CNO Financial Group reports third quarter 2012 results

            CNO Financial Group reports third quarter 2012 results

Results reflect significant management actions, continued core growth in
production and earnings, and completion of recapitalization

PR Newswire

CARMEL, Ind., Oct. 29, 2012

CARMEL, Ind., Oct. 29, 2012 /PRNewswire/ -- CNO Financial Group, Inc. (NYSE:
CNO) today announced third quarter of 2012 net loss of $5.0 million, or 2
cents per diluted share, and operating earnings (1) of $25.6 million, or 11
cents per diluted share. Third quarter operating earnings were significantly
impacted by our review of actuarial assumptions and an increase to litigation
reserves. Third quarter net income was also impacted by the loss on
extinguishment of debt related to the previously announced completion of our
recapitalization transactions, offset by a reduction to the deferred tax
valuation allowance.

"We continue to achieve solid core segment growth and earnings, while also
making significant progress in managing our run off business," CEO Ed Bonach
said. "Our recently completed recapitalization further strengthened our
balance sheet, while increasing financial flexibility and lowering our ongoing
costs. We continue to effectively deploy our excess capital and expect share
repurchases for the year to come in near the high end of our previously
announced range."

Third Quarter 2012 Highlights

  oSales, as defined by total new annualized premium ("NAP") (2): $94.1
    million, up 1% from 3Q11
  oNet income (loss) per diluted share: (2) cents, compared to 61 cents in
    3Q11
  oNet operating income (1) per diluted share: 11 cents compared to 12 cents
    in 3Q11
  oAdjustments arising from our review of actuarial assumptions reflecting
    the low interest rate environment: after-tax charge of $27.5 million
  oIncrease to litigation reserves relating to a tentative settlement of
    cases involving the Other CNO Business segment: after-tax charge of $13.4
    million
  oLoss on extinguishment of debt related to the previously announced
    recapitalization transactions: after-tax charge of $176.4 million
  oReduction to the deferred tax valuation allowance reflecting the higher
    levels of operating income and taxable investment gains realized
    year-to-date: increase to net income of $143 million
  oUnrestricted cash and investments held by our non-insurance companies were
    $313.6 million at September 30, 2012 and share repurchases of $41.4
    million

Nine-month 2012 Highlights

  oSales, as defined by total NAP (2): $287.7 million, up 6% from the first
    nine months of 2011
  oNet income per diluted share of 45 cents, compared to 92 cents in the
    first nine months of 2011
  oNet operating income (1) per diluted share: 45 cents compared to 43 cents
    in the first nine months of 2011
  oThe consolidated statutory risk-based capital ratio increased 3 percentage
    points to 361% during the first nine months of 2012, reflecting statutory
    earnings of $243 million and dividend payments to the non-insurance
    holding companies of $198 million

Quarterly Segment Operating Results

                                                        Three months ended
                                                        September30,
                                                        2012          2011
                                                        (Dollars in millions,
                                                        except per-share data)
EBIT (4):
Bankers Life                                            $  80.6       $ 79.4
Washington National                                     33.9          21.2
Colonial Penn                                           (2.6)         (1.3)
Other CNO Business                                      (53.6)        2.8
EBIT from business segments                             58.3          102.1
Corporate Operations, excluding corporate interest      (6.7)         (27.5)
expense
EBIT                                                    51.6          74.6
Corporate interest expense                              (16.3)        (18.7)
Operating earnings before tax                           35.3          55.9
Tax expense on operating income                         9.7           23.1
Net operating income (1)                                25.6          32.8
Net realized investment gains (net of related           4.8           17.3
amortization and taxes)
Fair value changes in embedded derivative liabilities   (2.0)         (12.9)
(net of related amortization and taxes)
Loss on extinguishment of debt, net of income taxes     (176.4)       (.7)
Net income (loss) before valuation allowance for        (148.0)       36.5
deferred tax assets
Decrease in valuation allowance for deferred tax assets 143.0         143.0
Net income (loss)                                       $  (5.0)      $ 179.5
Per diluted share:
Net operating income                                    $  .11        $ .12
Net realized investment gains (net of related           .02           .06
amortization and taxes)
Fair value changes in embedded derivative liabilities   (.01)         (.04)
(net of related amortization and taxes)
Loss on extinguishment of debt                          (.76)         —
Decrease in valuation allowance for deferred tax assets .62           .47
Net income (loss)                                       $  (.02)      $ .61



