax credit carryforwards, the statute of limitations does not close until the expiration of the statute of limitations for the tax year in which such carryforwards are utilized.

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DOCUMENT AND ENTITY INFORMATION	6 Months Ended
	Jun. 30, 2014	Jul. 22, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	CNO Financial Group, Inc.
Entity Central Index Key	0001224608
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Entity Filer Category	Large Accelerated Filer
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Amendment Flag	false
Entity Common Stock, Shares Outstanding		212,674,485

XML

NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS

NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS

The following notes payable were direct corporate obligations of the Company as of June 30, 2014 and December 31, 2013 (dollars in millions):

	June 30, 2014			December 31, 2013
Senior Secured Credit Agreement (as defined below)	$	555.5		$	581.5
6.375% Senior Secured Notes due October 2020 (the "6.375% Notes")	275.0			275.0
7.0% Debentures	—			3.5
Unamortized discount on Senior Secured Credit Agreement	(3.2		)	(3.6		)
Direct corporate obligations	$	827.3		$	856.4

Senior Secured Credit Agreement

On September 28, 2012, the Company entered into a new senior secured credit agreement, providing for: (i) a $425.0 million six-year term loan facility ($393.0 million remained outstanding at June 30, 2014); (ii) a $250.0 million four-year term loan facility ($162.5 million remained outstanding at June 30, 2014); and (iii) a $50.0 million three-year revolving credit facility, with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto (the "Senior Secured Credit Agreement"). The Senior Secured Credit Agreement is guaranteed by the Subsidiary Guarantors (as defined below) and secured by a first-priority lien (which ranks pari passu with the liens securing the 6.375% Notes) on substantially all of the Company's and the Subsidiary Guarantors' assets. As of June 30, 2014, no amounts have been borrowed under the revolving credit facility.

The revolving credit facility includes an uncommitted subfacility for swingline loans of up to $5.0 million, and up to $5.0 million of the revolving credit facility is available for the issuance of letters of credit. The six-year term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 1% and the four-year term loan facility amortizes in quarterly installments resulting in an annual amortization of 20% during the first and second years and 30% during the third and fourth years. Subject to certain conditions, the Company may incur additional incremental loans under the Senior Secured Credit Agreement in an amount of up to $250.0 million.

The interest rates with respect to loans under: (i) the six-year term loan facility are, at the Company's option, equal to a eurodollar rate, plus 2.75% per annum, or a base rate, plus 1.75% per annum, subject to a eurodollar rate "floor" of 1.00% and a base rate "floor" of 2.25% (such rate was 3.75% at June 30, 2014); (ii) the four-year term loan facility are, at the Company's option, equal to a eurodollar rate, plus 2.25% per annum, or a base rate, plus 1.25% per annum, subject to a eurodollar rate "floor" of .75% and a base rate "floor" of 2.00% (such rate was 3.00% at June 30, 2014); and (iii) the revolving credit facility will be, at the Company's option, equal to a eurodollar rate, plus 3.00% per annum, or a base rate, plus 2.00% per annum, in each case, with respect to revolving credit facility borrowings only, subject to certain step-downs based on the debt to total capitalization ratio of the Company.

In the first six months of 2014, we made $26.0 million of scheduled quarterly principal payments due under the Senior Secured Credit Agreement.

On May 30, 2014, the Company completed an amendment to the Senior Secured Credit Agreement to waive the requirement that the net proceeds in excess of $125 million to be received from the sale of CLIC be used to prepay amounts outstanding under the Senior Secured Credit Agreement. In the second quarter of 2014, we recognized expenses related to the amendment of the Senior Secured Credit Agreement totaling $.4 million which are included in the loss on extinguishment or modification of debt.

The amendment to the Senior Secured Credit Agreement did not impact the restrictions set forth in the 6.375% Indenture dated as of September 28, 2012 (the "6.375% Indenture") for the Company’s 6.375% Notes regarding the Company’s use of the proceeds from the sale of CLIC. Under the Indenture, the net proceeds received by the Company from the sale of CLIC (defined as "Net Available Cash" under the Indenture) may be used to: (i) reinvest in or acquire assets to be used in the insurance business or a related business; or (ii) repay the Senior Secured Credit Agreement. Under the Indenture, any Net Available Cash not so reinvested or applied within 365 days after the closing of the sale of CLIC must be used to make an offer to purchase the outstanding notes at par and, in the interim, may only be invested as set forth in the Indenture. The Company currently plans to reinvest the cash received from the sale of CLIC in its business including the payment on July 1, 2014, of $28.0 million to recapture a block of life insurance business from Wilton Re.

Mandatory prepayments of the Senior Secured Credit Agreement will be required, subject to certain exceptions, in an amount equal to: (i) 100% of the net cash proceeds from certain asset sales or casualty events; (ii) 100% of the net cash proceeds received by the Company or any of its restricted subsidiaries from certain debt issuances; and (iii) 100% of the amount of certain restricted payments made (including any common stock dividends and share repurchases) as defined in the Senior Secured Credit Agreement provided that if, as of the end of the fiscal quarter immediately preceding such restricted payment, the debt to total capitalization ratio is: (x) equal to or less than 25.0%, but greater than 20.0%, the prepayment requirement shall be reduced to 33.33%; or (y) equal to or less than 20.0%, the prepayment requirement shall not apply.

Notwithstanding the foregoing, no mandatory prepayments pursuant to item (i) in the preceding paragraph shall be required if: (x) the debt to total capitalization ratio is equal or less than 20% and (y) either (A) the financial strength rating of certain of the Company's insurance subsidiaries is equal or better than A- (stable) from A.M. Best Company ("A.M. Best") or (B) the Senior Secured Credit Agreement is rated equal or better than BBB- (stable) from S&P and Baa3 (stable) by Moody's Investor Services, Inc. ("Moody's").

The Senior Secured Credit Agreement requires the Company to maintain (each as calculated in accordance with the Senior Secured Credit Agreement): (i) a debt to total capitalization ratio of not more than 27.5 percent (such ratio was 17.6 percent at June 30, 2014); (ii) an interest coverage ratio of not less than 2.50 to 1.00 for each rolling four quarters (or, if less, the number of full fiscal quarters commencing after the effective date of the Senior Secured Credit Agreement) (such ratio was 9.81 to 1.00 for the four quarters ended June 30, 2014); (iii) an aggregate ratio of total adjusted capital to company action level risk-based capital for the Company's insurance subsidiaries of not less than 250 percent (such ratio was 437 percent at June 30, 2014); and (iv) a combined statutory capital and surplus for the Company's insurance subsidiaries of at least $1,300.0 million (combined statutory capital and surplus at June 30, 2014, was $2,057 million).

6.375% Notes

On September 28, 2012, we issued $275.0 million in aggregate principal amount of 6.375% Notes pursuant to the 6.375% Indenture, among the Company, the subsidiary guarantors party thereto (the "Subsidiary Guarantors") and Wilmington Trust, National Association, as trustee and as collateral agent. The net proceeds from the issuance of the 6.375% Notes, together with the net proceeds from the Senior Secured Credit Agreement, were used to repay other outstanding indebtedness and for general corporate purposes. The 6.375% Notes mature on October 1, 2020. Interest on the 6.375% Notes accrues at a rate of 6.375% per annum and is payable semiannually in arrears on April 1 and October 1 of each year, commencing on April 1, 2013. The 6.375% Notes and the guarantees thereof (the "Guarantees") are senior secured obligations of the Company and the Subsidiary Guarantors and rank equally in right of payment with all of the Company's and the Subsidiary Guarantors' existing and future senior obligations, and senior to all of the Company's and the Subsidiary Guarantors' future subordinated indebtedness. The 6.375% Notes are secured by a first-priority lien on substantially all of the assets of the Company and the Subsidiary Guarantors, subject to certain exceptions. The 6.375% Notes and the Guarantees are pari passu with respect to security and in right of payment with all of the Company's and the Subsidiary Guarantors' existing and future secured indebtedness under the Senior Secured Credit Agreement. The 6.375% Notes are structurally subordinated to all of the liabilities and preferred stock of each of the Company's insurance subsidiaries, which are not guarantors of the 6.375% Notes.

Under the 6.375% Indenture, the Company can make Restricted Payments (as such term is defined in the 6.375% Indenture) up to a calculated limit, provided that the Company's pro forma risk-based capital ratio exceeds 225% after giving effect to the Restricted Payment and certain other conditions are met. Restricted Payments include, among other items, repurchases of common stock and cash dividends on common stock (to the extent such dividends exceed $30.0 million in the aggregate in any calendar year).

The limit of Restricted Payments permitted under the 6.375% Indenture is the sum of (x) 50% of the Company's "Net Excess Cash Flow" (as defined in the 6.375% Indenture) for the period (taken as one accounting period) from July 1, 2012 to the end of the Company's most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment, (y) $175.0 million and (z) certain other amounts specified in the 6.375% Indenture. Based on the provisions set forth in the 6.375% Indenture and the Company's Net Excess Cash Flow for the period from July 1, 2012 through June 30, 2014, the Company could have made additional Restricted Payments under this 6.375% Indenture covenant of approximately $178 million as of June 30, 2014. This limitation on Restricted Payments does not apply if the Debt to Total Capitalization Ratio (as defined in the 6.375% Indenture) as of the last day of the Company's most recently ended fiscal quarter for which financial statements are available that immediately precedes the date of any Restricted Payment, calculated immediately after giving effect to such Restricted Payment and any related transactions on a pro forma basis, is equal to or less than 17.5%.

7.0% Debentures

On May 30, 2014, we repurchased the remaining $3.5 million principal amount of the 7.0% Debentures for a purchase price of $3.7 million and recognized a loss on the extinguishment of debt of $.2 million.

Scheduled Repayment of our Direct Corporate Obligations

The scheduled repayment of our direct corporate obligations was as follows at June 30, 2014 (dollars in millions):

Year ending June 30,
2015	$	73.0
2016	79.3
2017	23.0
2018	4.2
2019	376.0
Thereafter	275.0
	$	830.5

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FAIR VALUE MEASUREMENTS - FAIR VALUE ACTIVITY (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases	$ (31.1)		$ (27.7)		$ (57.7)		$ (52.8)
Sales	3.9		2.5		7.0		4.3
Issuances	(22.5)		(14.0)		(26.2)		(64.2)
Settlements	14.4		9.0		28.9		19.8
Purchases, sales, issuances and settlements, net	(35.3)	[1]	(30.2)	[2]	(48.0)	[1],[3]	(92.9)	[4]
Corporate debt securities | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases	51.0		10.0		51.0		71.5
Sales	(3.3)		(7.8)		(9.8)		(7.9)
Issuances	0		0		0		0
Settlements	0		0		0		0
Purchases, sales, issuances and settlements, net	47.7		2.2		41.2		63.6
Corporate debt securities | Equity securities classification
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases	0.8				1.7
Sales	0				0
Issuances	0				0
Settlements	0				0
Purchases, sales, issuances and settlements, net	0.8		0	[2]	1.7		0	[4]
Asset-backed securities | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases	0		0		9.9		7.6
Sales	(0.5)		(0.2)		(0.9)		(0.4)
Issuances	0		0		0		0
Settlements	0		0		0		0
Purchases, sales, issuances and settlements, net	(0.5)		(0.2)		9.0		7.2
Collateralized debt obligations | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases	0		0		0.9		13.3
Sales	(0.1)		(33.7)		(5.3)		(55.3)
Issuances	0		0		0		0
Settlements	0		0		0		0
Purchases, sales, issuances and settlements, net	(0.1)		(33.7)		(4.4)		(42.0)
Collateralized debt obligations | Trading securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases							0
Sales							(7.7)
Issuances							0
Settlements							0
Purchases, sales, issuances and settlements, net							(7.7)
Commercial mortgage backed securities | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases			0				0
Sales			(0.5)				(0.7)
Issuances			0				0
Settlements			0				0
Purchases, sales, issuances and settlements, net			(0.5)				(0.7)
Mortgage pass through securities | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases	1.1				1.1		0
Sales	(0.2)				(1.4)		(0.1)
Issuances	0				0		0
Settlements	0				0		0
Purchases, sales, issuances and settlements, net	0.9				(0.3)		(0.1)
Collateralized mortgage obligations | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases							0
Sales							(0.1)
Issuances							0
Settlements							0
Purchases, sales, issuances and settlements, net							(0.1)
Total fixed maturities, available for sale | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases	52.1		10.0		62.9		92.4
Sales	(4.1)		(42.2)		(17.4)		(64.5)
Issuances	0		0		0		0
Settlements	0		0		0		0
Purchases, sales, issuances and settlements, net	48.0		(32.2)		45.5		27.9
Venture capital funds | Equity securities classification
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net			0	[2]			0	[4]
Equity securities | Equity securities classification
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net			0	[2]			0	[4]
US states and political subdivisions debt securities | Trading securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net			0	[2]			0	[4]
Collateralized debt obligations | Trading securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net							(7.7)	[4]
Interest sensitive products
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases	(31.1)		(27.7)		(57.7)		(52.8)
Sales	0.5		0		3.6		1.4
Issuances	(22.5)		(14.0)		(24.6)		(64.2)
Settlements	14.4		9.0		28.9		19.8
Purchases, sales, issuances and settlements, net	(38.7)	[1]	(32.7)	[2]	(49.8)	[1],[3]	(95.8)	[4]
Interest sensitive products modified coinsurance agreement
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases	0		0		0		0
Sales	3.4		2.5		3.4		2.9
Issuances	0		0		(1.6)		0
Settlements	0		0		0		0
Purchases, sales, issuances and settlements, net	3.4	[1]	2.5	[2]	1.8	[1],[3]	2.9	[4]
Fair value, measurements, recurring | Level 3 | Trading securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net			0	[2]			(7.7)	[4]
Fair value, measurements, recurring | Level 3 | Corporate debt securities | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net	47.7	[1]	2.2	[2]	41.2	[1],[3]	63.6	[4]
Fair value, measurements, recurring | Level 3 | Corporate debt securities | Equity securities classification
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net	0.8	[1]			1.7	[1],[3]
Fair value, measurements, recurring | Level 3 | US states and political subdivisions debt securities | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net	0	[1]	0	[2]	0	[3]	0	[4]
Fair value, measurements, recurring | Level 3 | Asset-backed securities | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net	(0.5)	[1]	(0.2)	[2]	9.0	[1],[3]	7.2	[4]
Fair value, measurements, recurring | Level 3 | Collateralized debt obligations | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net	(0.1)	[1]	(33.7)	[2]	(4.4)	[1],[3]	(42.0)	[4]
Fair value, measurements, recurring | Level 3 | Commercial mortgage backed securities | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net			(0.5)	[2]			(0.7)	[4]
Fair value, measurements, recurring | Level 3 | Mortgage pass through securities | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net	0.9	[1]	0	[2]	(0.3)	[1],[3]	(0.1)	[4]
Fair value, measurements, recurring | Level 3 | Collateralized mortgage obligations | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net	0	[1]	0	[2]	0	[3]	(0.1)	[4]
Fair value, measurements, recurring | Level 3 | Total fixed maturities, available for sale | Available-for-sale securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net	48.0	[1]	(32.2)	[2]	45.5	[1],[3]	27.9	[4]
Fair value, measurements, recurring | Level 3 | Collateralized mortgage obligations | Trading securities
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net	0	[1]	0	[2]	0	[1],[3]	0	[4]
Assets of CLIC being sold | Fair value, measurements, recurring | Level 3
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Purchases, sales, issuances and settlements, net					$ 0	[3]

