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CNO Financial Group reports fourth quarter and full year 2012 results

    CNO Financial Group reports fourth quarter and full year 2012 results

Results reflect continued growth in core production and earnings

Financial position supports capital deployment guidance

PR Newswire

CARMEL, Ind., Feb. 11, 2013

CARMEL, Ind., Feb. 11, 2013 /PRNewswire/ --CNO Financial Group, Inc. (NYSE:
CNO) today announced fourth quarter of 2012 net income of $101.2 million, or
41 cents per diluted share, and operating earnings (1) of $60.0 million, or 25
cents per diluted share. For the full year, CNO reported net income of $221.0
million, or 83 cents per diluted share, and operating earnings (1) of $180.4
million, or 69 cents per diluted share.

"We again delivered positive results with strong earnings growth for both the
fourth quarter and full year, as our businesses continued to perform well,"
CEO Ed Bonach said. "We are also pleased with our growth, sales distribution
expansion, and that CNO's key measures of financial strength, including
risk-based capital, liquidity, and book value, all continued to improve."

Fourth Quarter 2012 Highlights

  oSales, as defined by total new annualized premium ("NAP") (2): $105.7
    million, up 2% from 4Q11
  oNet income per diluted share: 41 cents, compared to 23 cents in 4Q11
  oNet operating income (1) per diluted share: 25 cents compared to 18 cents
    in 4Q11
  oReduction to the deferred tax valuation allowance reflecting the higher
    levels of operating income and taxable investment gains realized: increase
    to net income of $28.5 million
  oUnrestricted cash and investments held by our non-insurance companies were
    $294 million at December 31, 2012 after the repurchase of 8.6 million
    shares for $80.7 million, repayment of debt of $31.6 million and common
    stock dividend payments of $4.5 million

Full Year 2012 Highlights

  oSales, as defined by total NAP (2): $393.4 million, up 5% from 2011
  oNet income per diluted share of 83 cents, compared to $1.15 in 2011
  oNet operating income (1) per diluted share: 69 cents compared to 61 cents
    in 2011
  oThe consolidated statutory risk-based capital ratio increased 9 percentage
    points to 367% during 2012, reflecting statutory earnings of $337 million
    and dividend payments to the non-insurance holding companies of $265
    million
  oRepurchase of 21.5 million shares for $180 million and redemption of $200
    million principal amount of convertible debentures for $355 million that
    would have otherwise been convertible into 36.6 million shares

Quarterly Segment Operating Results

                                                        Three months ended
                                                        December31,
                                                        2012           2011
                                                        (Dollars in millions,

                                                        except per-share data)
EBIT (4):
Bankers Life                                            $   73.7       $ 77.2
Washington National                                     34.6           28.8
Colonial Penn                                           3.2            1.8
Other CNO Business                                      5.2            —
EBIT from business segments                             116.7          107.8
Corporate Operations, excluding corporate interest      (2.7)          (8.4)
expense
EBIT                                                    114.0          99.4
Corporate interest expense                              (15.8)         (17.7)
Operating earnings before tax                           98.2           81.7
Tax expense on operating income                         38.2           30.7
Net operating income (1)                                60.0           51.0
Net realized investment gains (net of related           10.8           14.0
amortization and taxes)
Fair value changes in embedded derivative liabilities   2.6            (.4)
(net of related amortization and taxes)
Loss on extinguishment of debt (net of income taxes)    (.7)           (.2)
Net income before valuation allowance for deferred tax  72.7           64.4
assets
Decrease in valuation allowance for deferred tax assets 28.5           —
Net income                                              $   101.2      $ 64.4
Per diluted share:
Net operating income                                    $   .25        $ .18
Net realized investment gains (net of related           .04            .05
amortization and taxes)
Fair value changes in embedded derivative liabilities   .01            —
(net of related amortization and taxes)
Loss on extinguishment of debt (net of income taxes)    —              —
Decrease in valuation allowance for deferred tax assets .11            —
Net income                                              $   .41        $ .23