The following table summarizes the financial impact of significant items (as
described in the segment results below) on our 3Q12 net operating income
(dollars in millions, except per share
amounts):

                                Three months ended
                                September 30, 2012*
                                Actual   Significant items  Excluding
                                results                     significant items
Net Operating Income (1):
Bankers Life                    $ 80.6   $     —            $    80.6
Washington National             33.9     —                  33.9
Colonial Penn                   (2.6)    —                  (2.6)
Other CNO Business              (53.6)   64.0               10.4
EBIT from business segments     58.3     64.0               122.3
Corporate Operations, excluding (6.7)    10.0               3.3
corporate interest expense
EBIT (4)                        51.6     74.0               125.6
Corporate interest expense      (16.3)   —                  (16.3)
Operating earnings before tax   35.3     74.0               109.3
Tax expense on operating income 9.7      29.7               39.4
Net operating income            $ 25.6   $     44.3         $    69.9
Net operating income per        $ .11    $     .15          $    .26     **
diluted share



* See page 10 for the table of Net Operating Income Excluding Significant
Items for the three months ended September 30, 2011.

** Net operating income per diluted share excluding significant items is
calculated based on the weighted average diluted shares outstanding, including
the dilutive effect of all common stock equivalents. Such common stock
equivalents are dilutive in this calculation.

Net operating income excluding significant items in 3Q12 benefited from
several items explained further in the Segment Results, including: (i)
favorable benefit ratios in the supplemental health and Medicare supplement
blocks in the Washington National segment; (ii) favorable mortality experience
in the life blocks of the Other CNO Business segment; and (iii) modestly
favorable investment results in the Corporate Operations segment.

Segment Results
Bankers Life markets and distributes a variety of insurance products to the
middle-income senior market through a dedicated field force of career agents.
NAP in 3Q12 was $57.6 million, down 5% from 3Q11 with higher sales of life and
Medicare supplement products being offset by lower annuity sales as a result
of the low interest rate environment and product adjustments. Excluding
annuities, NAP in 3Q12 was up 5%, driven by an increase in agent force due to
gains in agent retention.

Pre-tax operating earnings in 3Q12 compared to 3Q11 were up $1.2 million, or 2
percent. Such increase reflects increased earnings from our annuity business
reflecting favorable investment spreads and higher account values, partially
offset by higher benefit ratios in the long-term care block in 3Q12. Pre-tax
operating earnings in 3Q11 of $79.4 million included approximately $14 million
of favorable reserve developments in the long-term care and Medicare
supplement blocks.

Washington National markets and distributes supplemental health and life
insurance to middle-income consumers through a wholly owned subsidiary and
independent insurance agencies. NAP in 3Q12 was $21.4 million, up 7% from
3Q11 due to increased sales of core supplemental health and life insurance
products. Sales in the quarter benefited from distribution expansion and an
increase in voluntary worksite sales, which were up 9%.

Pre-tax operating earnings in 3Q12 compared to 3Q11 were up $12.7 million, or
60 percent. Such increase primarily reflects favorable benefit ratios in the
supplemental health and Medicare supplement blocks in 3Q12. Pre-tax operating
earnings in 3Q11 of $21.2 million included a $6.0 million out-of-period
adjustment which reduced earnings.

Colonial Penn markets primarily graded benefit and simplified issue life
insurance directly to customers through television advertising, direct mail,
the internet and telemarketing. NAP in 3Q12 was $15.1 million, up 19% from
3Q11. Sales in the quarter benefited from an increase in lead levels and
higher buy rates, which demonstrate the benefits of our increased investment
in marketing and advertising.