[1] Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended June 30, 2014 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, netAssets: Fixed maturities, available for sale: Corporate securities$51.0 $(3.3) $— $— $47.7Asset-backed securities— (.5) — — (.5)Collateralized debt obligations— (.1) — — (.1)Mortgage pass-through securities1.1 (.2) — — .9Total fixed maturities, available for sale52.1 (4.1) — — 48.0Equity securities - corporate securities.8 — — — .8Liabilities: Liabilities for insurance products: Interest-sensitive products - embedded derivatives associated with fixed index annuity products(31.1) .5 (22.5) 14.4 (38.7)Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement— 3.4 — — 3.4Total liabilities for insurance products(31.1) 3.9 (22.5) 14.4 (35.3)

[2] Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended June 30, 2013 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, netAssets: Fixed maturities, available for sale: Corporate securities$10.0 $(7.8) $— $— $2.2Asset-backed securities— (.2) — — (.2)Collateralized debt obligations— (33.7) — — (33.7)Commercial mortgage-backed securities— (.5) — — (.5)Total fixed maturities, available for sale10.0 (42.2) — — (32.2)Liabilities: Liabilities for insurance products: Interest-sensitive products - embedded derivatives associated with fixed index annuity products(27.7) — (14.0) 9.0 (32.7)Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement— 2.5 — — 2.5Total liabilities for insurance products(27.7) 2.5 (14.0) 9.0 (30.2)

[3] Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the six months ended June 30, 2014 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, netAssets: Fixed maturities, available for sale: Corporate securities$51.0 $(9.8) $— $— $41.2Asset-backed securities9.9 (.9) — — 9.0Collateralized debt obligations.9 (5.3) — — (4.4)Mortgage pass-through securities1.1 (1.4) — — (.3)Total fixed maturities, available for sale62.9 (17.4) — — 45.5Equity securities - corporate securities1.7 — — — 1.7Liabilities: Liabilities for insurance products: Interest-sensitive products - embedded derivatives associated with fixed index annuity products(57.7) 3.6 (24.6) 28.9 (49.8)Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement— 3.4 (1.6) — 1.8Total liabilities for insurance products(57.7) 7.0 (26.2) 28.9 (48.0)

[4] Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the six months ended June 30, 2013 (dollars in millions): Purchases Sales Issuances Settlements Purchases, sales, issuances and settlements, netAssets: Fixed maturities, available for sale: Corporate securities$71.5 $(7.9) $— $— $63.6Asset-backed securities7.6 (.4) — — 7.2Collateralized debt obligations13.3 (55.3) — — (42.0)Commercial mortgage-backed securities— (.7) — — (.7)Mortgage pass-through securities— (.1) — — (.1)Collateralized mortgage obligations— (.1) — — (.1)Total fixed maturities, available for sale92.4 (64.5) — — 27.9Trading securities - collateralized debt obligations— (7.7) — — (7.7)Liabilities: Liabilities for insurance products: Interest-sensitive products - embedded derivatives associated with fixed index annuity products(52.8) 1.4 (64.2) 19.8 (95.8)Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement— 2.9 — — 2.9Total liabilities for insurance products(52.8) 4.3 (64.2) 19.8 (92.9)

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CONSOLIDATED STATEMENT OF OPERATIONS (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenues:
Insurance policy income	$ 679.0	$ 691.3	$ 1,364.9	$ 1,382.5
Net investment income (loss):
General account assets	347.4	348.8	695.5	700.7
Policyholder and reinsurer accounts and other special-purpose portfolios	47.2	31.8	68.1	109.5
Realized investment gains (losses):
Net realized investment gains, excluding impairment losses	12.4	3.8	47.7	19.1
Other-than-temporary impairment losses:
Total other-than-temporary impairment losses	0	(0.6)	(11.9)	(0.6)
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income	0	0	0	0
Net impairment losses recognized	0	(0.6)	(11.9)	(0.6)
Total realized gains	12.4	3.2	35.8	18.5
Fee revenue and other income	7.0	6.4	13.4	12.9
Total revenues	1,093.0	1,081.5	2,177.7	2,224.1
Benefits and expenses:
Insurance policy benefits	691.1	673.2	1,381.4	1,427.3
Loss on sale of subsidiary	0	0	278.6	0
Gain related to reinsurance transaction	(3.8)	0	(3.8)	0
Interest expense	24.3	26.9	48.9	54.2
Amortization	64.9	79.2	131.6	158.5
Loss on extinguishment or modification of debt	0.6	7.7	0.6	65.4
Other operating costs and expenses	201.5	179.8	395.6	369.4
Total benefits and expenses	978.6	966.8	2,232.9	2,074.8
Income (loss) before income taxes	114.4	114.7	(55.2)	149.3
Income tax expense:
Tax expense on period income	40.3	42.6	79.3	75.8
Valuation allowance for deferred tax assets and other tax items	(4.0)	(5.0)	15.4	(15.5)
Net income (loss)	$ 78.1	$ 77.1	$ (149.9)	$ 89.0
Basic:
Weighted average shares outstanding (in shares)	216,538	220,498	218,422	221,290
Net income (loss) (in dollars per share)	$ 0.36	$ 0.35	$ (0.69)	$ 0.40
Diluted:
Weighted average shares outstanding (in shares)	222,108	230,893	218,422	237,180
Net income (loss) (in dollars per share)	$ 0.35	$ 0.34	$ (0.69)	$ 0.38

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INVESTMENTS

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

INVESTMENTS

We classify our fixed maturity securities into one of two categories: (i) "available for sale" (which we carry at estimated fair value with any unrealized gain or loss, net of tax and related adjustments, recorded as a component of shareholders' equity); or (ii) "trading" (which we carry at estimated fair value with changes in such value recognized as net investment income (classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios)).

Ourtrading securities include: (i) investments purchased with the intent of selling in the near term to generate income; and (ii) investments supporting certain insurance liabilities (including investments backing the market strategies of our multibucket annuity products) and certain reinsurance agreements. The change in fair value of these securities is recognized in income from policyholder and reinsurer accounts and other special-purpose portfolios (a component of net investment income). Investment income from trading securities backing certain insurance liabilities and certain reinsurance agreements is substantially offset by the change in insurance policy benefits related to certain products and agreements.  The trading account also includes certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in value of these securities is recognized in realized investment gains (losses).  Our trading securities totaled $227.4 million and $247.6 million at June 30, 2014 and December 31, 2013, respectively.

Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments.  These amounts, included in shareholders' equity as of June 30, 2014 and December 31, 2013, were as follows (dollars in millions):

	June 30, 2014			December 31, 2013
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized	$	8.5		$	6.5
Net unrealized gains on all other investments	2,157.8			1,322.6
Adjustment to present value of future profits (a)	(157.6		)	(47.7		)
Adjustment to deferred acquisition costs	(395.5		)	(137.0		)
Adjustment to insurance liabilities	(168.1		)	—
Unrecognized net loss related to deferred compensation plan	(6.4		)	(7.1		)
Deferred income tax liabilities	(512.6		)	(405.5		)
Accumulated other comprehensive income	$	926.1		$	731.8

________

(a) The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003 (the date Conseco, Inc., an Indiana corporation (our "Predecessor"), emerged from bankruptcy.

At June 30, 2014, adjustments to the present value of future profits, deferred acquisition costs, insurance liabilities and deferred tax assets included $(134.0) million, $(143.3) million, $(168.1) million and $158.3 million, respectively, for premium deficiencies that would exist on certain long-term health products if unrealized gains on the assets backing such products had been realized and the proceeds from the sales of such assets were invested at then current yields.

At June 30, 2014, the amortized cost, gross unrealized gains and losses, estimated fair value, other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, were as follows (dollars in millions):

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Other-than-temporary impairments included in accumulated other comprehensive income
Corporate securities	$	12,217.4	$	1,688.0	$	(23.8	)	$	13,881.6	$	—
United States Treasury securities and obligations of United States government corporations and agencies	149.6		10.7		(.2		)	160.1		—
States and political subdivisions	1,944.3		212.9		(6.3		)	2,150.9		—
Asset-backed securities	1,244.5		84.2		(2.6		)	1,326.1		—
Collateralized debt obligations	319.9		5.2		(.9		)	324.2		—
Commercial mortgage-backed securities	1,173.9		92.5		(.2		)	1,266.2		—
Mortgage pass-through securities	8.4		.5		—			8.9		—
Collateralized mortgage obligations	1,325.8		90.7		(.9		)	1,415.6		(3.7		)
Total fixed maturities, available for sale	$	18,383.8	$	2,184.7	$	(34.9	)	$	20,533.6	$	(3.7	)
Fixed maturities of CLIC being sold	$	3,470.7	$	—	$	—		$	3,470.7	$	—

The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at June 30, 2014, by contractual maturity.  Actual maturities will differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties.  In addition, structured securities (such as asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments.

	Amortized cost		Estimated fair value
	(Dollars in millions)
Due in one year or less	$	164.7	$	169.5
Due after one year through five years	1,762.1		1,957.6
Due after five years through ten years	2,906.4		3,192.2
Due after ten years	9,478.1		10,873.3
Subtotal	14,311.3		16,192.6
Structured securities	4,072.5		4,341.0
Total fixed maturities, available for sale	$	18,383.8	$	20,533.6

Net Realized Investment Gains (Losses)

The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Fixed maturity securities, available for sale:
Gross realized gains on sale	$	4.9		$	10.8		$	46.4		$	27.4
Gross realized losses on sale	(3.0		)	(1.4		)	(8.5		)	(3.4		)
Impairments:
Total other-than-temporary impairment losses	—			—			—			—
Other-than-temporary impairment losses recognized in accumulated other comprehensive income	—			—			—			—
Net impairment losses recognized	—			—			—			—
Net realized investment gains from fixed maturities	1.9			9.4			37.9			24.0
Equity securities	7.9			—			7.9			—
Commercial mortgage loans	1.1			—			1.1			.7
Impairments of mortgage loans and other investments	—			(.6		)	(11.9		)	(.6		)
Other	1.5			(5.6		)	.8			(5.6		)
Net realized investment gains	$	12.4		$	3.2		$	35.8		$	18.5

During the first six months of 2014, we recognized net realized investment gains of $35.8 million, which were comprised of $41.8 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $1.4 billion, the increase in fair value of certain fixed maturity investments with embedded derivatives of $5.9 million and $11.9 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

During the first six months of 2013, we recognized net realized investment gains of $18.5 million, which were comprised of $29.6 million of net gains from the sales of investments (primarily fixed maturities) with proceeds of $.9 billion and the decrease in fair value of certain fixed maturity investments with embedded derivatives of $10.5 million and $.6 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

Our fixed maturity investments are generally purchased in the context of various long-term strategies, including funding insurance liabilities, so we do not generally seek to generate short-term realized gains through the purchase and sale of such securities.  In certain circumstances, including those in which securities are selling at prices which exceed our view of their underlying economic value, or when it is possible to reinvest the proceeds to better meet our long-term asset-liability objectives, we may sell certain securities.

During the first six months of 2014, the $8.5 million of realized losses on sales of $156.9 million of fixed maturity securities, available for sale, included:  (i) $.5 million of losses related to the sales of securities issued by state and political subdivisions; and (ii) $8.0 million of additional losses related to various corporate securities.  Securities are generally sold at a loss following unforeseen issue-specific events or conditions or shifts in perceived risks.  These reasons include but are not limited to:  (i) changes in the investment environment; (ii) expectation that the market value could deteriorate further; (iii) desire to reduce our exposure to an asset class, an issuer or an industry; (iv) prospective or actual changes in credit quality; or (v) changes in expected cash flows.

During the first six months of 2014, we recognized $11.9 million of impairment losses recorded in earnings which included: (i) a $3.9 million writedown of a commercial mortgage loan related to a property with expected occupancy challenges; and (ii) an $8.0 million impairment related to two legacy private company investments where earnings and cash flows have not met the expectations assumed in our previous valuations.

We regularly evaluate all of our investments with unrealized losses for possible impairment.  Our assessment of whether unrealized losses are "other than temporary" requires significant judgment.  Factors considered include:  (i) the extent to which fair value is less than the cost basis; (ii) the length of time that the fair value has been less than cost; (iii) whether the unrealized loss is event driven, credit-driven or a result of changes in market interest rates or risk premium; (iv) the near-term prospects for specific events, developments or circumstances likely to affect the value of the investment; (v) the investment's rating and whether the investment is investment-grade and/or has been downgraded since its purchase; (vi) whether the issuer is current on all payments in accordance with the contractual terms of the investment and is expected to meet all of its obligations under the terms of the investment; (vii) whether we intend to sell the investment or it is more likely than not that circumstances will require us to sell the investment before recovery occurs; (viii) the underlying current and prospective asset and enterprise values of the issuer and the extent to which the recoverability of the carrying value of our investment may be affected by changes in such values; (ix) projections of, and unfavorable changes in, cash flows on structured securities including mortgage-backed and asset-backed securities; (x) our best estimate of the value of any collateral; and (xi) other objective and subjective factors.

Future events may occur, or additional information may become available, which may necessitate future realized losses in our portfolio.  Significant losses could have a material adverse effect on our consolidated financial statements in future periods.

Impairment losses on equity securities are recognized in net income.  The manner in which impairment losses on fixed maturity securities, available for sale, are recognized in the financial statements is dependent on the facts and circumstances related to the specific security.  If we intend to sell a security or it is more likely than not that we would be required to sell a security before the recovery of its amortized cost, the security is other-than-temporarily impaired and the full amount of the impairment is recognized as a loss through earnings.  If we do not expect to recover the amortized cost basis, we do not plan to sell the security, and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, less any current period credit loss, the recognition of the other-than-temporary impairment is bifurcated.  We recognize the credit loss portion in net income and the noncredit loss portion in accumulated other comprehensive income.

We estimate the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security.  The present value is determined using the best estimate of future cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security.  The methodology and assumptions for establishing the best estimate of future cash flows vary depending on the type of security.

For most structured securities, cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity, prepayment speeds and structural support, including excess spread, subordination and guarantees.  For corporate bonds, cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or the disposition of assets using bond specific facts and circumstances. The previous amortized cost basis less the impairment recognized in net income becomes the security's new cost basis.  We accrete the new cost basis to the estimated future cash flows over the expected remaining life of the security, except when the security is in default or considered nonperforming.