Our businesses performed at the high end of our seasonally adjusted expected
range in 4Q12. Pre-tax operating earnings benefited from the following items:
(i) $8 million of call and prepayment income above expectations across all
segments; and (ii) $7 million from favorable mortality in the universal life
and traditional life blocks of business in the Other CNO Business segment. In
addition, several significant items (as described in the segment results)
impacted our 4Q12 net operating income as summarized below (dollars in
millions, except per share amounts):

                                     Three months ended
                                     December 31, 2012*
                                     Actual    Significant  Excluding

                                     results  items        significant items
Net Operating Income (1):
Bankers Life                         $  73.7   $   4.0      $     77.7
Washington National                  34.6      —            34.6
Colonial Penn                        3.2       —            3.2
Other CNO Business                   5.2       11.3         16.5
EBIT from business segments          116.7     15.3         132.0
Corporate Operations, excluding      (2.7)     —            (2.7)
corporate interest expense
EBIT (4)                             114.0     15.3         129.3
Corporate interest expense           (15.8)    —            (15.8)
Operating earnings before tax        98.2      15.3         113.5
Tax expense on operating income      38.2      2.7          40.9
Net operating income                 $  60.0   $   12.6     $     72.6
Net operating income per diluted     $  .25    $   .05      $     .30
share

* See page 10 for the table of Net Operating Income Excluding Significant
Items for the three months ended December 31, 2011.

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 4Q12 was $69.3 million, down .7% from 4Q11 with higher sales of life
products being offset by lower annuity sales as a result of the low interest
rate environment and product adjustments. Excluding annuities, NAP in 4Q12 was
up 5%, driven by an increase in agent force due to gains in agent retention.

Pre-tax operating earnings in 4Q12 included $8 million of increased litigation
expense offset by the release of long-term care reserves of approximately $4
million due to the impact of policyholder actions following recent rate
increases.

Pre-tax operating earnings in 4Q11 of $77.2 million included approximately $11
million of favorable reserve developments in the long-term care and Medicare
supplement blocks.

We expect this segment to experience normal seasonal variances in quarterly
earnings during 2013, with the first quarter of the year typically having
lower earnings than the other three quarters (substantially similar to the
seasonal trends experienced over the last two years).

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 4Q12 was $22.8 million, up 8% from
4Q11 due to increased sales of core supplemental health products. Sales in
the quarter benefited from distribution expansion and an increase in voluntary
worksite sales, which were up 12%.

Pre-tax operating earnings in 4Q12 compared to 4Q11 were up $5.8 million, or
20 percent. Such increase primarily reflects increased earnings from our
supplemental health products due to growth in this block of business and
favorable claim experience.

Pre-tax operating earnings in 4Q11 of $28.8 million included: (i) a $4.5
million out-of-period adjustment which reduced earnings; and (ii)
approximately $3.7 million of favorable reserve developments in the
supplemental health block.

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 4Q12 was $13.6 million, up 11% from
4Q11. 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 4Q12 compared to 4Q11 were up $1.4 million or 78
percent. Such increase primarily reflects lower non-deferrable policy
acquisition and marketing costs during the quarter.

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. Based on our current
advertising plan, this segment expects to report a $5 million to $10 million
pre-tax loss for 2013, with the majority of the loss expected to be reported
in 1Q13.

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

The results in 4Q12 reflect: (i) a $6 million out-of-period adjustment which
reduced earnings; (ii) a $5 million charge for litigation expense in the
Company's subsidiary, Conseco Life Insurance Company; partially offset by
(iii) favorable mortality of approximately $7 million in the universal life
and traditional life blocks of business.

Corporate Operations includes our investment advisory subsidiary and corporate
expenses.

Pre-tax earnings in 4Q12 compared to 4Q11 reflect an increase in investment
income, consistent with our investment strategies in the corporate segment.

Net expenses in 4Q11 included: (i) a charge of $10 million related to the
impact of lower interest rates on the value of liabilities for agent deferred
compensation and other retirement benefits; and (ii) a reduction in expenses
of $7.4 million related to a true-up of the expense assumptions related to
stock-based compensation to reflect actual and future expected forfeitures.