Pre-tax operating earnings in 3Q12 reflected higher marketing expenses as
compared to 3Q11.

This segment's results are significantly impacted by the adoption of the new
accounting standard related to deferred acquisition costs. We are no longer
able to defer most of Colonial Penn's direct response advertising costs
although such costs generate predictable sales and future inforce profits.
The amount of our investment in new business during a particular period will
have a significant impact on this segment's results. Consistent with our
previous guidance and based on our current advertising plan, we expect this
segment to report a modest level of earnings in 4Q12.

Other CNO Business consists of blocks of various insurance products that are
no longer being actively marketed. Its earnings will often fluctuate between
periods.

Results in 3Q12 and 3Q11 reflect reductions in earnings of approximately $43
million and $13 million, respectively, primarily due to the impact of
decreased projected future investment yield assumptions related to
interest-sensitive insurance products. The results in 3Q12 also reflect a $21
million charge relating to a tentative agreement regarding the material
economic terms of a settlement of cases involving changes implemented in late
2011 to some non-guaranteed elements in certain policies sold by Conseco Life
Insurance Company prior to its acquisition by our predecessor. We also
experienced favorable mortality experience in this segment's life block in
3Q12.

Corporate Operations includes our investment advisory subsidiary and corporate
expenses.

Net expenses in 3Q12 and 3Q11 included losses of $10 million and $9 million,
respectively, related to the impact of lower interest rates on the values of
liabilities for agent deferred compensation and former executive retirement
annuities.

Net expenses, excluding corporate interest expense, in 3Q12 compared to 3Q11
were down $20.8 million reflecting: (i) a $15 million increase in the value of
Company-owned life insurance; and (ii) a $7 million increase in income from
investment trading account activities and an increase in value of certain
hedge funds.

Non-Operating Items
Net realized investment gains in 3Q12 were $4.8 million (net of related
amortization and taxes), including total other-than-temporary impairment
losses of $23.1 million primarily related to two private company investments
obtained through the commutation of an investment made by our predecessor in a
guaranteed investment contract. Net realized investment gains in 3Q11 were
$17.3 million (net of related amortization and taxes), including total
other-than-temporary impairment losses of $2.9 million.

During 3Q12 and 3Q11, we recognized decreases to earnings of $2.0 million and
$12.9 million, respectively, resulting from an increase in the estimated fair
value of embedded derivative liabilities related to our fixed index annuities,
net of related amortization and income taxes. Such charges reflect the
reduction in market interest rates used to determine the derivative's
estimated fair value.

The results for 3Q12 include a $176.4 million loss on extinguishment of debt,
net of income taxes, related to the previously announced completion of our
recapitalization transactions. The results for 3Q11 include a $.7 million
loss on extinguishment of debt, net of income taxes, related to a prepayment
under our previous senior secured credit agreement.

The results for both 3Q12 and 3Q11 reflect reductions to the deferred tax
valuation allowance, primarily resulting from the impact of our higher levels
of operating income on projected future taxable income used to determine
recoverable net operating loss carryforwards. We identified a reduction of
$155.0 million in 3Q12, of which $143.0 million was recognized in 3Q12 and
$12.0 million will be recognized in 4Q12, as we reflect the impact of the
lower estimated annual effective tax rate on income for the entire year. We
identified a reduction of $143.0 million in 3Q11, all of which was recognized
in 3Q11.

Book value per common share, excluding other comprehensive income (loss) (5),
increased to $16.70 from $15.88 at December 31, 2011.

Statutory (based on non-GAAP measures) and GAAP Capital Information
Our consolidated statutory risk-based capital ratio decreased 8 percentage
points to 361% during 3Q12, reflecting consolidated statutory operating
earnings of $60.3 million and the payment of dividends to the non-insurance
holding companies of $95 million during the quarter. Based on our continued
expectation to generate strong statutory earnings and excess capital, we
anticipate total year dividend payments to the holding company of $250 million
to $275 million during 2012 ($198 million of which have been paid through
September 30, 2012).