The remaining noncredit impairment, which is recorded in accumulated other comprehensive income, is the difference between the security's estimated fair value and our best estimate of future cash flows discounted at the effective interest rate prior to impairment.  The remaining noncredit impairment typically represents changes in the market interest rates, current market liquidity and risk premiums.  As of June 30, 2014, other-than-temporary impairments included in accumulated other comprehensive income of $3.7 million (before taxes and related amortization) related to structured securities.

The following table summarizes the amount of credit losses recognized in earnings on fixed maturity securities, available for sale, held at the beginning of the period, for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income for the three and six months ended June 30, 2014, and 2013 (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Credit losses on fixed maturity securities, available for sale, beginning of period	$	(1.3	)	$	(1.5	)	$	(1.3	)	$	(1.6	)
Add:  credit losses on other-than-temporary impairments not previously recognized	—			—			—			—
Less:  credit losses on securities sold	.1			—			.1			.1
Less:  credit losses on securities impaired due to intent to sell (a)	—			—			—			—
Add:  credit losses on previously impaired securities	—			—			—			—
Less:  increases in cash flows expected on previously impaired securities	—			—			—			—
Credit losses on fixed maturity securities, available for sale, end of period	$	(1.2	)	$	(1.5	)	$	(1.2	)	$	(1.5	)

__________

(a) Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis.

Gross Unrealized Investment Losses

Our investment strategy is to maximize, over a sustained period and within acceptable parameters of quality and risk, investment income and total investment return through active investment management. Accordingly, we may sell securities at a gain or a loss to enhance the projected total return of the portfolio as market opportunities change, to reflect changing perceptions of risk, or to better match certain characteristics of our investment portfolio with the corresponding characteristics of our insurance liabilities.

The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at June 30, 2014 (dollars in millions):

	Less than 12 months					12 months or greater					Total
Description of securities	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
United States Treasury securities and obligations of United States government corporations and agencies	$	—	$	—		$	18.4	$	(.2	)	$	18.4	$	(.2	)
States and political subdivisions	15.6		(.6		)	124.1		(5.7		)	139.7		(6.3		)
Corporate securities	173.3		(1.1		)	423.2		(22.7		)	596.5		(23.8		)
Asset-backed securities	76.9		(.5		)	91.5		(2.1		)	168.4		(2.6		)
Collateralized debt obligations	64.2		(.7		)	11.7		(.2		)	75.9		(.9		)
Commercial mortgage-backed securities	14.8		—			19.2		(.2		)	34.0		(.2		)
Mortgage pass-through securities	1.2		—			.8		—			2.0		—
Collateralized mortgage obligations	82.4		(.4		)	20.6		(.5		)	103.0		(.9		)
Total fixed maturities, available for sale	$	428.4	$	(3.3	)	$	709.5	$	(31.6	)	$	1,137.9	$	(34.9	)
Preferred stock	$	34.3	$	(.4	)	$	20.3	$	(.9	)	$	54.6	$	(1.3	)

The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2013 (dollars in millions):

	Less than 12 months					12 months or greater					Total
Description of securities	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
United States Treasury securities and obligations of United States government corporations and agencies	$	23.8	$	(.6	)	$	—	$	—		$	23.8	$	(.6	)
States and political subdivisions	473.6		(30.3		)	79.2		(8.7		)	552.8		(39.0		)
Corporate securities	2,406.1		(132.8		)	170.3		(20.8		)	2,576.4		(153.6		)
Asset-backed securities	308.4		(6.5		)	32.5		(.7		)	340.9		(7.2		)
Collateralized debt obligations	46.7		(.5		)	—		—			46.7		(.5		)
Commercial mortgage-backed securities	161.8		(5.8		)	—		—			161.8		(5.8		)
Mortgage pass-through securities	1.6		—			1.6		—			3.2		—
Collateralized mortgage obligations	121.8		(1.6		)	2.2		—			124.0		(1.6		)
Total fixed maturities, available for sale	$	3,543.8	$	(178.1	)	$	285.8	$	(30.2	)	$	3,829.6	$	(208.3	)
Preferred stock	$	26.8	$	(4.9	)	$	—	$	—		$	26.8	$	(4.9	)

Based on management's current assessment of investments with unrealized losses at June 30, 2014, the Company believes the issuers of the securities will continue to meet their obligations (or with respect to equity-type securities, the investment value will recover to its cost basis).  While we do not have the intent to sell securities with unrealized losses and it is not more likely than not that we will be required to sell securities with unrealized losses prior to their anticipated recovery, our intent on an individual security may change, based upon market or other unforeseen developments.  In such instances, if a loss is recognized from a sale subsequent to a balance sheet date due to these unexpected developments, the loss is recognized in the period in which we had the intent to sell the security before its anticipated recovery.

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OUT OF PERIOD ADJUSTMENTS

6 Months Ended

Jun. 30, 2014

Out of Period Adjustments [Abstract]

OUT-OF-PERIOD ADJUSTMENTS

OUT-OF-PERIOD ADJUSTMENTS

In the six months ended June 30, 2014, we recorded the net effect of an out-of-period adjustment related to the calculation of incentive compensation accruals which increased other operating costs and expenses by $2.4 million, decreased tax expense by $.8 million and increased our net loss by $1.6 million (or 1 cent per diluted share). In the six months ended June 30, 2013, we recorded the net effect of an out-of-period adjustment which increased our insurance policy benefits by $6.7 million, increased amortization expense by $2.5 million, decreased tax expense by $3.2 million and decreased our net income by $6.0 million (or 3 cents per diluted share), none of which was recognized in the second quarter of 2013. We evaluated these adjustments taking into account both qualitative and quantitative factors and considered the impact of these adjustments in relation to each period, as well as the periods in which they originated. The impact of recognizing these adjustments in prior years was not significant to any individual period. Management believes these adjustments are immaterial to the consolidated financial statements and all previously issued financial statements.

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RECENTLY ISSUED ACCOUNTING STANDARDS

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

RECENTLY ISSUED ACCOUNTING STANDARDS

RECENTLY ISSUED ACCOUNTING STANDARDS

Pending Accounting Standards

In April 2014, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance changing the criteria for reporting discontinued operations. Under the revised guidance, only disposals of a component or a group of components, including those classified as held for sale, which represent a strategic shift that has or will have a major effect on a company's operations and financial results will be reported as discontinued operations. The guidance is effective prospectively for new disposals occurring after January 1, 2015.

In May 2014, the FASB issued authoritative guidance for recognizing revenue from contracts with customers. Certain contracts with customers are specifically excluded from this guidance, including insurance contracts. The core principle of the new guidance is that an entity should recognize revenue when it transfers promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance will be effective for the Company on January 1, 2017 and permits two methods of transition upon adoption; full retrospective and modified retrospective. Under the full retrospective method, prior periods would be restated under the new revenue standard, providing for comparability in all periods presented. Under the modified retrospective method, prior periods would not be restated. Instead, revenues and other disclosures for pre-2017 periods would be provided in the notes to the financial statements as previously reported under the current revenue standard. The Company is currently assessing the impact the guidance will have upon adoption.

In June 2014, the FASB issued authoritative guidance on the accounting and disclosure of repurchase-to-maturity transactions and repurchase financings. Under this new accounting guidance, repurchase-to-maturity transactions will be accounted for as secured borrowings rather than sales of an asset, and transfers of financial assets with a contemporaneous repurchase financing arrangement will no longer be evaluated to determine whether they should be accounted for on a combined basis as forward contracts. The new guidance also prescribes additional disclosures particularly on the nature of collateral pledged in the repurchase agreement accounted for as a secured borrowing. The new guidance is effective beginning on January 1, 2015. The Company is currently assessing the impact the guidance will have upon adoption.

Adopted Accounting Standards

In July 2013, the FASB issued authoritative guidance regarding the financial statement presentation of an unrecognized tax benefit when a NOL carryforward, a similar tax loss or a tax credit carryforward exists. Such guidance will require an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a NOL carryforward, a similar tax loss, or a tax credit carryforward, except under certain circumstances as further described in the guidance. Such guidance does not require new recurring disclosures. This guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this guidance did not have a material impact on our consolidated financial statements.

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INVESTMENT BORROWINGS

6 Months Ended

Jun. 30, 2014

Investment Borrowings [Abstract]

INVESTMENT BORROWINGS

INVESTMENT BORROWINGS

Two of the Company's insurance subsidiaries (Washington National Insurance Company ("Washington National") and Bankers Life) are members of the Federal Home Loan Bank ("FHLB").  As members of the FHLB, Washington National and Bankers Life have the ability to borrow on a collateralized basis from the FHLB.  Washington National and Bankers Life are required to hold certain minimum amounts of FHLB common stock as a condition of membership in the FHLB, and additional amounts based on the amount of the borrowings.  At June 30, 2014, the carrying value of the FHLB common stock was $73.5 million.  As of June 30, 2014, collateralized borrowings from the FHLB totaled $1.5 billion and the proceeds were used to purchase fixed maturity securities.  The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet.  The borrowings are collateralized by investments with an estimated fair value of $1.8 billion at June 30, 2014, which are maintained in a custodial account for the benefit of the FHLB.  Substantially all of such investments are classified as fixed maturities, available for sale, in our consolidated balance sheet.  

CLIC was also a member of the FHLB and "Assets of subsidiary being sold" included FHLB common stock of $22.5 million and "Liabilities of subsidiary being sold" included collateralized borrowings of $383.4 million, both as of June 30, 2014. These borrowings are collateralizd by investments with an estimated fair value of $503.9 million included in the "Assets of subsidiary being sold".

The following summarizes the terms of the borrowings from the FHLB by Washington National and Bankers Life (dollars in millions):

Amount		Maturity	Interest rate at
borrowed		date	June 30, 2014
$	50.0	September 2015	Variable rate – 0.528%
50.0		October 2015	Variable rate – 0.502%
100.0		June 2016	Variable rate – 0.592%
75.0		June 2016	Variable rate – 0.394%
100.0		October 2016	Variable rate – 0.412%
50.0		November 2016	Variable rate – 0.497%
50.0		November 2016	Variable rate – 0.622%
57.7		June 2017	Variable rate – 0.581%
50.0		August 2017	Variable rate – 0.424%
75.0		August 2017	Variable rate – 0.377%
100.0		October 2017	Variable rate – 0.656%
50.0		November 2017	Variable rate – 0.737%
50.0		January 2018	Variable rate – 0.578%
50.0		January 2018	Variable rate – 0.566%
50.0		February 2018	Variable rate – 0.533%
50.0		February 2018	Variable rate – 0.315%
22.0		February 2018	Variable rate – 0.559%
100.0		May 2018	Variable rate – 0.600%
50.0		July 2018	Variable rate – 0.698%
50.0		August 2018	Variable rate – 0.344%
50.0		January 2019	Variable rate – 0.649%
50.0		February 2019	Variable rate – 0.315%
100.0		March 2019	Variable rate – 0.634%
21.8		June 2020	Fixed rate – 1.960%
27.2		March 2023	Fixed rate – 2.160%
20.5		June 2025	Fixed rate – 2.940%
$	1,499.2

The following summarizes the terms of the borrowings classified as "Liabilities of subsidiary being sold" (dollars in millions):

Amount		Maturity	Interest rate at
borrowed		date	June 30, 2014
$	146.4	November 2015	Fixed rate – 5.300%
100.0		December 2015	Fixed rate – 4.710%
100.0		July 2017	Fixed rate – 3.900%
37.0		November 2017	Fixed rate – 3.750%
$	383.4

The variable rate borrowings are pre-payable on each interest reset date without penalty.  The fixed rate borrowings are pre-payable subject to payment of a yield maintenance fee based on current market interest rates.  At June 30, 2014, the aggregate yield maintenance fee to prepay all fixed rate borrowings was $29.5 million.

Interest expense of $13.8 million and $13.6 million in the first six months of 2014 and 2013, respectively, was recognized related to total borrowings from the FHLB.

As part of our investment strategy, we may enter into repurchase agreements to increase our investment return. Pursuant to such agreements, the Company sells securities subject to an obligation to repurchase the same securities. Under these arrangements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets. As a result, these repurchase agreements are accounted for as collateralized financing arrangements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities. Such borrowings totaled $8.4 million at June 30, 2014 and mature prior to June 30, 2015.

The primary risks associated with short-term collateralized borrowings are: (i) a substantial decline in the market value of the margined security; and (ii) that a counterparty may be unable to perform under the terms of the contract or be unwilling to extend such financing in future periods especially if the liquidity or value of the margined security has declined. Exposure is limited to any depreciation in value of the related securities.

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ACCOUNTING FOR DERIVATIVES

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

ACCOUNTING FOR DERIVATIVES

ACCOUNTING FOR DERIVATIVES

Our fixed index annuity products provide a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the "participation rate") of the amount of increase in the value of a particular index, such as the Standard & Poor's 500 Index, over a specified period.  Typically, on each policy anniversary date, a new index period begins.  We are generally able to change the participation rate at the beginning of each index period during a policy year, subject to contractual minimums.  We typically buy call options (including call spreads) referenced to the applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked.  We reflect changes in the estimated fair value of these options in net investment income (classified as investment income from policyholder and reinsurer accounts and other special-purpose portfolios).  Net investment gains (losses) related to fixed index products were $36.7 million and $75.9 million in the six months ended June 30, 2014 and 2013, respectively. These amounts were substantially offset by a corresponding change to insurance policy benefits.  The estimated fair value of these options was $130.7 million (including $4.3 million classified as "Assets of subsidiary being sold") and $156.2 million at June 30, 2014 and December 31, 2013, respectively.  We classify these instruments as other invested assets.

The Company accounts for the options attributed to the policyholder for the estimated life of the annuity contract as embedded derivatives.  The Company purchases options to hedge liabilities for the next policy period approximately on each policy anniversary date and must estimate the fair value of the forward embedded options related to the policies.  These accounting requirements often create volatility in the earnings from these products.  We record the changes in the fair values of the embedded derivatives in earnings as a component of insurance policy benefits.  The fair value of these derivatives, which are classified as "policyholder account balances", was $980.3 million and $903.7 million at June 30, 2014 and December 31, 2013, respectively. We recognized an increase to earnings of $7.4 million and $18.5 million in the second quarters of 2014 and 2013, respectively, and $18.4 million and $20.6 million in the first six months of 2014 and 2013, respectively, from the volatility caused by the accounting requirements to record embedded options at fair value.

If the counterparties for the call options we hold fail to meet their obligations, we may have to recognize a loss.  We limit our exposure to such a loss by diversifying among several counterparties believed to be strong and creditworthy.  At June 30, 2014, substantially all of our counterparties were rated "BBB" or higher by Standard & Poor's Corporation ("S&P").

