CNO Financial Group, Inc. (NYSE:CNO) Q4 2018 Earnings Conference Call Transcript

Feb 13, 2019 • 11:00 am ET


CNO Financial Group, Inc. (NYSE:CNO) Q4 2018 Earnings Conference Call Transcript


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Good morning. My name is Emily, and I will be your conference operator today. At this time, I would like to welcome everyone to the CNO Financial Group Fourth Quarter 2018 Earnings Results. (Operator Instructions) Thank you.

Jennifer Childe, Vice President of Investor Relations. Please go ahead.

Jennifer Childe

Thank you, Emily. Good afternoon, and thank you for joining us on CNO Financial Group's Fourth Quarter 2018 Earnings Conference Call. Today's presentation will include remarks from Gary Bhojwani, Chief Executive Officer; and Erik Helding, Chief Financial Officer.

Following the presentation, we will also have several other business leaders available for the question-and-answer period. During this conference call, we will be referring to the information contained in yesterday's press release. You can obtain the release by visiting the Media section of our website at This morning's presentation is also available in the Investors section of our website and was filed in a Form 8-K earlier today. We expect to file our Form 10-K and posted on our website on or before February 25th.

Let me remind you that any forward-looking statements we make today are subject to a number of factors, which may cause actual results to be materially different than those contemplated by the forward-looking statements. Today's presentations contain a number of non-GAAP measures, which should not be considered as substitutes for the most directly comparable GAAP measures. You'll find a reconciliation of the non-GAAP measures to the corresponding GAAP measures in the appendix.

Throughout the presentation, we will be making performance comparisons and unless otherwise specified, any comparisons made will be referring to changes between fourth quarter 2017 and fourth quarter 2018.

And with that, I'll turn the call over to Gary.

Gary C. Bhojwani

Thank you, Jennifer. Good morning, and thank you for joining us. 2018 was another successful year for CNO. We executed well against our strategy and delivered strong operational and financial performance, which accelerated in the second half of the year. Growth initiatives implemented over the past few years drove strong production across the board. Despite market volatility in the fourth quarter, which created a $0.09 per share headwind, we increased our operating earnings per share by 5% in 2018 and returned $166 million to shareholders in the form of dividends and share repurchases, including $57 million in the fourth quarter alone.

I'm especially pleased with the long-term care reinsurance transaction in which we ceded $2.7 billion of reserves to Wilton Re. By ceding the most problematic portion of our LTC block, we fundamentally changed the risk profile of our company. The fact that we were the only company to complete a significant reinsurance transaction in 2018 should provide considerable comfort that the remainder of our block has a very different profile from the other long-term care blocks in the marketplace that have captured negative headlines as of late.

Moody's was the first to recognize this fundamental change upgrading CNO to investment grade this past October. We remain on the path to investment grade with both S&P and Fitch. The