We purchased 12.9 million shares of our common stock during the nine months
ended September 30, 2012 under our share repurchase program. Such shares were
purchased at an aggregate cost of $99.5 million, or $7.72 per share. As of
September 30, 2012, we had approximately 229.5 million shares outstanding and
had authority to repurchase up to an additional $130.7 million of our common
stock. We currently anticipate repurchasing common shares near the high end
of the $150 million to $170 million range during 2012. The amount and timing
of the share repurchases (if any) will be based on business and market
conditions and other factors.

Our debt-to-total capital ratio, excluding accumulated other comprehensive
income (3) at September 30, 2012 was 21.3 percent, an increase of 300 basis
points from December 31, 2011. The increase in such ratio primarily resulted
from the completion of our previously announced recapitalization transactions.

Conference Call
The Company will host a conference call to discuss results on October 30, 2012
at 11:00 a.m. Eastern Daylight Time.Recognizing the potential disruption of
Hurricane Sandy, the Company is continuing with its conference call to provide
management's comments on the quarter, and to take questions. Ifdeemed
necessary, an additional question and answer call may be scheduled.The
webcast can be accessed through the Investors section of the company's
website: http://ir.CNOinc.com. Participants should go to the website at least
15 minutes before the event to register and download any necessary audio
software. During the call, we will be referring to a presentation that will
be available the morning of the call at the Investors section of the company's
website.

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

- Tables Follow -

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

                                                   September30,  December31,
                                                   2012           2011
                                                   (unaudited)
ASSETS
Investments:
Fixed maturities, available for sale, at fair
value (amortized cost:
  September 30, 2012 - $21,825.7; December 31,   $  24,742.3    $  23,516.0
2011 -
 $21,779.1)
Equity securities at fair value (cost: September
30, 2012 -                                         180.0          175.1
 $174.0;December 31, 2011 - $177.0)
Mortgage loans                                     1,597.2        1,602.8
Policy loans                                       274.1          279.7
Trading securities                                 199.4          91.6
Investments held by securitization entities        829.4          496.3
Other invested assets                              265.0          202.8
Total investments                                  28,087.4       26,364.3
Cash and cash equivalents - unrestricted           415.3          436.0
Cash and cash equivalents held by securitization   48.2           74.4
entities
Accrued investment income                          317.8          288.7
Present value of future profits                    642.4          697.7
Deferred acquisition costs                         580.7          797.1
Reinsurance receivables                            2,967.7        3,091.1
Income tax assets, net                             594.5          865.4
Assets held in separate accounts                   15.7           15.0
Other assets                                       338.6          292.2
Total assets                                       $  34,008.3    $  32,921.9
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Liabilities for insurance products:
Interest-sensitive products                        $  12,930.3    $  13,165.5
Traditional products                               10,669.9       10,482.7
Claims payable and other policyholder funds        977.6          1,034.3
Liabilities related to separate accounts           15.7           15.0
Other liabilities                                  709.0          556.3
Investment borrowings                              1,650.9        1,676.5
Borrowings related to variable interest entities   766.9          519.9
Notes payable – direct corporate obligations       1,035.1        857.9
Total liabilities                                  28,755.4       28,308.1
Commitments and Contingencies
Shareholders' equity:
Common stock ($0.01 par value, 8,000,000,000
shares
 authorized, shares issued and outstanding:     2.3            2.4
September 30, 2012 -
 229,506,690; December 31, 2011 – 241,304,503)
Additional paid-in capital                         4,251.2        4,361.9
Accumulated other comprehensive income             1,421.1        781.6
Accumulated deficit                                (421.7)        (532.1)
Total shareholders' equity                         5,252.9        4,613.8
Total liabilities and shareholders' equity         $  34,008.3    $  32,921.9