Net expenses, excluding corporate interest expense, in 4Q12 compared to 4Q11
were down $5.7 million reflecting: (i) a $7.1 million increase in income from
investment trading account activities and an increase in value of certain
hedge funds; (ii) a net reduction in expenses of $2.6 million resulting from
the two significant items discussed in the previous paragraph; partially
offset by (iii) a $3.2 million decrease in the value of Company-owned life
insurance.

Non-Operating Items

Net realized investment gains in 4Q12 were $10.8 million (net of related
amortization and taxes), including total other-than-temporary impairment
losses of $3.3 million. Net realized investment gains in 4Q11 were $14.0
million (net of related amortization and taxes), including total
other-than-temporary impairment losses of $8.3 million.

During 4Q12 and 4Q11, we recognized an increase (decrease) to earnings of $2.6
million and $(.4) million, respectively, resulting from changes in the
estimated fair value of embedded derivative liabilities related to our fixed
index annuities, net of related amortization and income taxes. Such amounts
reflect the changes in market interest rates used to determine the
derivative's estimated fair value.

The results for 4Q12 and 4Q11 include losses on the early extinguishment of
debt, net of income taxes, of $.7 million and $.2 million, respectively.

In 4Q12, we reduced the valuation allowance for deferred taxes by $28.5
million resulting from the utilization of capital loss carryforwards, higher
projections of future taxable income related to state income taxes and the
impact of valuation allowance reduction identified in 3Q12 on our annual
effective tax rate.

Book value per common share, excluding other comprehensive income (loss) (5),
increased to $17.39 from $15.88 at December 31, 2011.

Statutory (based on non-GAAP measures) and GAAP Capital Information

Our consolidated statutory risk-based capital ratio increased 6 percentage
points to 367% during 4Q12, reflecting consolidated statutory operating
earnings of $94 million and the payment of dividends to the non-insurance
holding companies of $67 million during the quarter. During 2012, we made
dividend payments to the holding company totaling $265 million. 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 $300 million.

We purchased 21.5 million shares of our common stock during 2012 under our
share repurchase program. Such shares were purchased at an aggregate cost of
$180.2 million, or $8.37 per share. We redeemed $200 million principal amount
of convertible debentures in 2012 for an aggregate cost of $355 million. Such
convertible debentures would have otherwise been convertible into 36.6 million
shares of our common stock.

During 2012, we also paid common stock dividends of $13.9 million.

Our debt-to-total capital ratio, excluding accumulated other comprehensive
income (3) at December 31, 2012 was 20.7 percent, an increase of 240 basis
points from December 31, 2011. The increase in such ratio primarily resulted
from the completion of our previously announced recapitalization transactions.

As of December 31, 2012, we had approximately 221.5 million shares outstanding
and had authority to repurchase up to an additional $350 million of our
securities. We currently anticipate repurchasing common stock, warrants or
convertible debentures in the range of $250 million to $300 million during
2013. The amount and timing of the securities repurchases (if any) will be
based on business and market conditions and other factors. As part of our
securities repurchase program, we announced today in a separate press release
the commencement of a cash tender offer to purchase our outstanding 7.0%
convertible senior debentures due 2016.

Conference Call

The Company will host a conference call to discuss results on February 12,
2013 at 8:30 a.m. Eastern Standard Time. 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)


                                                      2012         2011
ASSETS
Investments:
Fixed maturities, available for sale, at fair value
(amortized cost: 2012                                $ 24,614.1   $ 23,516.0