In periods prior to the second quarter of 2014, we were required to establish an embedded derivative related to a modified coinsurance agreement which ceded the risks of a block of interest sensitive life business. We recaptured this block in the second quarter of 2014, resulting in a gain of $3.8 million, primarily consisting of the release of the embedded derivative. Prior to the recapture of this block, we maintained the investments related to the modified coinsurance agreement in our trading securities account, which we carried at estimated fair value with changes in such value recognized as investment income.  Such trading securities were sold in the second quarter of 2014 in conjunction with the reinsurance recapture.

We purchase certain fixed maturity securities that contain embedded derivatives that are required to be bifurcated from the instrument and held at fair value on the consolidated balance sheet. For certain of these securities, we have elected the fair value option to carry the entire security at fair value with changes in fair value reported in net income for operational ease. Such securities totaled $221.1 million (including $24.3 million classified as "Assets of subsidiary being sold") and $180.6 million at June 30, 2014 and December 31, 2013, respectively.

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INCOME TAXES INCOME TAXES - NET OPERATING LOSSES (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Operating Loss Carryforwards [Line Items]
Capital loss carryforwards	$ 0
Total loss carryforwards	3,806.0
Capital loss carryforwards, unrecognized tax benefit	1.8
Total loss carryforwards, unrecognized tax benefit	(541.9)
Capital loss carryforwards, net of unrecognized tax benefits	1.8
Total loss carryforwards, net of unrecognized tax benefits	3,264.1
Life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	1,045.2
Net operating loss carryforward, unrecognized tax benefit	(344.7)
Net operating loss carryforwards, net of unrecognized tax benefits	700.5
Non life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	2,760.8
Net operating loss carryforward, unrecognized tax benefit	(199.0)
Net operating loss carryforwards, net of unrecognized tax benefits	2,561.8
Carryforward Expiration 2018
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2018
Capital loss carryforwards	0
Total loss carryforwards	120.6
Carryforward Expiration 2018 | Life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	120.6
Carryforward Expiration 2018 | Non life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	0
Carryforward Expiration 2021
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2021
Capital loss carryforwards	0
Total loss carryforwards	30.0
Carryforward Expiration 2021 | Life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	30.0
Carryforward Expiration 2021 | Non life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	0
Carryforward Expiration 2022
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2022
Capital loss carryforwards	0
Total loss carryforwards	152.0
Carryforward Expiration 2022 | Life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	152.0
Carryforward Expiration 2022 | Non life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	0
Carryforward Expiration 2023
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2023
Capital loss carryforwards	0
Total loss carryforwards	2,868.7
Carryforward Expiration 2023 | Life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	742.6
Carryforward Expiration 2023 | Non life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	2,126.1
Carryforward Expiration 2025
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2025
Capital loss carryforwards	0
Total loss carryforwards	115.3
Carryforward Expiration 2025 | Life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	0
Carryforward Expiration 2025 | Non life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	115.3
Carryforward Expiration 2027
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2027
Capital loss carryforwards	0
Total loss carryforwards	202.6
Carryforward Expiration 2027 | Life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	0
Carryforward Expiration 2027 | Non life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	202.6
Carryforward Expiration 2028
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2028
Capital loss carryforwards	0
Total loss carryforwards	0.5
Carryforward Expiration 2028 | Life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	0
Carryforward Expiration 2028 | Non life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	0.5
Carryforward Expiration 2029
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2029
Capital loss carryforwards	0
Total loss carryforwards	272.3
Carryforward Expiration 2029 | Life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	0
Carryforward Expiration 2029 | Non life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	272.3
Carryforward Expiration 2032
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2032
Capital loss carryforwards	0
Total loss carryforwards	44.0
Carryforward Expiration 2032 | Life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	0
Carryforward Expiration 2032 | Non life insurance companies
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 44.0

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands):

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014			2013
Net income (loss) for basic earnings per share	$	78.1	$	77.1	$	(149.9	)	$	89.0
Add:  interest expense on 7.0% Senior Debentures due 2016 (the "7.0% Debentures"), net of income taxes	—		.4		—			1.6
Net income (loss) for diluted earnings per share	$	78.1	$	77.5	$	(149.9	)	$	90.6
Shares:
Weighted average shares outstanding for basic earnings per share	216,538		220,498		218,422			221,290
Effect of dilutive securities on weighted average shares:
7.0% Debentures	—		5,692		—			11,141
Stock options, restricted stock and performance units	2,390		2,412		—			2,620
Warrants	3,180		2,291		—			2,129
Dilutive potential common shares	5,570		10,395		—			15,890
Weighted average shares outstanding for diluted earnings per share	222,108		230,893		218,422			237,180

In the six months ended June 30, 2014, 5,687,000 equivalent common shares (comprised of 2,464,000 shares related to stock options, restricted stock and performance units and 3,223,000 shares related to warrants) were not included in the diluted weighted average shares outstanding, because their inclusion would have been antidilutive in such period due to the net loss recognized by the Company resulting from the sale of CLIC.

Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period.  Restricted shares (including our performance units) are not included in basic earnings per share until vested.  Diluted earnings per share reflect the potential dilution that could occur if outstanding stock options and warrants were exercised and restricted stock was vested.  The dilution from options, warrants and restricted shares is calculated using the treasury stock method.  Under this method, we assume the proceeds from the exercise of the options and warrants (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the average market price during the period, reducing the dilutive effect of the exercise of the options and warrants (or the vesting of the restricted stock and performance units). Initially, the 7.0% Debentures were convertible into 182.1494 shares of our common stock for each $1,000 principal amount of 7.0% Debentures, which was equivalent to an initial conversion price of approximately $5.49 per share. The conversion rate was subject to adjustment following the occurrence of certain events (including the payment of dividends on our common stock) in accordance with the terms of the an indenture dated as of October 16, 2009. On July 1, 2013, the Company issued a conversion right termination notice to holders of the 7.0% Debentures and the right to convert the 7.0% Debentures into shares of its common stock was terminated effective July 30, 2013.

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BUSINESS SEGMENTS

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

BUSINESS SEGMENTS

BUSINESS SEGMENTS

Prior to 2014, the Company managed its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; Other CNO Business, comprised primarily of products we no longer sell actively; and corporate operations, comprised of holding company activities and certain noninsurance company businesses.  As a result of the sale of CLIC which was completed on July 1, 2014 and the coinsurance agreements to cede certain long-term care business effective December 31, 2013 (as further described in the note to the consolidated financial statements entitled "Reinsurance"), management has changed the manner in which it disaggregates the Company's operations for making operating decisions and assessing performance. In periods prior to 2014: (i) the results in the Washington National segment have been adjusted to include the results from the business in the Other CNO Business segment that are being retained; (ii) the Other CNO Business segment included only the long-term care business that was ceded effective December 31, 2013 and the overhead expense of CLIC that is expected to continue after the completion of the sale; and (iii) the CLIC business being sold is excluded from our analysis of business segment results. Beginning on January 1, 2014: (i) the overhead expense of CLIC that is expected to continue after the completion of the sale has been reallocated primarily to the Bankers Life and Washington National segments; (ii) there is no longer an Other CNO Business segment; and (iii) the CLIC business being sold continues to be excluded from our analysis of business segment results. After the completion of the sale of CLIC: (i) the Bankers Life segment will include the results of certain life insurance business that was recaptured from Wilton Re; and (ii) the revenues and expenses associated with a transition services agreement and a special support services agreement with Wilton Re will be included in our non-operating earnings. Our prior period segment disclosures have been revised to reflect management's current view of the Company's operating segments.

We measure segment performance by excluding the loss on the operations of CLIC being sold, the earnings of CLIC being sold, net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), equity in earnings of certain non-strategic investments and earnings attributable to variable interest entities ("VIEs"), loss on extinguishment or modification of debt and income taxes ("pre-tax operating earnings") because we believe that this performance measure is a better indicator of the ongoing business and trends in our business.  Our primary investment focus is on investment income to support our liabilities for insurance products as opposed to the generation of net realized investment gains (losses), and a long-term focus is necessary to maintain profitability over the life of the business.

The loss on the operations of CLIC being sold, the earnings of CLIC being sold, net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), equity in earnings of certain non-strategic investments and earnings attributable to VIEs and loss on extinguishment or modification of debt depend on market conditions or represent unusual items that do not necessarily relate to the underlying business of our segments.  Net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) may affect future earnings levels since our underlying business is long-term in nature and changes in our investment portfolio may impact our ability to earn the assumed interest rates needed to maintain the profitability of our business.

Operating information by segment was as follows (dollars in millions):

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Revenues:
Bankers Life:
Insurance policy income:
Annuities	$	7.7	$	8.6	$	15.2	$	16.5
Health	320.5		334.1		651.0		666.7
Life	79.9		76.4		158.2		153.9
Net investment income (a)	247.6		226.6		472.0		488.3
Fee revenue and other income (a)	5.8		4.0		11.1		7.7
Total Bankers Life revenues	661.5		649.7		1,307.5		1,333.1
Washington National:
Insurance policy income:
Annuities	1.4		1.7		2.4		3.2
Health	148.8		145.8		297.7		291.2
Life	6.5		5.6		12.2		11.6
Net investment income (a)	71.8		69.8		140.8		147.7
Fee revenue and other income (a)	.2		.2		.4		.4
Total Washington National revenues	228.7		223.1		453.5		454.1
Colonial Penn:
Insurance policy income:
Health	.9		1.1		1.9		2.2
Life	60.8		56.9		120.3		112.7
Net investment income (a)	10.5		9.9		21.2		19.8
Fee revenue and other income (a)	.3		.2		.5		.4
Total Colonial Penn revenues	72.5		68.1		143.9		135.1
Other CNO Business:
Insurance policy income - health	—		6.1		—		12.3
Net investment income (a)	—		8.4		—		16.8
Total Other CNO Business revenues	—		14.5		—		29.1
Corporate operations:
Net investment income	5.7		4.5		12.7		14.6
Fee and other income	1.3		1.5		2.7		3.2
Total corporate revenues	7.0		6.0		15.4		17.8
Total revenues	969.7		961.4		1,920.3		1,969.2

(continued on next page)

(continued from previous page)

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Expenses:
Bankers Life:
Insurance policy benefits	$	427.9		$	434.1		$	842.9		$	904.6
Amortization	45.4			45.7			93.6			100.2
Interest expense on investment borrowings	1.9			1.7			3.8			3.1
Other operating costs and expenses	98.9			89.1			195.6			184.0
Total Bankers Life expenses	574.1			570.6			1,135.9			1,191.9
Washington National:
Insurance policy benefits	132.8			130.3			264.6			268.0
Amortization	16.0			16.2			32.3			33.3
Interest expense on investment borrowings	.5			.5			.9			1.0
Other operating costs and expenses	47.1			40.3			92.3			82.0
Total Washington National expenses	196.4			187.3			390.1			384.3
Colonial Penn:
Insurance policy benefits	43.2			41.2			87.9			84.2
Amortization	3.8			3.7			7.8			7.4
Other operating costs and expenses	21.7			22.0			50.6			47.7
Total Colonial Penn expenses	68.7			66.9			146.3			139.3
Other CNO Business:
Insurance policy benefits	—			15.3			—			30.9
Other operating costs and expenses	—			6.4			—			12.7
Total Other CNO Business expenses	—			21.7			—			43.6
Corporate operations:
Interest expense on corporate debt	11.1			13.1			22.2			28.2
Interest expense on investment borrowings	—			—			—			.1
Other operating costs and expenses	22.5			3.6			36.9			12.3
Total corporate expenses	33.6			16.7			59.1			40.6
Total expenses	872.8			863.2			1,731.4			1,799.7
Pre-tax operating earnings by segment:
Bankers Life	87.4			79.1			171.6			141.2
Washington National	32.3			35.8			63.4			69.8
Colonial Penn	3.8			1.2			(2.4		)	(4.2		)
Other CNO Business	—			(7.2		)	—			(14.5		)
Corporate operations	(26.6		)	(10.7		)	(43.7		)	(22.8		)
Pre-tax operating earnings	$	96.9		$	98.2		$	188.9		$	169.5

___________________

(a) It is not practicable to provide additional components of revenue by product or services.

A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income (loss) is as follows (dollars in millions):

	Three months ended						Six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Total segment revenues	$	969.7		$	961.4		$	1,920.3		$	1,969.2
Net realized investment gains	11.7			1.6			33.0			14.8
Revenues related to certain non-strategic investments and earnings attributable to VIEs	7.3			8.2			13.6			15.1
Revenues of CLIC being sold	104.3			110.3			210.8			225.0
Consolidated revenues	1,093.0			1,081.5			2,177.7			2,224.1
Total segment expenses	872.8			863.2			1,731.4			1,799.7
Gain related to reinsurance transaction	(3.8		)	—			(3.8		)	—
Insurance policy benefits - fair value changes in embedded derivative liabilities	10.1			(29.0		)	25.3			(32.1		)
Amortization related to fair value changes in embedded derivative liabilities	(2.7		)	10.5			(6.9		)	11.5
Amortization related to net realized investment gains	.1			.4			.5			1.2
Expenses related to certain non-strategic investments and earnings attributable to VIEs	10.2			11.1			19.8			19.9
Loss on extinguishment or modification of debt	.6			7.7			.6			65.4
Loss on sale of subsidiary	—			—			278.6			—
Expenses of CLIC being sold	91.3			102.9			187.4			209.2
Consolidated expenses	978.6			966.8			2,232.9			2,074.8
Income (loss) before tax	114.4			114.7			(55.2		)	149.3
Income tax expense:
Tax expense on period income	40.3			42.6			79.3			75.8
Valuation allowance for deferred taxes and other tax items	(4.0		)	(5.0		)	15.4			(15.5		)
Net income (loss)	$	78.1		$	77.1		$	(149.9	)	$	89.0

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REINSURANCE

6 Months Ended

Jun. 30, 2014

Reinsurance Disclosures [Abstract]

REINSURANCE

REINSURANCE

The cost of reinsurance ceded totaled $55.4 million and $55.1 million in the second quarters of 2014 and 2013, respectively, and $107.5 million and $107.1 million in the first six months of 2014 and 2013, respectively.  We deduct this cost from insurance policy income.  Reinsurance recoveries netted against insurance policy benefits totaled $61.2 million and $39.1 million in the second quarters of 2014 and 2013, respectively, and $120.8 million and $92.7 million in the first six months of 2014 and 2013, respectively.

From time-to-time, we assume insurance from other companies.  Any costs associated with the assumption of insurance are amortized consistent with the method used to amortize deferred acquisition costs described above.  Reinsurance premiums assumed totaled $3.8 million and $15.4 million in the second quarters of 2014 and 2013, respectively, and $14.7 million and $29.1 million in the first six months of 2014 and 2013, respectively.  Reinsurance premiums included amounts assumed pursuant to marketing and quota-share agreements with Coventry Health Care ("Coventry") of nil and $10.8 million in the second quarters of 2014 and 2013, respectively and $6.8 million and $19.7 million in the first six months of 2014 and 2013, respectively. In August 2013, we received a notice of Coventry's intent to terminate the Medicare Part D prescription drug plan ("PDP") quota-share reinsurance agreement whereby we assumed a portion of the risk related to the PDP business sold through our Bankers Life segment. The PDP premiums received in 2014 (all of which were received in the first quarter of 2014)represent adjustments on such business related to periods prior to the termination of the agreement. We continue to receive distribution income from Coventry for PDP business sold through our Bankers Life segment.