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



                        Three months ended          Nine months ended
                        September30,               September30,
                        2012          2011          2012          2011
Revenues:
Insurance policy income $   690.2     $   673.5     $  2,071.3    $  2,020.3
Net investment income:
General account assets  349.4         338.2         1,045.7       1,016.5
Policyholder and
reinsurer accounts and
other                   39.1          (54.9)        87.4          (14.4)
 special-purpose
portfolios
Realized investment
gains:
Net realized investment
gains, excluding        32.2          33.5          98.4          64.9
impairment losses
Other-than-temporary
impairment losses:
Total
other-than-temporary    (23.1)        (2.9)         (34.5)        (26.3)
impairment losses
Portion of
other-than-temporary
impairment
losses         —             —             —             —
recognized in
accumulated other
 comprehensive
income
Net impairment losses   (23.1)        (2.9)         (34.5)        (26.3)
recognized
Total realized gains    9.1           30.6          63.9          38.6
Fee revenue and other   5.2           4.9           13.6          12.5
income
Total revenues          1,093.0       992.3         3,281.9       3,073.5
Benefits and expenses:
Insurance policy        745.7         661.0         2,124.4       2,028.6
benefits
Interest expense        29.2          27.9          86.7          86.0
Amortization            60.9          58.6          215.8         224.1
Loss on extinguishment  198.5         1.1           199.2         3.1
of debt
Other operating costs   217.5         182.0         617.8         527.8
and expenses
Total benefits and      1,251.8       930.6         3,243.9       2,869.6
expenses
Income (loss) before    (158.8)       61.7          38.0          203.9
income taxes
Income tax expense
(benefit):
Tax expense (benefit)   (10.8)        25.2          61.2          75.6
on period income
Decrease in valuation
allowance for deferred  (143.0)       (143.0)       (143.0)       (143.0)
tax assets
Net income (loss)       $   (5.0)     $   179.5     $  119.8      $  271.3
Earnings per common
share:
Basic:
Weighted average shares 231,481,000   246,965,000   236,555,000   249,673,000
outstanding
Net income (loss)       $   (.02)     $   .73       $  .51        $  1.09
Diluted:
Weighted average shares 231,481,000   302,708,000   292,983,000   306,085,000
outstanding
Net income (loss)       $   (.02)     $   .61       $  .45        $  .92





CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
EBIT FROM BUSINESS SEGMENTS
SUMMARIZED BY IN-FORCE AND NEW BUSINESS (6)
(Dollars in millions)





                                      Three months ended   Nine months ended
EBIT (4) from In-force and New        September30,        September30,
Business
                                      2012       2011      2012       2011
Bankers Life segment:
In-Force Business                     $ 110.1    $ 111.6   $ 309.8    $ 296.9
New Business                          (29.5)     (32.2)    (82.6)     (83.2)
Total                                 $ 80.6     $ 79.4    $ 227.2    $ 213.7
Washington National segment:
In-Force Business                     $ 36.3     $ 22.4    $ 97.9     $ 74.5
New Business                          (2.4)      (1.2)     (5.4)      (7.2)
Total                                 $ 33.9     $ 21.2    $ 92.5     $ 67.3
Colonial Penn segment:
In-Force Business                     $ 11.6     $ 11.6    $ 29.5     $ 29.7
New Business                          (14.2)     (12.9)    (41.3)     (36.2)
Total                                 $ (2.6)    $ (1.3)   $ (11.8)   $ (6.5)
Other CNO Business segment:
In-Force Business                     $ (53.6)   $ 2.8     $ (54.0)   $ 15.3
New Business                          —          —         —          —
Total                                 $ (53.6)   $ 2.8     $ (54.0)   $ 15.3
Total Business segments:
In-Force Business                     $ 104.4    $ 148.4   $ 383.2    $ 416.4
New Business                          (46.1)     (46.3)    (129.3)    (126.6)
Total EBIT from business segments     $ 58.3     $ 102.1   $ 253.9    $ 289.8



CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
SEGMENT OPERATING RESULTS
(Dollars in millions, except per-share data)



                                                            Nine months ended
                                                            September30,
                                                            2012      2011
EBIT (4):
Bankers Life                                                $ 227.2   $ 213.7
Washington National                                         92.5      67.3
Colonial Penn                                               (11.8)    (6.5)
Other CNO Business                                          (54.0)    15.3
EBIT from business segments                                 253.9     289.8
Corporate Operations, excluding corporate interest expense  (17.6)    (39.3)
EBIT                                                        236.3     250.5
Corporate interest expense                                  (50.4)    (58.6)
Operating earnings before tax                               185.9     191.9
Tax expense on operating income                             65.5      71.4
Net operating income (1)                                    120.4     120.5
Net realized investment gains (net of related amortization  37.6      22.7
and taxes)
Fair value changes in embedded derivative liabilities (net  (4.4)     (12.9)
of related amortization and taxes)
Loss on extinguishment of debt, net of income taxes         (176.8)   (2.0)
Net income (loss) before valuation allowance for deferred   (23.2)    128.3
tax assets
Decrease in valuation allowance for deferred tax assets     143.0     143.0
Net income                                                  $ 119.8   $ 271.3
Per diluted share:
Net operating income                                        $ .45     $ .43
Net realized investment gains (net of related amortization  .13       .07
and taxes)
Fair value changes in embedded derivative liabilities (net  (.02)     (.04)
of related amortization and taxes)
Loss on extinguishment of debt, net of income taxes         (.60)     (.01)
Decrease in valuation allowance for deferred tax assets     .49       .47
Net income                                                  $ .45     $ .92



CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
NET OPERATING INCOME EXCLUDING SIGNIFICANT ITEMS*
(Dollars in millions)



                               Three months ended
                               September 30, 2011
                               Actual   Significant items  Excluding
                               results                      significant items
Net Operating Income (1):
Bankers Life                   $ 79.4   $    (14.0)         $     65.4
Washington National            21.2     6.0                 27.2
Colonial Penn                  (1.3)    —                   (1.3)
Other CNO Business             2.8      13.0                15.8
EBIT from business segments    102.1    5.0                 107.1
Corporate Operations,
excluding corporate interest   (27.5)   9.0                 (18.5)
expense
EBIT (4)                       74.6     14.0                88.6
Corporate interest expense     (18.7)   —                   (18.7)
Operating earnings before tax  55.9     14.0                69.9
Tax expense on operating       23.1     2.0                 25.1
income
Net operating income           $ 32.8   $    12.0           $     44.8
Net operating income per       $ .12    $    .04            $     .16
diluted share

* This table summarizes the financial impact of significant items (as
described in the segment results section of this press release) on our 3Q11
net operating income.



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



                                                  Three months ended
                                                  September30,
                                                  2012      2011
Bankers Life segment:
Medicare supplement and other supplemental health $ 191.2   $ 190.2
Life                                              81.3      65.5
Long-term care                                    136.1     137.8
Annuity                                           171.7     264.1
Total                                             580.3     657.6
Washington National segment:
Supplemental health                               114.5     108.4
Medicare supplement and other supplemental health 29.1      32.8
Life                                              3.0       4.1
Total                                             146.6     145.3
Colonial Penn segment:
Life                                              53.0      49.2
Supplemental health                               1.2       1.4
Total                                             54.2      50.6
Other CNO Business segment:
Life                                              40.3      44.0
Annuity                                           .9        3.3
Other health                                      6.1       6.7
Total                                             47.3      54.0
Total collected premiums                          $ 828.4   $ 907.5



NEW ANNUALIZED PREMIUMS (2)
(Dollars in millions)