- $21,626.8; 2011 - $21,779.1)
Equity securities at fair value (cost: 2012 -         171.4        175.1
$167.1;2011 - $177.0)
Mortgage loans                                        1,573.2      1,602.8
Policy loans                                          272.0        279.7
Trading securities                                    266.2        91.6
Investments held by securitization entities           814.3        496.3
Other invested assets                                 248.1        202.8
Total investments                                     27,959.3     26,364.3
Cash and cash equivalents - unrestricted              582.5        436.0
Cash and cash equivalents held by securitization      54.2         74.4
entities
Accrued investment income                             286.2        288.7
Present value of future profits                       626.0        697.7
Deferred acquisition costs                            629.7        797.1
Reinsurance receivables                               2,927.7      3,091.1
Income tax assets, net                                716.9        865.4
Assets held in separate accounts                      14.9         15.0
Other assets                                          334.0        292.2
Total assets                                          $ 34,131.4   $ 32,921.9
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Liabilities for insurance products:
Interest-sensitive products                           $ 12,893.2   $ 13,165.5
Traditional products                                  11,196.3     10,482.7
Claims payable and other policyholder funds           985.1        1,034.3
Liabilities related to separate accounts              14.9         15.0
Other liabilities                                     570.6        556.3
Investment borrowings                                 1,650.8      1,676.5
Borrowings related to variable interest entities      767.0        519.9
Notes payable – direct corporate obligations          1,004.2      857.9
Total liabilities                                     29,082.1     28,308.1
Commitments and Contingencies
Shareholders' equity:
Common stock ($0.01 par value, 8,000,000,000 shares
authorized,

shares issued and outstanding:2012 – 221,502,371;   2.2          2.4
2011 –

241,304,503)
Additional paid-in capital                            4,174.7      4,361.9
Accumulated other comprehensive income                1,197.4      781.6
Accumulated deficit                                   (325.0)      (532.1)
Total shareholders' equity                            5,049.3      4,613.8
Total liabilities and shareholders' equity            $ 34,131.4   $ 32,921.9





CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(Dollars in millions, except per-share data)

(unaudited)


                        Three months ended          Year ended
                        December31,                December31,
                        2012          2011          2012          2011
Revenues:
Insurance policy income $   684.1     $   670.2     $  2,755.4    $  2,690.5
Net investment income:
General account assets  352.8         344.2         1,398.5       1,360.7
Policyholder and
reinsurer accounts and
                        .5            7.8           87.9          (6.6)
other special-purpose
portfolios
Realized investment
gains:
Net realized investment
gains, excluding        20.5          31.5          118.9         96.4

impairment losses
Other-than-temporary
impairment losses:
Total
other-than-temporary    (3.3)         (13.6)        (37.8)        (39.9)
impairment losses
Portion of
other-than-temporary
impairment
                        —             5.3           —             5.3
losses recognized in
accumulated other

comprehensive income
Net impairment losses   (3.3)         (8.3)         (37.8)        (34.6)
recognized
Total realized gains    17.2          23.2          81.1          61.8
Fee revenue and other   6.2           5.7           19.8          18.2
income
Total revenues          1,060.8       1,051.1       4,342.7       4,124.6
Benefits and expenses:
Insurance policy        639.5         670.4         2,763.9       2,699.0
benefits
Interest expense        27.9          28.1          114.6         114.1
Amortization            73.2          73.3          289.0         297.4
Loss on extinguishment  1.0           .3            200.2         3.4
of debt
Other operating costs   201.5         176.7         819.3         704.5
and expenses
Total benefits and      943.1         948.8         4,187.0       3,818.4
expenses
Income before income    117.7         102.3         155.7         306.2
taxes
Income tax expense:
Tax expense on period   45.0          37.9          106.2         113.5
income
Decrease in valuation
allowance for deferred  (28.5)        —             (171.5)       (143.0)

tax assets
Net income              $   101.2     $   64.4      $  221.0      $  335.7
Earnings per common
share:
Basic:
Weighted average shares 225,074,000   242,789,000   233,685,000   247,952,000
outstanding
Net income              $   .45       $   .27       $  .95        $  1.35
Diluted:
Weighted average shares 246,761,000   298,071,000   281,427,000   304,081,000
outstanding
Net income              $   .41       $   .23       $  .83        $  1.15





CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

EBIT FROM BUSINESS SEGMENTS

SUMMARIZED BY IN-FORCE AND NEW BUSINESS (6)

(Dollars in millions)