In December 2013, two of our insurance subsidiaries with long-term care business in the Other CNO Business segment entered into 100% coinsurance agreements ceding $495 million of long-term care reserves to Beechwood Re Ltd. ("BRe"). Pursuant to the agreements, the insurance subsidiaries paid an additional premium of $96.9 million to BRe and an amount equal to the related net liabilities. The insurance subsidiaries' ceded reserve credits are secured by assets in market-value trusts subject to a 7% over-collateralization, investment guidelines and periodic true-up provisions. Future payments into the trusts to maintain collateral requirements are the responsibility of BRe.

In the second quarter of 2014, we recaptured a block of interest-sensitive life business that was previously ceded under a modified coinsurance agreement. The recapture of this block resulted in a gain related to reinsurance transaction of $3.8 million. The gain primarily consisted of the release of an embedded derivative that is no longer required.

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NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (DETAILS) (USD $)	Jun. 30, 2014	Dec. 31, 2013	Sep. 28, 2012
Debt Instrument [Line Items]
Notes payable – direct corporate obligations	$ 827,300,000	$ 856,400,000
Senior secured note 6.375 percent
Debt Instrument [Line Items]
Interest rate	6.375%
Senior secured note 6.375 percent | Senior notes
Debt Instrument [Line Items]
Notes payable – direct corporate obligations	275,000,000	275,000,000	275,000,000
Interest rate			6.375%
Limit of restricted payments permitted, amount	175,000,000
Limit of restricted payments permitted, amount of allowed additional payments	178,000,000
Senior secured note 6.375 percent | Senior notes | Minimum
Debt Instrument [Line Items]
Minimum pro forma risk-based capital ratio for restricted payments	225.00%
Limit of restricted payments permitted, cash dividends to common stock	$ 30,000,000
Senior secured note 6.375 percent | Senior notes | Maximum
Debt Instrument [Line Items]
Debt to capitalization ratio, threshold requiring equal debt repayment	17.50%

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NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS NOTES PAYABLE - SCHEDULED REPAYMENT (DETAILS) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014
Debt Disclosure [Abstract]
2015	$ 73.0
2016	79.3
2017	23.0
2018	4.2
2019	376.0
Thereafter	275.0
Long-term Debt	$ 830.5

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NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS NOTES PAYABLE - NEW SENIOR SECURED CREDIT AGREEMENT (DETAILS) (USD $)	3 Months Ended		6 Months Ended			0 Months Ended	6 Months Ended	0 Months Ended	3 Months Ended		0 Months Ended			6 Months Ended	0 Months Ended			6 Months Ended		0 Months Ended				6 Months Ended		0 Months Ended					0 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jul. 01, 2014 Bankers Life Wilton Reassurance Company [Member]	Jun. 30, 2014 Assets of CLIC being sold	May 30, 2014 Senior secured credit agreement	Jun. 30, 2014 Senior secured credit agreement	Dec. 31, 2013 Senior secured credit agreement	Sep. 28, 2012 Term loan facility, six-year Senior secured credit agreement	Sep. 28, 2012 Term loan facility, four-year Senior secured credit agreement	Sep. 28, 2012 Revolving credit facility Senior secured credit agreement	Jun. 30, 2014 Notes payable to banks Senior secured credit agreement	Sep. 28, 2012 Notes payable to banks Senior secured credit agreement Maximum	Jun. 30, 2014 Notes payable to banks Senior secured credit agreement Maximum	Jun. 30, 2014 Notes payable to banks Senior secured credit agreement Minimum	Jun. 30, 2014 Notes payable to banks Term loan facility, six-year Senior secured credit agreement	Sep. 28, 2012 Notes payable to banks Term loan facility, six-year Senior secured credit agreement	Sep. 28, 2012 Notes payable to banks Term loan facility, six-year Senior secured credit agreement Eurodollar rate	Sep. 28, 2012 Notes payable to banks Term loan facility, six-year Senior secured credit agreement Base rate	Sep. 28, 2012 Notes payable to banks Term loan facility, six-year Senior secured credit agreement Base rate subject to eurodollar floor	Sep. 28, 2012 Notes payable to banks Term loan facility, six-year Senior secured credit agreement Base rate floor	Jun. 30, 2014 Notes payable to banks Term loan facility, four-year Senior secured credit agreement	Sep. 28, 2012 Notes payable to banks Term loan facility, four-year Senior secured credit agreement	Sep. 28, 2012 Notes payable to banks Term loan facility, four-year Senior secured credit agreement Eurodollar rate	Sep. 28, 2012 Notes payable to banks Term loan facility, four-year Senior secured credit agreement Base rate	Sep. 28, 2012 Notes payable to banks Term loan facility, four-year Senior secured credit agreement Base rate subject to eurodollar floor	Sep. 28, 2012 Notes payable to banks Term loan facility, four-year Senior secured credit agreement Base rate floor	Sep. 28, 2012 Notes payable to banks Revolving credit facility Senior secured credit agreement	Sep. 28, 2012 Notes payable to banks Revolving credit facility Senior secured credit agreement Base rate	Jun. 30, 2014 Notes payable to banks Revolving credit facility Senior secured credit agreement Eurodollar floor	Sep. 28, 2012 Notes payable to banks Uncommitted subfacility Senior secured credit agreement Maximum	Sep. 28, 2012 Notes payable to banks Letter of credit Senior secured credit agreement Maximum
Debt Instrument [Line Items]
Notes payable – direct corporate obligations	$ 827,300,000		$ 827,300,000		$ 856,400,000				$ 555,500,000	$ 581,500,000								$ 393,000,000	$ 425,000,000					$ 162,500,000	$ 250,000,000
Debt instrument, term											6 years	4 years	3 years
Maximum borrowing capacity																														50,000,000			5,000,000	5,000,000
Annual amortization percentage of loan in first and second year																			1.00%						20.00%
Annual amortization percentage of loan in third and fourth year																									30.00%
Additional borrowings															250,000,000
Basis spread on variable rate																		3.75%		2.75%	1.75%	1.00%	2.25%	3.00%		2.25%	1.25%	0.75%	2.00%		2.00%	3.00%
Additional debt repayment														26,000,000
Mandatory prepayment required to be made with net proceeds exceeding a certain amount from sale of subsidiary							125,000,000
Gains (Losses) on Extinguishment of Debt	(600,000)	(7,700,000)	(600,000)	(65,400,000)				(200,000)	(400,000)
Reinsurance recapture fee paid						28,000,000
Percentage of net cash proceeds from asset sales and casualty events														100.00%
Percentage of net cash proceeds received for restricted subsidiaries from debt issuances														100.00%
Percentage of restricted payments														100.00%
Debt to capitalization ratio, threshold requiring equal debt repayment																25.00%	20.00%
Mandatory prepayments, reduced percentage														33.33%
Debt to capitalization ratio, maximum threshold for repayment requirement														20.00%
Debt to capitalization ratio, percentage required for no mandatory prepayment																20.00%
Debt to capitalization ratio required																27.50%
Debt to capitalization ratio at period end														17.60%
Interest coverage ratio required																	2.50
Lesser of interest coverage ratio required														9.81
Aggregate adjusted capital to company action level risk-based capital ratio, after stated date																	250.00%
Aggregate adjusted capital to company action level risk based capital ratio at period end														437.00%
Minimum combined statutory capital and surplus																	1,300,000,000
Combined statutory capital and surplus at period end														$ 2,057,000,000

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NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (TABLES)

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Schedule of long-term debt instruments

The following notes payable were direct corporate obligations of the Company as of June 30, 2014 and December 31, 2013 (dollars in millions):

	June 30, 2014			December 31, 2013
Senior Secured Credit Agreement (as defined below)	$	555.5		$	581.5
6.375% Senior Secured Notes due October 2020 (the "6.375% Notes")	275.0			275.0
7.0% Debentures	—			3.5
Unamortized discount on Senior Secured Credit Agreement	(3.2		)	(3.6		)
Direct corporate obligations	$	827.3		$	856.4

Schedule of maturities of long-term debt

The scheduled repayment of our direct corporate obligations was as follows at June 30, 2014 (dollars in millions):

Year ending June 30,
2015	$	73.0
2016	79.3
2017	23.0
2018	4.2
2019	376.0
Thereafter	275.0
	$	830.5

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INVESTMENTS - SUMMARY OF INVESTMENTS WITH UNREALIZED LOSSES BY INVESTMENT CATEGORY (DETAILS) (USD $) In Millions, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Fair value, less than twelve months	$ 428.4	$ 3,543.8
Unrealized losses, less than 12 months	(3.3)	(178.1)
Fair value, twelve months or longer	709.5	285.8
Unrealized losses, 12 months or longer	(31.6)	(30.2)
Fair value, total	1,137.9	3,829.6
Unrealized losses, total	(34.9)	(208.3)
US treasury and government
Schedule of Available-for-sale Securities [Line Items]
Fair value, less than twelve months	0	23.8
Unrealized losses, less than 12 months	0	(0.6)
Fair value, twelve months or longer	18.4	0
Unrealized losses, 12 months or longer	(0.2)	0
Fair value, total	18.4	23.8
Unrealized losses, total	(0.2)	(0.6)
US states and political subdivisions debt securities
Schedule of Available-for-sale Securities [Line Items]
Fair value, less than twelve months	15.6	473.6
Unrealized losses, less than 12 months	(0.6)	(30.3)
Fair value, twelve months or longer	124.1	79.2
Unrealized losses, 12 months or longer	(5.7)	(8.7)
Fair value, total	139.7	552.8
Unrealized losses, total	(6.3)	(39.0)
Corporate debt securities
Schedule of Available-for-sale Securities [Line Items]
Fair value, less than twelve months	173.3	2,406.1
Unrealized losses, less than 12 months	(1.1)	(132.8)
Fair value, twelve months or longer	423.2	170.3
Unrealized losses, 12 months or longer	(22.7)	(20.8)
Fair value, total	596.5	2,576.4
Unrealized losses, total	(23.8)	(153.6)
Asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Fair value, less than twelve months	76.9	308.4
Unrealized losses, less than 12 months	(0.5)	(6.5)
Fair value, twelve months or longer	91.5	32.5
Unrealized losses, 12 months or longer	(2.1)	(0.7)
Fair value, total	168.4	340.9
Unrealized losses, total	(2.6)	(7.2)
Collateralized debt obligations
Schedule of Available-for-sale Securities [Line Items]
Fair value, less than twelve months	64.2	46.7
Unrealized losses, less than 12 months	(0.7)	(0.5)
Fair value, twelve months or longer	11.7	0
Unrealized losses, 12 months or longer	(0.2)	0
Fair value, total	75.9	46.7
Unrealized losses, total	(0.9)	(0.5)
Commercial mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Fair value, less than twelve months	14.8	161.8
Unrealized losses, less than 12 months	0	(5.8)
Fair value, twelve months or longer	19.2	0
Unrealized losses, 12 months or longer	(0.2)	0
Fair value, total	34.0	161.8
Unrealized losses, total	(0.2)	(5.8)
Mortgage pass through securities
Schedule of Available-for-sale Securities [Line Items]
Fair value, less than twelve months	1.2	1.6
Unrealized losses, less than 12 months	0	0
Fair value, twelve months or longer	0.8	1.6
Unrealized losses, 12 months or longer	0	0
Fair value, total	2.0	3.2
Unrealized losses, total	0	0
Collateralized mortgage obligations
Schedule of Available-for-sale Securities [Line Items]
Fair value, less than twelve months	82.4	121.8
Unrealized losses, less than 12 months	(0.4)	(1.6)
Fair value, twelve months or longer	20.6	2.2
Unrealized losses, 12 months or longer	(0.5)	0
Fair value, total	103.0	124.0
Unrealized losses, total	(0.9)	(1.6)
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Fair value, less than twelve months	34.3	26.8
Unrealized losses, less than 12 months	(0.4)	(4.9)
Fair value, twelve months or longer	20.3	0
Unrealized losses, 12 months or longer	(0.9)	0
Fair value, total	54.6	26.8
Unrealized losses, total	$ (1.3)	$ (4.9)

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SALES INDUCEMENTS

6 Months Ended

Jun. 30, 2014

Deferred Sales Inducements [Abstract]

SALES INDUCEMENTS

SALES INDUCEMENTS

Certain of our annuity products offer sales inducements to contract holders in the form of enhanced crediting rates or bonus payments in the initial period of the contract.  Certain of our life insurance products offer persistency bonuses credited to the contract holders balance after the policy has been outstanding for a specified period of time.  These enhanced rates and persistency bonuses are considered sales inducements in accordance with GAAP.  Such amounts are deferred and amortized in the same manner as deferred acquisition costs.  Sales inducements deferred totaled $3.1 million and $2.5 million during the six months ended June 30, 2014 and 2013, respectively.  Amounts amortized totaled $9.4 million and $13.3 million during the six months ended June 30, 2014 and 2013, respectively.  The unamortized balance of deferred sales inducements was $102.3 million (including $33.9 million classified as "Assets of subsidiary being sold") and $108.6 million at June 30, 2014 and December 31, 2013, respectively.  The balance of insurance liabilities for persistency bonus benefits was $27.6 million (including $25.7 million classified as "Liabilities of subsidiary being sold") and $28.9 million at June 30, 2014 and December 31, 2013, respectively.

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INVESTMENTS IN VARIABLE INTEREST ENTITIES

6 Months Ended

Jun. 30, 2014

Investments in Variable Interest Entities [Abstract]

INVESTMENTS IN VARIABLE INTEREST ENTITIES

INVESTMENTS IN VARIABLE INTEREST ENTITIES

We have concluded that we are the primary beneficiary with respect to certain VIEs, which are consolidated in our financial statements.  The following is a description of our significant investments in VIEs.

All of the VIEs are collateralized loan trusts that were established to issue securities to finance the purchase of corporate loans and other permitted investments (including two new VIEs which were consolidated in 2014).  The assets held by the trusts are legally isolated and not available to the Company.  The liabilities of the VIEs are expected to be satisfied from the cash flows generated by the underlying loans held by the trusts, not from the assets of the Company.  The Company has no financial obligation to the VIEs beyond its investment in each VIE.

Certain of our insurance subsidiaries are noteholders of the VIEs.  Another subsidiary of the Company is the investment manager for the VIEs.  As such, it has the power to direct the most significant activities of the VIEs which materially impacts the economic performance of the VIEs.