                                                  Three months ended
                                                  September30,
                                                  2012       2011
Bankers Life segment:
Medicare supplement and other supplemental health $  21.1    $ 19.4
Life                                              18.9       18.2
Long-term care                                    7.2        7.3
Annuity                                           10.4       15.9
Total                                             57.6       60.8
Washington National segment:
Supplemental health                               19.7       18.6
Medicare supplement and other supplemental health .2         .3
Life                                              1.5        .9
Annuity                                           —          .2
Total                                             21.4       20.0
Colonial Penn segment:
Life                                              15.1       12.7
Total                                             15.1       12.7
Total new annualized premiums                     $  94.1    $ 93.5



CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
BENEFIT RATIOS ON MAJOR HEALTH LINES OF BUSINESS



                                                    Three months ended
                                                    September 30,
                                                    2012          2011
Bankers Life segment:
Medicare Supplement:
Earned premium                                      $185 million  $179 million
Benefit ratio (7)                                   67.8     %    68.4     %
PDP:
Earned premium                                      $11 million   $13 million
Benefit ratio (7)                                   74.8     %    76.1     %
Long-Term Care:
Earned premium                                      $139 million  $142 million
Benefit ratio (7)                                   121.4    %    109.7    %
Interest-adjusted benefit ratio (a non-GAAP         74.7     %    65.5     %
measure) (8)
Washington National segment:
Medicare Supplement:
Earned premium                                      $29 million   $33 million
Benefit ratio (7)                                   63.8     %    69.9     %
Supplemental health:
Earned premium                                      $114 million  $108 million
Benefit ratio (7)                                   74.2     %    82.4     %
Interest-adjusted benefit ratio (a non-GAAP         47.5     %    53.9     %
measure) (8)



NOTES

(1) Management believes that an analysis of Net income applicable to
common stock before: (i) loss on extinguishment of debt, net of income taxes;
(ii) net realized investment gains or losses, net of related amortization and
income taxes; and (iii) fair value changes due to fluctuations in the interest
rates used to discount embedded derivative liabilities related to our fixed
index annuities, net of related amortization and income taxes ("Net operating
income," a non-GAAP financial measure) is important to evaluate the financial
performance of the company, and is a key measure commonly used in the life
insurance industry. Management uses this measure to evaluate performance
because the items excluded from net operating income can be affected by events
that are unrelated to the company's underlying fundamentals. 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. Prior to June 30, 2011, certain of our trading
securities were held to offset the income statement volatility caused by the
effect of interest rate fluctuations on the value of embedded derivatives
related to our fixed index annuity products. During 2Q2011, these securities
were sold. A reconciliation of Net operating income to Net income applicable
to common stock is provided in the tables on pages 2 and 9. Additional
information concerning this non-GAAP measure is included in our periodic
filings with the Securities and Exchange Commission that are available in the
"Investors - SEC Filings" section of CNO's website, www.CNOinc.com.

(2) Measured by new annualized premium, which includes 6% of annuity and
10% of single premium whole life deposits and 100% of all other premiums.
Medicare Advantage and Private-Fee-For-Service sales are not comparable to
other sales and are therefore excluded in all periods.

(3) The calculation of this non-GAAP measure differs from the
corresponding GAAP measure because accumulated other comprehensive income
(loss) has been excluded from the value of capital used to determine this
measure. Management believes this non-GAAP measure is useful because it
removes the volatility that arises from changes in the unrealized appreciation
(depreciation) of our investments. The corresponding GAAP measures for
debt-to-total capital were 16.5% and 15.7% at September 30, 2012 and December
31, 2011, respectively.

(4) Management believes that an analysis of earnings before net realized
investment gains (losses), fair value changes due to fluctuations in the
interest rates used to discount embedded derivative liabilities related to our
fixed index annuities, corporate interest expense, loss on extinguishment of
debt and taxes ("EBIT," a non-GAAP financial measure) provides a clearer
comparison of the operating results of the company quarter-over-quarter
because these items are unrelated to the company's underlying fundamentals. A
reconciliation of EBIT to Net Income applicable to common stock is provided in
the tables on pages 2 and 9.

