Second Quarter 2017 Highlights

• First-year collected premiums: $352.3 million, up 16% from 2Q16
• Total collected premiums: $925.0 million, up 7% from 2Q16
• New annualized premium (‘NAP’) (2) for life and health products: $81.9 million, down 9% from 2Q16
• Annuity collected premiums: $264.5 million, up 28% from 2Q16
• Annuity account values: $8.3 billion, up 4% from 2Q16
• Policies inforce of 3.5 million (including third party policies inforce), even with 2Q16
• Net income per diluted share: 48 cents in 2Q17 compared to 33 cents in 2Q16
• Net operating income (1) per diluted share: 45 cents in 2Q17 compared to 35 cents in 2Q16
• Book value per common share increased to $28.28at June 30, 2017from $25.28at June 30, 2016
• Book value per diluted share, excluding accumulated other comprehensive income (loss) (3), increased to $22.74at June 30, 2017from $20.67at June 30, 2016
• Unrestricted cash and investments held by our holding company were $278 million at June 30, 2017compared to $264 million at December 31, 2016
• Common stock repurchases of $68.9 million and dividends of $15.3 million in 2Q17

Six-month 2017 Highlights

• First-year collected premiums: $697.6 million, up 10% from the first six months of 2016
• Total collected premiums: $1,865.0 million, up 6% from the first six months of 2016
• NAP (2) (9) for life and health products: $169.8 million, down 7% from the first six months of 2016
• Annuity collected premiums: $522.2 million, up 18% from the first six months of 2016
• Net income per diluted share: 84 cents in the first six months of 2017 compared to 58 cents in the first six months of 2016
• Net operating income (1) per diluted share: 80 cents in the first six months of 2017 compared to 63 cents in the first six months of 2016
• Common stock repurchases of $111.9 million and dividends of $29.3 million in the first six months of 2017
• Consolidated risk-based capital ratio was estimated at 458% at June 30, 2017, reflecting estimated statutory operating earnings of $166 million and insurance company dividends to the holding company of $177.0 million during the first six months of 2017

The following table summarizes the financial impact of significant items on our 2Q17 net operating income (dollars in millions, except per share amounts):

The significant items in 2Q17 included the impacts of: (i) lower persistency (including the results of procedures performed to identify policies that had terminated prior to June 30, 2017due to death); and (ii) policyholder actions following long-term care rate increases. These items resulted in a release of reserves of $9.4 million, primarily related to the long-term care business in the Bankers Life segment.* See page 10 for the table of Net Operating Income Excluding a Significant Item for the three months ended June 30, 2016. 

* This table summarizes the financial impact of a significant item (as described in the segment results section of this press release) on our 2Q16 net operating income.

NOTES

Cautionary Statement Regarding Forward-Looking Statements. Our statements, trend analyses and other information contained in this press release relative to markets for CNO Financial’s products and trends in CNO Financial’s operations or financial results, as well as other statements, contain forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified by the use of terms such as ‘anticipate,’ ‘believe,’ ‘plan,’ ‘estimate,’ ‘expect,’ ‘project,’ ‘intend,’ ‘may,’ ‘will,’ ‘would,’ ‘contemplate,’ ‘possible,’ ‘attempt,’ ‘seek,’ ‘should,’ ‘could,’ ‘goal,’ ‘target,’ ‘on track,’ ‘comfortable with,’ ‘optimistic,’ ‘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. Assumptions and other important factors that could cause our actual results to differ materially from those anticipated in our forward-looking statements include, among other things: (i) changes in or sustained low interest rates causing reductions in investment income, the margins of our fixed annuity and life insurance businesses, and sales of, and demand for, our products; (ii) 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; (iii) general economic, market and political conditions and uncertainties, including the performance and fluctuations of the financial markets which may affect the value of our investments as well as our ability to raise capital or refinance existing indebtedness and the cost of doing so; (iv) the ultimate outcome of lawsuits filed against us and other legal and regulatory proceedings to which we are subject; (v) our ability to make anticipated changes to certain non-guaranteed elements of our life insurance products; (vi) our ability to obtain adequate and timely rate increases on our health products, including our long-term care business; (vii) the receipt of any required regulatory approvals for dividend and surplus debenture interest payments from our insurance subsidiaries; (viii) 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; (ix) changes in our assumptions related to deferred acquisition costs or the present value of future profits; (x) the recoverability of our deferred tax assets and the effect of potential ownership changes and tax rate changes on their value; (xi) our assumption that the positions we take on our tax return filings will not be successfully challenged by the Internal Revenue Service; (xii) changes in accounting principles and the interpretation thereof; (xiii) our ability to continue to satisfy the financial ratio and balance requirements and other covenants of our debt agreements; (xiv) 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, (xv) performance and valuation of our investments, including the impact of realized losses (including other-than-temporary impairment charges); (xvi) 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; (xvii) our ability to generate sufficient liquidity to meet our debt service obligations and other cash needs; (xviii) our ability to maintain effective controls over financial reporting; (xix) our ability to continue to recruit and retain productive agents and distribution partners; (xx) customer response to new products, distribution channels and marketing initiatives; (xxi) our ability to achieve additional upgrades of the financial strength ratings of CNO Financial and our insurance company subsidiaries as well as the impact of our ratings on our business, our ability to access capital and the cost of capital; (xxii) 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; (xxiii) 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; (xxiv) availability and effectiveness of reinsurance arrangements, as well as the impact of any defaults or failure of reinsurers to perform; (xxv) the amount we may need to pay to a reinsurer and the earnings charge we may incur in connection with a long-term care reinsurance transaction; (xxvi) the performance of third party service providers and potential difficulties arising from outsourcing arrangements; (xxvii) the growth rate of sales, collected premiums, annuity deposits and assets; (xxviii) interruption in telecommunication, information technology or other operational systems or failure to maintain the security, confidentiality or privacy of sensitive data on such systems; (xxix) events of terrorism, cyber attacks, natural disasters or other catastrophic events, including losses from a disease pandemic; (xxx) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks; and (xxxi) the risk factors or uncertainties listed from time to time in our filings with the Securities and Exchange Commission. 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.SOURCE CNO Financial Group, Inc.