The following table provides supplemental information about the assets and liabilities of the VIEs which have been consolidated in accordance with authoritative guidance (dollars in millions):

	June 30, 2014
	VIEs		Eliminations			Net effect on consolidated balance sheet
Assets:
Investments held by variable interest entities	$	1,241.1	$	—		$	1,241.1
Notes receivable of VIEs held by insurance subsidiaries	—		(116.0		)	(116.0		)
Cash and cash equivalents held by variable interest entities	101.8		—			101.8
Accrued investment income	2.5		—			2.5
Income tax assets, net	6.8		(2.2		)	4.6
Other assets	14.2		(.9		)	13.3
Total assets	$	1,366.4	$	(119.1	)	$	1,247.3
Liabilities:
Other liabilities	$	148.2	$	(3.2	)	$	145.0
Borrowings related to variable interest entities	1,110.8		—			1,110.8
Notes payable of VIEs held by insurance subsidiaries	120.1		(120.1		)	—
Total liabilities	$	1,379.1	$	(123.3	)	$	1,255.8

	December 31, 2013
	VIEs		Eliminations			Net effect on consolidated balance sheet
Assets:
Investments held by variable interest entities	$	1,046.7	$	—		$	1,046.7
Notes receivable of VIEs held by insurance subsidiaries	—		(108.5		)	(108.5		)
Cash and cash equivalents held by variable interest entities	104.3		—			104.3
Accrued investment income	1.9		—			1.9
Income tax assets, net	5.4		(2.5		)	2.9
Other assets	22.6		(.9		)	21.7
Total assets	$	1,180.9	$	(111.9	)	$	1,069.0
Liabilities:
Other liabilities	$	66.0	$	(4.0	)	$	62.0
Borrowings related to variable interest entities	1,012.3		—			1,012.3
Notes payable of VIEs held by insurance subsidiaries	112.5		(112.5		)	—
Total liabilities	$	1,190.8	$	(116.5	)	$	1,074.3

The investment portfolios held by the VIEs are primarily comprised of commercial bank loans to corporate obligors which are almost entirely rated below-investment grade.  At June 30, 2014, such loans had an amortized cost of $1,241.5 million; gross unrealized gains of $3.3 million; gross unrealized losses of $3.7 million; and an estimated fair value of $1,241.1 million.

The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at June 30, 2014, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

	Amortized cost		Estimated fair value
	(Dollars in millions)
Due in one year or less	$	2.8	$	2.8
Due after one year through five years	353.8		354.1
Due after five years through ten years	884.9		884.2
Total	$	1,241.5	$	1,241.1

During the first six months of 2014, we recognized net realized investment losses on the VIE investments of $2.0 million.  During the first six months of 2013, we recognized net realized investment losses on the VIE investments of $.3 million, which were comprised of $.3 million of net gains from the sales of fixed maturities, and $.6 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

At June 30, 2014, there were no investments held by the VIEs that were in default.

During the first six months of 2014, $21.3 million of investments held by the VIEs were sold which resulted in gross investment losses (before income taxes) of $2.1 million. During the first six months of 2013, no investments held by the VIEs were sold which resulted in gross investment losses.

At June 30, 2014, the VIEs held:  (i) investments with a fair value of $470.8 million and gross unrealized losses of $2.2 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $157.2 million and gross unrealized losses of $1.5 million that had been in an unrealized loss position for greater than twelve months.

At December 31, 2013, the VIEs held: (i) investments with a fair value of $355.5 million and gross unrealized losses of $3.1 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $7.9 million and gross unrealized losses of less than $.1 million that had been in an unrealized loss position for greater than twelve months.

The investments held by the VIEs are evaluated for other-than-temporary declines in fair value in a manner that is consistent with the Company's fixed maturities, available for sale.

In addition, the Company, in the normal course of business, makes passive investments in structured securities issued by VIEs for which the Company is not the investment manager.  These structured securities include asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, residential mortgage-backed securities and collateralized mortgage obligations.  Our maximum exposure to loss on these securities is limited to our cost basis in the investment.  We have determined that we are not the primary beneficiary of these structured securities due to the relative size of our investment in comparison to the total principal amount of the individual structured securities and the level of credit subordination which reduces our obligation to absorb gains or losses.

At June 30, 2014, we held investments in various limited partnerships, in which we are not the primary beneficiary, totaling $24.6 million (classified as other invested assets).  At June 30, 2014, we had unfunded commitments to these partnerships of $99.5 million.  Our maximum exposure to loss on these investments is limited to the amount of our investment.

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INVESTMENTS - NET REALIZED INVESTMENT GAINS (LOSSES) (DETAILS) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Gain (Loss) on Investments [Line Items]
Total other-than-temporary impairment losses	$ 0	$ (0.6)	$ (11.9)	$ (0.6)
Other-than-temporary impairment losses recognized in accumulated other comprehensive income	0	0	0	0
Net impairment losses recognized	0	(0.6)	(11.9)	(0.6)
Total realized gains	12.4	3.2	35.8	18.5
Total fixed maturities, available for sale
Gain (Loss) on Investments [Line Items]
Realized gains on sale	4.9	10.8	46.4	27.4
Gross realized losses on sale	(3.0)	(1.4)	(8.5)	(3.4)
Total other-than-temporary impairment losses	0	0	0	0
Other-than-temporary impairment losses recognized in accumulated other comprehensive income	0	0	0	0
Net impairment losses recognized	0	0	0	0
Total realized gains	1.9	9.4	37.9	24.0
Equity securities
Gain (Loss) on Investments [Line Items]
Total realized gains	7.9	0	7.9	0
Commercial mortgage loans
Gain (Loss) on Investments [Line Items]
Total realized gains	1.1	0	1.1	0.7
Impairments of mortgage loans and other investments
Gain (Loss) on Investments [Line Items]
Total realized gains	0	(0.6)	(11.9)	(0.6)
Other securities
Gain (Loss) on Investments [Line Items]
Total realized gains	$ 1.5	$ (5.6)	$ 0.8	$ (5.6)

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AGREEMENT TO SELL SUBSIDIARY - NARRATIVE (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended			0 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Assets of CLIC being sold	Jul. 01, 2014 Wilton Reassurance Company [Member] Bankers Life	Jul. 01, 2014 Subsequent Event [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net cash proceeds					$ 216.0
Tax expense related to tax gain on sale	(8.4)	0	(21.6)	0	(21.6)
Previously unrecognized tax benefit now recognized as a result of the gain	0	0	7.4	0	7.4
Valuation allowance release related to the gain	(8.4)	0	(14.2)	0	14.2
Valuation allowance for deferred tax assets and other tax items	(4.0)	(5.0)	15.4	(15.5)
Reinsurance recapture fee paid						28.0
Gain related to reinsurance transaction	(3.8)	0	(3.8)	0			4.5
Valuation allowance increase related to the decrease in projected future taxable income	$ 0	$ 0	$ (19.4)	$ 0	$ 19.4

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Consolidated Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 78.1	$ 77.1	$ (149.9)	$ 89.0
Unrealized gains (losses) for the period	479.1	(1,179.7)	872.9	(1,363.0)
Amortization of present value of future profits and deferred acquisition costs	(42.0)	113.4	(119.4)	134.1
Amount related to premium deficiencies assuming the net unrealized gains had been realized	(180.1)	342.7	(417.6)	478.0
Reclassification adjustments:
For net realized investment gains included in net income (loss)	(9.7)	(8.9)	(35.7)	(23.7)
For amortization of the present value of future profits and deferred acquisition costs related to net realized investment gains included in net income (loss)	0.1	0.4	0.5	1.2
Unrealized gains (losses) on investments	247.4	(732.1)	300.7	(773.4)
Change related to deferred compensation plan	0.4	1.4	0.7	2.4
Other comprehensive income (loss) before tax	247.8	(730.7)	301.4	(771.0)
Income tax (expense) benefit related to items of accumulated other comprehensive income	(87.9)	258.1	(107.1)	271.7
Other comprehensive income (loss), net of tax	159.9	(472.6)	194.3	(499.3)
Comprehensive income (loss)	$ 238.0	$ (395.5)	$ 44.4	$ (410.3)

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AGREEMENT TO SELL SUBSIDIARY

6 Months Ended

Jun. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

AGREEMENT TO SELL SUBSIDIARY

AGREEMENT TO SELL SUBSIDIARY

On March 2, 2014, CNO entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with Wilton Reassurance Company ("Wilton Re"), pursuant to which CNO agreed to sell to Wilton Re all of the issued and outstanding shares of Conseco Life Insurance Company ("CLIC"), an indirect wholly owned subsidiary of CNO. The transaction, which closed on July 1, 2014, was subject to receipt of insurance regulatory approvals and satisfaction of other customary closing conditions. The transaction resulted in net proceeds of approximately $216 million based upon an estimated balance sheet of CLIC as of June 30, 2014 and after anticipated transaction costs and intercompany transactions completed in connection with the closing.

In connection with the closing of the transaction, CNO Services, LLC ("CNO Services"), an indirect wholly owned subsidiary of CNO, entered into a transition services agreement and a special support services agreement with Wilton Re, pursuant to which CNO Services will make available to Wilton Re and its affiliates, for a limited period of time, certain services required for the operation of CLIC's business following the closing. The costs of the services provided to Wilton Re are expected to approximate the fees received under the agreements.

We have accounted for the sale of CLIC as held for sale. A business classified as held for sale is recorded at the lower of its carrying amount or estimated fair value less costs to sell. As the carrying amount of the CLIC business being sold exceeded its costs to sell, we have recognized a loss on the sale of CLIC in the six months ended June 30, 2014, as summarized below (dollars in millions):

Net cash proceeds	$	216.0
Net assets being sold:
Investments	3,863.8
Cash and cash equivalents	164.7
Accrued investment income	42.7
Present value of future profits	15.5
Deferred acquisition costs	37.6
Reinsurance receivables	307.4
Income tax assets, net	84.4
Other assets	2.8
Liabilities for insurance products	(3,201.3		)
Other liabilities	(199.1		)
Investment borrowings	(383.4		)
Accumulated other comprehensive income	(240.5		)
Net assets being sold	494.6
Loss before taxes	(278.6		)
Tax expense related to tax gain on sale	21.6
Previously unrecognized tax benefit now recognized as a result of the gain	(7.4		)
Valuation allowance release related to the gain	(14.2		)
Valuation allowance increase related to the decrease in projected future taxable income	19.4
Net loss	$	(298.0	)

Because the tax basis of CLIC is lower than the estimated cash proceeds, the transaction will generate a taxable gain and estimated tax expense of $21.6 million (subject to further adjustment based on the determination of the final sales price and net proceeds from the sale). Fully offsetting the tax is $7.4 million of previously unrecognized tax benefits (pertaining to a corporate matter unrelated to the sale of CLIC) which may now be recognized and $14.2 million of a valuation allowance release pertaining to net operating loss carryforwards ("NOLs") which may now be utilized. However, the disposition of CLIC is expected to result in a net reduction to CNO's taxable income in future periods which also requires us to establish a valuation allowance of $19.4 million.

The assets and liabilities of the CLIC business being sold have been segregated in the consolidated balance sheet as of June 30, 2014. The following summarizes the assets and liabilities held for sale as of June 30, 2014 (dollars in millions):

	June 30, 2014
Investments	$	3,863.8
Cash and cash equivalents - unrestricted	164.7
Accrued investment income	42.7
Present value of future profits	15.5
Deferred acquisition costs	37.6
Reinsurance receivables	307.4
Income tax assets, net	84.4
Other assets	2.8
Assets of subsidiary being sold	$	4,518.9
Liabilities for insurance products	$	3,201.3
Other liabilities	199.1
Investment borrowings	383.4
Loss accrual	514.5
Liabilities of subsidiary being sold	$	4,298.3

The Stock Purchase Agreement also provided that, at the closing, Bankers Life and Casualty Company ("Bankers Life"), an indirect wholly owned subsidiary of CNO, would recapture the life insurance business written by Bankers Life that was reinsured by Wilton Re.  The recapture agreement was conditioned on the concurrent consummation of the closing. On July 1, 2014, Bankers Life paid $28.0 million to recapture the life insurance business from Wilton Re and will recognize a gain (net of income taxes) of approximately $4.5 million in the third quarter of 2014 as a result of the recapture.

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INCOME TAXES INCOME TAXES - RECONCILIATION OF CORPORATE TAX RATE (Details)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Income Tax Disclosure [Abstract]
U.S. statutory corporate rate	35.00%	35.00%
Non-taxable income and nondeductible benefits, net	(1.00%)	(0.50%)
State taxes	1.50%	1.40%
Estimated annual effective tax rate	35.50%	35.90%

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FAIR VALUE MEASUREMENTS - NARRATIVE (Details)	6 Months Ended
	Jun. 30, 2014
Fair Value Disclosures [Abstract]
Fair value of level 3 fixed maturity securities valued using broker quotes, percentage	43.00%
Available for sale fixed maturities classified as level 3, investment grade, percent	81.00%
Available for sale maturities with significant unobservable inputs, structured securities, percent	3.00%
Available for Sale Maturities with Significant Unobservable Inputs, Corporate Securities, Percent	80.00%

XML

SALES INDUCEMENTS (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Deferred Revenue Arrangement [Line Items]
Deferred sales inducements	$ 3.1	$ 2.5
Deferred sales inducements, amortization expense	9.4	13.3
Unamortized deferred sales inducements	102.3		108.6
Insurance liabilities for persistency bonus benefits	27.6		28.9
Assets of CLIC being sold
Deferred Revenue Arrangement [Line Items]
Unamortized deferred sales inducements	33.9
Insurance liabilities for persistency bonus benefits	$ 25.7

XML

FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and, therefore, represents an exit price, not an entry price.  We carry certain assets and liabilities at fair value on a recurring basis, including fixed maturities, equity securities, trading securities, investments held by VIEs, derivatives, cash and cash equivalents, separate account assets and embedded derivatives.  We carry our company-owned life insurance policy, which is backed by a series of mutual funds, at its cash surrender value and our hedge fund investments at their net asset values; in both cases, we believe these values approximate their fair values. In addition, we disclose fair value for certain financial instruments, including mortgage loans and policy loans, insurance liabilities for interest-sensitive products, investment borrowings, notes payable and borrowings related to VIEs.

The degree of judgment utilized in measuring the fair value of financial instruments is largely dependent on the level to which pricing is based on observable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information.  Financial instruments with readily available active quoted prices would be considered to have fair values based on the highest level of observable inputs, and little judgment would be utilized in measuring fair value.  Financial instruments that rarely trade would often have fair value based on a lower level of observable inputs, and more judgment would be utilized in measuring fair value.

Valuation Hierarchy

There is a three-level hierarchy for valuing assets or liabilities at fair value based on whether inputs are observable or unobservable.

• Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities.  Our Level 1 assets primarily include cash and exchange traded securities.