(5) The calculation of this non-GAAP measure differs from the
corresponding GAAP measure because accumulated other comprehensive income
(loss) has been excluded from the value of capital used to determine this
measure. Management believes this non-GAAP measure is useful because it
removes the volatility that arises from changes in the unrealized appreciation
(depreciation) of our investments. The corresponding GAAP measures for book
value per common share were $22.89 and $19.12 at September 30, 2012 and
December 31, 2011, respectively.

(6) Management believes that an analysis of EBIT, 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.

(7) The benefit ratio is calculated by dividing the related product's
insurance policy benefits by insurance policy income.

(8) The interest-adjusted benefit ratio (a non-GAAP measure) is calculated
by dividing the product's insurance policy benefits less imputed interest
income on the accumulated assets backing the insurance liabilities by
insurance policy income. Interest income is an important factor in measuring
the performance of longer duration health products. The net cash flows
generally cause an accumulation of amounts in the early years of a policy
(accounted for as reserve increases), which will be paid out as benefits in
later policy years (accounted for as reserve decreases). Accordingly, as the
policies age, the benefit ratio will typically increase, but the increase in
the change in reserve will be partially offset by 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, which includes the effect of interest income, is
useful in analyzing product performance. Additional information concerning
this non-GAAP measure is included in our periodic filings with the Securities
and Exchange Commission that are available in the "Investors - SEC Filings"
section of CNO Financial's website, www.CNOinc.com.

Cautionary Statement Regarding Forward-Looking Statements. Our statements,
trend analyses and other information contained in this press release relative
to markets for CNO Financial's products and trends in CNO Financial's
operations or financial results, as well as other statements, contain
forward-looking statements within the meaning of the federal securities laws
and the Private Securities Litigation Reform Act of 1995. Forward-looking
statements typically are identified by the use of terms such as "anticipate,"
"believe," "plan," "estimate," "expect," "project," "intend," "may," "will,"
"would," "contemplate," "possible," "attempt," "seek," "should," "could,"
"goal," "target," "on track," "comfortable with," "optimistic" and similar
words, although some forward-looking statements are expressed differently. You
should consider statements that contain these words carefully because they
describe our expectations, plans, strategies and goals and our beliefs
concerning future business conditions, our results of operations, financial
position, and our business outlook or they state other ''forward-looking''
information based on currently available information. Assumptions and other
important factors that could cause our actual results to differ materially
from those anticipated in our forward-looking statements include, among other
things: (i) changes in or sustained low interest rates causing 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, 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,
including our position that our 7.0% convertible senior debentures due 2016
will not be treated as stock for purposes of Section 382 of the Internal
Revenue Code of 1986, as amended, and will not trigger an ownership change,
will not be successfully challenged by the Internal Revenue Service; (xii)
changes in accounting principles and the interpretation thereof (including
changes in principles related to accounting for deferred acquisition costs);
(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 and customer response to new products, distribution channels and
marketing initiatives; (xx) our ability to achieve eventual upgrades of the
financial strength ratings of CNO Financial and our insurance company
subsidiaries as well as the impact of our ratings on our business, our ability
to access capital and the cost of capital; (xxi) the risk factors or
uncertainties listed from time to time in our filings with the Securities and
Exchange Commission; (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; and (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. Other factors and assumptions not identified above are
also relevant to the forward-looking statements, and if they prove incorrect,
could also cause actual results to differ materially from those projected. All
forward-looking statements are expressly qualified in their entirety by the
foregoing cautionary statements. Our forward-looking statements speak only as
of the date made. We assume no obligation to update or to publicly announce
the results of any revisions to any of the forward-looking statements to
reflect actual results, future events or developments, changes in assumptions
or changes in other factors affecting the forward-looking statements.

SOURCE CNO Financial Group, Inc.

Website: http://www.CNOinc.com
Contact: (News Media) Tony Zehnder +1-312-396-7086, or (Investors) Erik
Helding +1-317-817-4760