                                       Three months ended  Year ended
EBIT (4) from In-force and New         December31,        December31,
Business
                                       2012      2011      2012       2011
Bankers Life segment:
In-Force Business                      $ 107.5   102.7     $ 417.3    $ 399.6
New Business                           (33.8)    (25.5)    (116.4)    (108.7)
Total                                  $ 73.7    $ 77.2    $ 300.9    $ 290.9
Washington National segment:
In-Force Business                      $ 36.6    $ 32.1    $ 134.5    $ 106.6
New Business                           (2.0)     (3.3)     (7.4)      (10.5)
Total                                  $ 34.6    $ 28.8    $ 127.1    $ 96.1
Colonial Penn segment:
In-Force Business                      $ 11.1    $ 9.8     $ 40.6     $ 39.5
New Business                           (7.9)     (8.0)     (49.2)     (44.2)
Total                                  $ 3.2     $ 1.8     $ (8.6)    $ (4.7)
Other CNO Business segment:
In-Force Business                      $ 5.2     $ —       $ (48.8)   $ 15.3
New Business                           —         —         —          —
Total                                  $ 5.2     $ —       $ (48.8)   $ 15.3
Total Business segments:
In-Force Business                      $ 160.4   $ 144.6   $ 543.6    $ 561.0
New Business                           (43.7)    (36.8)    (173.0)    (163.4)
Total EBIT from business segments      $ 116.7   $ 107.8   $ 370.6    $ 397.6





CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

SEGMENT OPERATING RESULTS

(Dollars in millions, except per-share data)


                                                            Year ended
                                                            December31,
                                                            2012      2011
EBIT (4):
Bankers Life                                                $ 300.9   $ 290.9
Washington National                                         127.1     96.1
Colonial Penn                                               (8.6)     (4.7)
Other CNO Business                                          (48.8)    15.3
EBIT from business segments                                 370.6     397.6
Corporate Operations, excluding corporate interest expense  (20.3)    (47.7)
EBIT                                                        350.3     349.9
Corporate interest expense                                  (66.2)    (76.3)
Operating earnings before tax                               284.1     273.6
Tax expense on operating income                             103.7     102.1
Net operating income (1)                                    180.4     171.5
Net realized investment gains (net of related amortization  48.4      36.7
and taxes)
Fair value changes in embedded derivative liabilities (net  (1.8)     (13.3)
of related amortization and taxes)
Loss on extinguishment of debt (net of income taxes)        (177.5)   (2.2)
Net income before valuation allowance for deferred tax      49.5      192.7
assets
Decrease in valuation allowance for deferred tax assets     171.5     143.0
Net income                                                  $ 221.0   $ 335.7
Per diluted share:
Net operating income                                        $ .69     $ .61
Net realized investment gains (net of related amortization  .17       .12
and taxes)
Fair value changes in embedded derivative liabilities (net  (.01)     (.04)
of related amortization and taxes)
Loss on extinguishment of debt (net of income taxes)        (.63)     (.01)
Decrease in valuation allowance for deferred tax assets     .61       .47
Net income                                                  $ .83     $ 1.15





CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

NET OPERATING INCOME EXCLUDING SIGNIFICANT ITEMS*

(Dollars in millions)
                                      Three months ended
                                      December 31, 2011
                                                                   Excluding
                                      Actual
                                               Significant items  significant
                                      results
                                                                   items
Net Operating Income (1):
Bankers Life                          $ 77.2   $    (11.0)         $   66.2
Washington National                   28.8     4.5                 33.3
Colonial Penn                         1.8      —                   1.8
Other CNO Business                    —        —                   —
EBIT from business segments           107.8    (6.5)               101.3
Corporate Operations, excluding       (8.4)    2.6                 (5.8)
corporate interest expense
EBIT (4)                              99.4     (3.9)               95.5
Corporate interest expense            (17.7)   —                   (17.7)
Operating earnings before tax         81.7     (3.9)               77.8
Tax expense on operating income       30.7     (1.4)               29.3
Net operating income                  $ 51.0   $    (2.5)          $   48.5
Net operating income per diluted      $ .18    $    —              $   .18
share

* This table summarizes the financial impact of significant items (as
described in the segment results section of this press release) on our 4Q11
net operating income.





CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

COLLECTED PREMIUMS

(Dollars in millions)
                                                  Three months ended
                                                  December31,
                                                  2012      2011
Bankers Life segment:
Medicare supplement and other supplemental health $ 200.9   $ 199.6
Life                                              87.8      66.1
Long-term care                                    134.9     136.3
Annuity                                           183.1     240.1
Total                                             606.7     642.1
Washington National segment:
Supplemental health                               116.9     110.0
Medicare supplement and other supplemental health 29.0      32.6
Life                                              3.4       3.7
Total                                             149.3     146.3
Colonial Penn segment:
Life                                              53.8      49.3
Supplemental health                               1.2       1.3
Total                                             55.0      50.6
Other CNO Business segment:
Life                                              38.5      40.1
Annuity                                           .8        3.0
Other health                                      6.3       6.3
Total                                             45.6      49.4
Total collected premiums                          $ 856.6   $ 888.4





NEW ANNUALIZED PREMIUMS (2)

(Dollars in millions)
                                                  Three months ended
                                                  December31,
                                                  2012      2011
Bankers Life segment:
Medicare supplement and other supplemental health $ 31.0    $ 31.5
Life                                              21.4      17.0
Long-term care                                    6.0       7.0
Annuity                                           10.9      14.3
Total                                             69.3      69.8
Washington National segment:
Supplemental health                               21.2      18.9
Medicare supplement and other supplemental health .1        .3
Life                                              1.5       1.8
Annuity                                           —         .2
Total                                             22.8      21.2
Colonial Penn segment:
Life                                              13.6      12.3
Total                                             13.6      12.3
Total new annualized premiums                     $ 105.7   $ 103.3



CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

BENEFIT RATIOS ON MAJOR HEALTH LINES OF BUSINESS


                                                    Three months ended
                                                    December31,
                                                    2012          2011
Bankers Life segment:
Medicare Supplement:
Earned premium                                      $185 million  $179 million
Benefit ratio (7)                                   71.4     %    70.5     %
PDP:
Earned premium                                      $10 million   $11 million
Benefit ratio (7)                                   64.8     %    72.6     %
Long-Term Care:
Earned premium                                      $137 million  $141 million
Benefit ratio (7)                                   116.7    %    112.1    %
Interest-adjusted benefit ratio (a non-GAAP         69.0     %    67.3     %
measure) (8)
Washington National segment:
Medicare Supplement:
Earned premium                                      $28 million   $33 million
Benefit ratio (7)                                   64.7     %    66.7     %
Supplemental health:
Earned premium                                      $115 million  $110 million
Benefit ratio (7)                                   72.9     %    76.3     %
Interest-adjusted benefit ratio (a non-GAAP         46.6     %    48.3     %
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; (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; and (iv)
changes to our valuation allowance for deferred tax assets ("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 16.6% and 15.7% at December 31, 2012 and 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 $22.80 and $19.12 at December 31, 2012 and 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.

This press release is for information purposes only and shall not constitute
an offer to purchase, a solicitation of an offer to purchase, or a
solicitation of an offer to sell securities. The tender offer for our
convertible debentures may be made only pursuant to the terms and conditions
of the Offer to Purchase, the Letter of Transmittal and the other related
tender offer materials. An issuer tender offer statement on Schedule TO,
including the Offer to Purchase and the Letter of Transmittal, describing the
tender offer will be filed with the Securities and Exchange Commission.
Holders of the convertible debentures are encouraged to read the Schedule TO
and its exhibits carefully before making any decision with respect to the
tender offer because it contains important information. The Schedule TO, the
Offer to Purchase, the Letter of Transmittal and other related tender offer
materials will be available free of charge at the website of the Securities
and Exchange Commission at www.sec.gov. In addition, CNO will provide copies
of the Schedule TO and related Offer materials upon request free of charge to
holders of the convertible debentures.





SOURCE CNO Financial Group, Inc.

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