• Level 2 – includes assets and liabilities valued using inputs that are quoted prices for similar assets in an active market, quoted prices for identical or similar assets in a market that is not active, observable inputs, or observable inputs that can be corroborated by market data.  Level 2 assets and liabilities include those financial instruments that are valued by independent pricing services using models or other valuation methodologies.  These models consider various inputs such as interest rate, credit or issuer spreads, reported trades and other inputs that are observable or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace.  Financial assets in this category primarily include:  certain public and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund and hedge fund investments; and most short-term investments; and non-exchange-traded derivatives such as call options to hedge liabilities related to our fixed index annuity products. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs.

• Level 3 – includes assets and liabilities valued using unobservable inputs that are used in model-based valuations that contain management assumptions.  Level 3 assets and liabilities include those financial instruments whose fair value is estimated based on broker/dealer quotes, pricing services or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information.  Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities.  Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) since their values include significant unobservable inputs including actuarial assumptions.

At each reporting date, we classify assets and liabilities into the three input levels based on the lowest level of input that is significant to the measurement of fair value for each asset and liability reported at fair value.  This classification is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions.  Our assessment of the significance of a particular input to the fair value measurement and the ultimate classification of each asset and liability requires judgment and is subject to change from period to period based on the observability of the valuation inputs. Any transfers between levels are reported as having occurred at the beginning of the period. There were no transfers between Level 1 and Level 2 in both the first six months of 2014 and 2013.

The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs, short-term and separate account assets use Level 2 inputs for the determination of fair value.  These fair values are obtained primarily from independent pricing services, which use Level 2 inputs for the determination of fair value.  Substantially all of our Level 2 fixed maturity securities and separate account assets were valued from independent pricing services.  Third party pricing services normally derive the security prices through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information.  If there are no recently reported trades, the third party pricing services may use matrix or model processes to develop a security price where future cash flow expectations are discounted at an estimated risk-adjusted market rate.  The number of prices obtained for a given security is dependent on the Company's analysis of such prices as further described below.

For securities that are not priced by pricing services and may not be reliably priced using pricing models, we obtain broker quotes.  These broker quotes are non-binding andrepresent an exit price, but assumptions used to establish the fair value may not be observable and therefore represent Level 3 inputs.  Approximately 43 percent of our Level 3 fixed maturity securities were valued using unadjusted broker quotes or broker-provided valuation inputs.  The remaining Level 3 fixed maturity investments do not have readily determinable market prices and/or observable inputs.  For these securities, we use internally developed valuations.  Key assumptions used to determine fair value for these securities may include risk-free rates, risk premiums, performance of underlying collateral and other factors involving significant assumptions which may not be reflective of an active market.  For certain investments, we use a matrix or model process to develop a security price where future cash flow expectations are discounted at an estimated market rate.  The pricing matrix incorporates term interest rates as well as a spread level based on the issuer's credit rating and other factors relating to the issuer and the security's maturity.  In some instances issuer-specific spread adjustments, which can be positive or negative, are made based upon internal analysis of security specifics such as liquidity, deal size, and time to maturity.

As the Company is responsible for the determination of fair value, we have control processes designed to ensure that the fair values received from third-party pricing sources are reasonable and the valuation techniques and assumptions used appear reasonable and consistent with prevailing market conditions. Additionally, when inputs are provided by third-party pricing sources, we have controls in place to review those inputs for reasonableness. As part of these controls, we perform monthly quantitative and qualitative analysis on the prices received from third parties to determine whether the prices are reasonable estimates of fair value.  The Company's analysis includes:  (i) a review of the methodology used by third party pricing services; (ii) where available, a comparison of multiple pricing services' valuations for the same security; (iii) a review of month to month price fluctuations; (iv) a review to ensure valuations are not unreasonably dated; and (v) back testing to compare actual purchase and sale transactions with valuations received from third parties.  As a result of such procedures, the Company may conclude the prices received from third parties are not reflective of current market conditions.  In those instances, we may request additional pricing quotes or apply internally developed valuations.  However, the number of instances is insignificant and the aggregate change in value of such investments is not materially different from the original prices received.

The categorization of the fair value measurements of our investments priced by independent pricing services was based upon the Company's judgment of the inputs or methodologies used by the independent pricing services to value different asset classes.  Such inputs include:  benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data.  The Company categorizes such fair value measurements based upon asset classes and the underlying observable or unobservable inputs used to value such investments.

The fair value measurements for derivative instruments, including embedded derivatives requiring bifurcation, are determined based on the consideration of several inputs including closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options; market interest rates; and non-performance risk.  For certain embedded derivatives, we use actuarial assumptions in the determination of fair value.

The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at June 30, 2014 is as follows (dollars in millions):

	Quoted prices in active markets for identical assets or liabilities (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs  (Level 3)		Total
Assets:
Fixed maturities, available for sale:
Corporate securities	$	—	$	13,491.8	$	389.8	$	13,881.6
United States Treasury securities and obligations of United States government corporations and agencies	—		160.1		—		160.1
States and political subdivisions	—		2,122.2		28.7		2,150.9
Asset-backed securities	—		1,273.4		52.7		1,326.1
Collateralized debt obligations	—		310.0		14.2		324.2
Commercial mortgage-backed securities	—		1,266.2		—		1,266.2
Mortgage pass-through securities	—		7.6		1.3		8.9
Collateralized mortgage obligations	—		1,415.5		.1		1,415.6
Total fixed maturities, available for sale	—		20,046.8		486.8		20,533.6
Equity securities - corporate securities	52.9		208.4		26.2		287.5
Trading securities:
Corporate securities	—		23.8		—		23.8
United States Treasury securities and obligations of United States government corporations and agencies	—		4.2		—		4.2
Asset-backed securities	—		20.9		—		20.9
Commercial mortgage-backed securities	—		146.6		—		146.6
Mortgage pass-through securities	—		.1		—		.1
Collateralized mortgage obligations	—		23.9		5.9		29.8
Equity securities	2.0		—		—		2.0
Total trading securities	2.0		219.5		5.9		227.4
Investments held by variable interest entities - corporate securities	—		1,241.1		—		1,241.1
Other invested assets - derivatives	.9		126.4		—		127.3
Assets held in separate accounts	—		9.4		—		9.4
Assets of subsidiary being sold	—		3,458.6		63.1		3,521.7
Total assets carried at fair value by category	$	55.8	$	25,310.2	$	582.0	$	25,948.0
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	$	—	$	—	$	980.3	$	980.3
Total liabilities for insurance products	—		—		980.3		980.3
Total liabilities carried at fair value by category	$	—	$	—	$	980.3	$	980.3

The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2013 is as follows (dollars in millions):

	Quoted prices in active markets  for identical assets or liabilities (Level 1)		Significant other observable inputs  (Level 2)		Significant unobservable inputs  (Level 3)		Total
Assets:
Fixed maturities, available for sale:
Corporate securities	$	—	$	15,313.8	$	359.6	$	15,673.4
United States Treasury securities and obligations of United States government corporations and agencies	—		73.1		—		73.1
States and political subdivisions	—		2,204.4		—		2,204.4
Asset-backed securities	—		1,419.9		42.2		1,462.1
Collateralized debt obligations	—		47.3		246.7		294.0
Commercial mortgage-backed securities	—		1,609.0		—		1,609.0
Mortgage pass-through securities	—		11.8		1.6		13.4
Collateralized mortgage obligations	—		1,848.9		—		1,848.9
Total fixed maturities, available for sale	—		22,528.2		650.1		23,178.3
Equity securities - corporate securities	79.6		145.2		24.5		249.3
Trading securities:
Corporate securities	—		45.2		—		45.2
United States Treasury securities and obligations of United States government corporations and agencies	—		4.6		—		4.6
States and political subdivisions	—		14.1		—		14.1
Asset-backed securities	—		24.3		—		24.3
Commercial mortgage-backed securities	—		125.8		—		125.8
Mortgage pass-through securities	—		.1		—		.1
Collateralized mortgage obligations	—		31.1		—		31.1
Equity securities	2.4		—		—		2.4
Total trading securities	2.4		245.2		—		247.6
Investments held by variable interest entities - corporate securities	—		1,046.7		—		1,046.7
Other invested assets - derivatives	.6		156.2		—		156.8
Assets held in separate accounts	—		10.3		—		10.3
Total assets carried at fair value by category	$	82.6	$	24,131.8	$	674.6	$	24,889.0
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	$	—	$	—	$	903.7	$	903.7
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—		—		1.8		1.8
Total liabilities for insurance products	—		—		905.5		905.5
Total liabilities carried at fair value by category	$	—	$	—	$	905.5	$	905.5

For those financial instruments disclosed at fair value, we use the following methods and assumptions to determine the estimated fair values:

Mortgage loans and policy loans.  We discount future expected cash flows for loans included in our investment portfolio based on interest rates currently being offered for similar loans to borrowers with similar credit ratings.  We aggregate loans with similar characteristics in our calculations.  The fair value of policy loans approximates their carrying value.

Company-owned life insurance is backed by a series of mutual funds and is carried at cash surrender value which approximates estimated fair value.

Alternative investment funds are carried at their net asset values which approximates estimated fair value.

Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value.

Liabilities for policyholder account balances.  We discount future expected cash flows based on interest rates currently being offered for similar contracts with similar maturities.

Investment borrowings, notes payable and borrowings related to variable interest entities.  For publicly traded debt, we use current fair values.  For other notes, we use discounted cash flow analyses based on our current incremental borrowing rates for similar types of borrowing arrangements.

Assets of subsidiary being sold include mortgage loans, policy loans, and cash and cash equivalents. The estimated fair value of these financial instruments is determined in the same manner as described above.

Liabilities of subsidiary being sold include liabilities for policyholder account balances and investment borrowings. The estimated fair value of these financial instruments is determined in the same manner as described above.

The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions):

	June 30, 2014
	Quoted prices in active markets for identical assets or liabilities (Level 1)		Significant other observable inputs  (Level 2)		Significant unobservable inputs  (Level 3)		Total estimated fair value		Total carrying amount
Assets:
Mortgage loans	$	—	$	—	$	1,647.1	$	1,647.1	$	1,595.9
Policy loans	—		—		99.7		99.7		99.7
Other invested assets:
Company-owned life insurance	—		149.4		—		149.4		149.4
Alternative investment funds	—		86.6		—		86.6		86.6
Cash and cash equivalents:
Unrestricted	167.8		211.0		—		378.8		378.8
Held by variable interest entities	101.8		—		—		101.8		101.8
Assets of subsidiary being sold	164.7		—		351.0		515.7		503.8
Liabilities:
Policyholder account balances (a)	—		—		10,649.7		10,649.7		10,649.7
Investment borrowings	—		1,507.0		—		1,507.0		1,507.6
Borrowings related to variable interest entities	—		955.9		—		955.9		1,110.8
Notes payable – direct corporate obligations	—		852.4		—		852.4		827.3
Liabilities of subsidiary being sold	—		412.9		2,070.0		2,482.9		2,453.4

	December 31, 2013
	Quoted prices in active markets for identical assets or liabilities (Level 1)		Significant other observable inputs  (Level 2)		Significant unobservable inputs  (Level 3)		Total estimated fair value		Total carrying amount
Assets:
Mortgage loans	$	—	$	—	$	1,749.5	$	1,749.5	$	1,729.5
Policy loans	—		—		277.0		277.0		277.0
Other invested assets:
Company-owned life insurance	—		144.8		—		144.8		144.8
Alternative investment funds	—		67.6		—		67.6		67.6
Cash and cash equivalents:
Unrestricted	457.8		241.2		—		699.0		699.0
Held by variable interest entities	104.3		—		—		104.3		104.3
Liabilities:
Policyholder account balances (a)	—		—		12,776.4		12,776.4		12,776.4
Investment borrowings	—		1,948.5		—		1,948.5		1,900.0
Borrowings related to variable interest entities	—		993.7		—		993.7		1,012.3
Notes payable – direct corporate obligations	—		872.5		—		872.5		856.4

____________________

(a) The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value at June 30, 2014 and December 31, 2013.  This was because interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year.

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended June 30, 2014 (dollars in millions):

	June 30, 2014
	Beginning balance as of March 31, 2014			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Ending balance as of June 30, 2014			Amount of total gains (losses) for the three months ended June 30, 2014 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	336.8		$	47.7		$	—		$	4.0		$	16.3	$	(15.0	)	$	389.8		$	—
States and political subdivisions	—			—			—			.7			28.0		—			28.7			—
Asset-backed securities	42.2			(.5		)	—			1.1			9.9		—			52.7			—
Collateralized debt obligations	14.1			(.1		)	—			.2			—		—			14.2			—
Mortgage pass-through securities	.4			.9			—			—			—		—			1.3			—
Collateralized mortgage obligations	—			—			—			(.1		)	.2		—			.1			—
Total fixed maturities, available for sale	393.5			48.0			—			5.9			54.4		(15.0		)	486.8			—
Equity securities - corporate securities	25.4			.8			—			—			—		—			26.2			—
Trading securities - collateralized mortgage obligations	5.9			—			—			—			—		—			5.9			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(930.8		)	(38.7		)	(10.8		)	—			—		—			(980.3		)	(10.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(3.4		)	3.4			—			—			—		—			—			—
Total liabilities for insurance products	(934.2		)	(35.3		)	(10.8		)	—			—		—			(980.3		)	(10.8		)

_________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the three months ended June 30, 2014 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	51.0		$	(3.3	)	$	—		$	—	$	47.7
Asset-backed securities	—			(.5		)	—			—		(.5		)
Collateralized debt obligations	—			(.1		)	—			—		(.1		)
Mortgage pass-through securities	1.1			(.2		)	—			—		.9
Total fixed maturities, available for sale	52.1			(4.1		)	—			—		48.0
Equity securities - corporate securities	.8			—			—			—		.8
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(31.1		)	.5			(22.5		)	14.4		(38.7		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			3.4			—			—		3.4
Total liabilities for insurance products	(31.1		)	3.9			(22.5		)	14.4		(35.3		)

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the six months ended June 30, 2014 (dollars in millions):

	June 30, 2014
	Beginning balance as of December 31, 2013			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)		Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Amounts classified as Assets of subsidiary being sold			Ending balance as of June 30, 2014			Amount of total gains (losses) for the six months ended June 30, 2014 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	359.6		$	41.2		$	—		$	13.4	$	26.8	$	—		$	(51.2	)	$	389.8		$	—
States and political subdivisions	—			—			—			2.0		28.9		—			(2.2		)	28.7			—
Asset-backed securities	42.2			9.0			—			3.3		7.9		—			(9.7		)	52.7			—
Collateralized debt obligations	246.7			(4.4		)	—			—		12.6		(240.7		)	—			14.2			—
Mortgage pass-through securities	1.6			(.3		)	—			—		—		—			—			1.3			—
Collateralized mortgage obligations	—			—			—			—		.1		—			—			.1			—
Total fixed maturities, available for sale	650.1			45.5			—			18.7		76.3		(240.7		)	(63.1		)	486.8			—
Equity securities - corporate securities	24.5			1.7			—			—		—		—			—			26.2			—
Trading securities - collateralized mortgage obligations	—			—			—			.1		5.8		—			—			5.9			.1
Assets of subsidiary being sold	—			—			—			—		—		—			63.1			63.1			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(903.7		)	(49.8		)	(26.8		)	—		—		—			—			(980.3		)	(26.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(1.8		)	1.8			—			—		—		—			—			—			—
Total liabilities for insurance products	(905.5		)	(48.0		)	(26.8		)	—		—		—			—			(980.3		)	(26.8		)

_________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the six months ended June 30, 2014 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	51.0		$	(9.8	)	$	—		$	—	$	41.2
Asset-backed securities	9.9			(.9		)	—			—		9.0
Collateralized debt obligations	.9			(5.3		)	—			—		(4.4		)
Mortgage pass-through securities	1.1			(1.4		)	—			—		(.3		)
Total fixed maturities, available for sale	62.9			(17.4		)	—			—		45.5
Equity securities - corporate securities	1.7			—			—			—		1.7
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(57.7		)	3.6			(24.6		)	28.9		(49.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			3.4			(1.6		)	—		1.8
Total liabilities for insurance products	(57.7		)	7.0			(26.2		)	28.9		(48.0		)

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended June 30, 2013 (dollars in millions):

	June 30, 2013
	Beginning balance as of March 31, 2013			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Ending balance as of June 30, 2013			Amount of total gains (losses) for the three months ended June 30, 2013 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	356.3		$	2.2		$	(.3	)	$	(9.6	)	$	44.5	$	—		$	393.1		$	—
States and political subdivisions	15.0			—			—			—			—		(15.0		)	—			—
Asset-backed securities	46.6			(.2		)	—			(2.5		)	2.0		(.5		)	45.4			—
Collateralized debt obligations	309.7			(33.7		)	(.1		)	.9			10.8		—			287.6			—
Commercial mortgage-backed securities	3.8			(.5		)	—			—			—		—			3.3			—
Mortgage pass-through securities	1.8			—			—			—			—		—			1.8			—
Collateralized mortgage obligations	36.6			—			—			—			—		(36.5		)	.1			—
Total fixed maturities, available for sale	769.8			(32.2		)	(.4		)	(11.2		)	57.3		(52.0		)	731.3			—
Equity securities:
Corporate securities	.1			—			—			—			—		—			.1			—
Venture capital investments	3.1			—			—			—			—		—			3.1			—
Total equity securities	3.2			—			—			—			—		—			3.2			—
Trading securities:
States and political subdivisions	.6			—			—			—			—		(.6		)	—			—
Collateralized mortgage obligations	5.7			—			—			(.1		)	4.8		—			10.4			—
Total trading securities	6.3			—			—			(.1		)	4.8		(.6		)	10.4			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(794.3		)	(32.7		)	30.7			—			—		—			(796.3		)	30.7
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(5.1		)	2.5			—			—			—		—			(2.6		)	—
Total liabilities for insurance products	(799.4		)	(30.2		)	30.7			—			—		—			(798.9		)	30.7

____________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the three months ended June 30, 2013 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	10.0		$	(7.8	)	$	—		$	—	$	2.2
Asset-backed securities	—			(.2		)	—			—		(.2		)
Collateralized debt obligations	—			(33.7		)	—			—		(33.7		)
Commercial mortgage-backed securities	—			(.5		)	—			—		(.5		)
Total fixed maturities, available for sale	10.0			(42.2		)	—			—		(32.2		)
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(27.7		)	—			(14.0		)	9.0		(32.7		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			2.5			—			—		2.5
Total liabilities for insurance products	(27.7		)	2.5			(14.0		)	9.0		(30.2		)

The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the six months ended June 30, 2013 (dollars in millions):

	June 30, 2013
	Beginning balance as of December 31, 2012			Purchases, sales, issuances and settlements, net (b)			Total realized and unrealized gains (losses) included in net income			Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)			Transfers into Level 3 (a)		Transfers out of Level 3 (a)			Ending balance as of June 30, 2013			Amount of total gains (losses) for the six months ended June 30, 2013 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
Fixed maturities, available for sale:
Corporate securities	$	355.5		$	63.6		$	(.3	)	$	(13.4	)	$	—	$	(12.3	)	$	393.1		$	—
States and political subdivisions	13.1			—			—			—			—		(13.1		)	—			—
Asset-backed securities	44.0			7.2			—			(3.3		)	2.0		(4.5		)	45.4			—
Collateralized debt obligations	324.0			(42.0		)	.1			5.5			—		—			287.6			—
Commercial mortgage-backed securities	6.2			(.7		)	—			.1			—		(2.3		)	3.3			—
Mortgage pass-through securities	1.9			(.1		)	—			—			—		—			1.8			—
Collateralized mortgage obligations	16.9			(.1		)	—			—			—		(16.7		)	.1			—
Total fixed maturities, available for sale	761.6			27.9			(.2		)	(11.1		)	2.0		(48.9		)	731.3			—
Equity securities:
Corporate securities	.1			—			—			—			—		—			.1			—
Venture capital investments	2.8			—			—			.3			—		—			3.1			—
Total equity securities	2.9			—			—			.3			—		—			3.2			—
Trading securities:
States and political subdivisions	.6			—			—			—			—		(.6		)	—			—
Collateralized debt obligations	7.3			(7.7		)	.6			(.2		)	—		—			—			—
Collateralized mortgage obligations	5.8			—			—			(.3		)	4.9		—			10.4			—
Total trading securities	13.7			(7.7		)	.6			(.5		)	4.9		(.6		)	10.4			—
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(734.0		)	(95.8		)	33.5			—			—		—			(796.3		)	33.5
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	(5.5		)	2.9			—			—			—		—			(2.6		)	—
Total liabilities for insurance products	(739.5		)	(92.9		)	33.5			—			—		—			(798.9		)	33.5

____________

(a) Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.

(b) Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the six months ended June 30, 2013 (dollars in millions):

	Purchases			Sales			Issuances			Settlements		Purchases, sales, issuances and settlements, net
Assets:
Fixed maturities, available for sale:
Corporate securities	$	71.5		$	(7.9	)	$	—		$	—	$	63.6
Asset-backed securities	7.6			(.4		)	—			—		7.2
Collateralized debt obligations	13.3			(55.3		)	—			—		(42.0		)
Commercial mortgage-backed securities	—			(.7		)	—			—		(.7		)
Mortgage pass-through securities	—			(.1		)	—			—		(.1		)
Collateralized mortgage obligations	—			(.1		)	—			—		(.1		)
Total fixed maturities, available for sale	92.4			(64.5		)	—			—		27.9
Trading securities - collateralized debt obligations	—			(7.7		)	—			—		(7.7		)
Liabilities:
Liabilities for insurance products:
Interest-sensitive products - embedded derivatives associated with fixed index annuity products	(52.8		)	1.4			(64.2		)	19.8		(95.8		)
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement	—			2.9			—			—		2.9
Total liabilities for insurance products	(52.8		)	4.3			(64.2		)	19.8		(92.9		)

At June 30, 2014, 81 percent of our Level 3 fixed maturities, available for sale, were investment grade and 3 percent and 80 percent of our Level 3 fixed maturities, available for sale, consisted of structured securities and corporate securities, respectively.

Realized and unrealized investment gains and losses presented in the preceding tables represent gains and losses during the time the applicable financial instruments were classified as Level 3.

Realized and unrealized gains (losses) on Level 3 assets are primarily reported in either net investment income for policyholder and reinsurer accounts and other special-purpose portfolios, net realized investment gains (losses) or insurance policy benefits within the consolidated statement of operations or accumulated other comprehensive income within shareholders' equity based on the appropriate accounting treatment for the instrument.

The amount presented for gains (losses) included in our net loss for assets and liabilities still held as of the reporting date primarily represents impairments for fixed maturities, available for sale, changes in fair value of trading securities and certain derivatives and changes in fair value of embedded derivative instruments included in liabilities for insurance products that exist as of the reporting date.

The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at June 30, 2014 (dollars in millions):

	Fair value at June 30, 2014		Valuation technique(s)	Unobservable inputs	Range (weighted average)
Assets:
Corporate securities (a)	$	254.5	Discounted cash flow analysis	Discount margins	1.50% - 5.00% (2.44%)
Asset-backed securities (b)	29.1		Discounted cash flow analysis	Discount margins	1.72% - 4.30% (2.81%)
Other assets categorized as Level 3 (c)	235.3		Unadjusted third-party price source	Not applicable	Not applicable
Assets of subsidiary being sold:
Corporate securities (a)	19.1		Discounted cash flow analysis	Discount margins	1.50% - 2.45% (1.96%)
Asset-backed securities (b)	8.7		Discounted cash flow analysis	Discount margins	3.50%
Other assets categorized as Level 3 (c)	35.3		Unadjusted third-party price source	Not applicable	Not applicable
Total	582.0
Liabilities:
Interest-sensitive products (d)	980.3		Discounted projected embedded derivatives	Projected portfolio yields	5.35% - 6.63% (5.60%)
				Discount rates	0.00 - 3.78% (2.04%)
				Surrender rates	2.80% - 54.60% (14.39%)

________________________________

(a) Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(b) Asset-backed securities - The significant unobservable input used in the fair value measurement of our asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(c) Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.

(d) Interest-sensitive products - The significant unobservable inputs used in the fair value measurement of our interest-sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2013 (dollars in millions):

	Fair value at December 31, 2013		Valuation technique(s)	Unobservable inputs	Range (weighted average)
Assets:
Corporate securities (a)	$	260.3	Discounted cash flow analysis	Discount margins	1.65% - 2.90% (2.36%)
Asset-backed securities (b)	35.1		Discounted cash flow analysis	Discount margins	2.03% - 4.20% (3.09%)
Collateralized debt obligations (c)	240.7		Discounted cash flow analysis	Recoveries	64% - 67% (65.8%)
				Constant prepayment rate	20%
				Discount margins	.95% - 2.00% (1.32%)
				Annual default rate	1.14% - 5.57% (3.05%)
				Portfolio CCC %	1.52% - 21.79% (12.57%)
Equity security (d)	24.5		Cost approach	Historical cost	Not applicable
Other assets categorized as Level 3 (e)	114.0		Unadjusted third-party price source	Not applicable	Not applicable
Total	674.6
Liabilities:
Interest-sensitive products (f)	905.5		Discounted projected embedded derivatives	Projected portfolio yields	5.35% - 6.63% (5.60%)
				Discount rates	0.00 - 4.64% (2.47%)
				Surrender rates	2.80% - 54.60% (14.39%)

________________________________

(a) Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(b) Asset-backed securities - The significant unobservable input used in the fair value measurement of our asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.

(c) Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes.

(d) Equity security - The significant unobservable input used in the fair value measurement of this equity security is historical cost as that is the amount that would be required to replace the security with a comparable security. The amount represents an investment in an entity that is currently in the construction phase of a manufacturing facility.  The fair value measurement is sensitive to the construction phase and operational risk of the security.

(e) Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.

(f) Interest-sensitive products - The significant unobservable inputs used in the fair value measurement of our interest-sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

XML

INVESTMENTS IN VARIABLE INTEREST ENTITIES - NARRATIVE (DETAILS) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Less than twelve months	Dec. 31, 2013 Less than twelve months	Jun. 30, 2014 Greater than twelve months	Dec. 31, 2013 Greater than twelve months
Variable Interest Entity [Line Items]
Variable interest entity amortized cost securities held	$ 1,241,500,000
Variable interest entity, gross unrealized gains fixed maturity securities	3,300,000
Variable interest entity gross unrealized losses fixed maturity securities	3,700,000
Variable Interest Entity, Fixed Maturity Securities Fair Value	1,241,100,000
Variable interest entities net realized gain (loss) on investments	(2,000,000)	300,000
Variable Interest Entities Net Gains Losses From Sale Of Fixed Maturity Investments		300,000
Total Other Than Temporary Impairment Losses on Investments Held by Variable Interest Entities		600,000
Variable interest entities, investments sold	21,300,000	0
Variable interest entity, gross investment losses from sale	2,100,000
Fair value investments held by variable interest entity that had been in an unrealized loss position			470,800,000	355,500,000	157,200,000	7,900,000
Gross Unrealized Losses On Investments Held By Variable Interest Entity			2,200,000	3,100,000	1,500,000	100,000
Investments held in limited partnerships	24,600,000
Unfunded commitments to limited partnerships	$ 99,500,000

XML

CONSOLIDATED STATEMENT CASH FLOWS (TABLES)

6 Months Ended

Jun. 30, 2014

Supplemental Cash Flow Elements [Abstract]

Schedule of the reconciliation for net income provided by operating activities

The following reconciles net income to net cash provided by operating activities (dollars in millions):

	Six months ended
	June 30,
	2014				2013
Cash flows from operating activities:
Net income (loss)	$	(149.9	)		$	89.0
Adjustments to reconcile net income to net cash from operating activities:
Amortization and depreciation	146.2				172.6
Income taxes	92.7				57.4
Insurance liabilities	155.2				205.3
Accrual and amortization of investment income	(77.5		)		(125.0		)
Deferral of policy acquisition costs	(116.9		)		(107.2		)
Net realized investment gains	(35.8		)		(18.5		)
Payment to reinsurer pursuant to long-term care business reinsured	(590.3		)		—
Loss on sale of subsidiary	278.6				—
Gain related to reinsurance transaction	(3.8		)		—
Loss on extinguishment or modification of debt	.6				65.4
Other	(14.0		)		(49.1		)
Net cash from operating activities	$	(314.9	)	(a)	$	289.9

______________________

(a) Cash flows from operating activities reflect outflows in the 2014 period due to the payment to reinsurer to transfer certain long-term care business.

Schedule of other significant noncash transactions

Non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions):

	Six months ended
	June 30,
	2014		2013
Stock options, restricted stock and performance units	$	8.1	$	7.2

XML

CHANGES IN COMMON STOCK

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

CHANGES IN COMMON STOCK

CHANGES IN COMMON STOCK

Changes in the number of shares of common stock outstanding were as follows (shares in thousands):

Balance, December 31, 2013	220,324
Treasury stock purchased and retired	(7,834	)
Stock options exercised	732
Restricted and performance stock vested	533		(a)
Balance, June 30, 2014	213,755

____________________

(a) Such amount was reduced by 227 thousand shares which were tendered to the Company for the payment of required federal and state tax withholdings owed on the vesting of restricted and performance stock.

In May 2011, the Company announced a common share repurchase program of up to $100.0 million. In February 2012, June 2012, December 2012 and December 2013, the Company's Board of Directors approved, in aggregate, an additional $800.0 million to repurchase the Company's outstanding securities. In the first six months of 2014, we repurchased 7.8 million shares of common stock for $136.6 million under the securities repurchase program. The Company had remaining repurchase authority of $260.8 million as of June 30, 2014.

In the first six months of 2014, dividends declared and paid on common stock totaled $26.3 million ($0.12 per common share). In March 2014, the Company increased its quarterly common stock dividend to $0.06 per share from $0.03 per share.