CNO Reports 221% Increase in Third Quarter 2010 Net Income to $49.4 Million, or 17 Cents Per Share

CARMEL, Ind., Nov. 2, 2010 /PRNewswire-FirstCall/ –CNO Financial Group, Inc.
(NYSE: CNO) today announced results for the third quarter of 2010. “CNO had a
strong third quarter, with net income again ahead of expectations, increasing
221 percent to over $49 million compared to last year’s third quarter,” CEO Jim
Prieur said, “as our three core growing businesses continued to perform well.
This is the first quarter where we are reporting under our new segmentation,
where the performance of our growing Washington National business is separated
from our Other CNO Business, which is comprised mainly of closed blocks of
business.”

Third Quarter Results

— Net income increased to $49.4 million, compared to $15.4 million in 3Q09
(including $2.3 million of net realized investment gains in 3Q10 vs.
$38.9 million of net realized investment losses and valuation allowance
for deferred tax assets in 3Q09)
— Net income per diluted share of 17 cents, compared to 8 cents in 3Q09
(reflecting dilution of 2 cents per share related to the issuance of
common stock and convertible debentures; and including 1 cent of net
realized investment gains in 3Q10 vs. 21 cents of net realized
investment losses and valuation allowance for deferred tax assets in
3Q09) (1)
— $93.8 million of income before net realized investment gains, corporate
interest and taxes (“EBIT”) (2), down 12% compared to $107.0 million in
3Q09; $130.5 million of EBIT (2) from our active marketing segments
(Bankers Life, Washington National and Colonial Penn), up 7 percent
compared to $121.9 million in 3Q09
— Net operating income (3) of $47.1 million, down 13% compared to $54.3
million in 3Q09, reflecting approximately $12 million of 3Q10 after-tax
charges related to unlocking and recoverability of the present value of
future profits in the Other CNO Business segment
— Net operating income per diluted share: 16 cents, compared to 29 cents
in 3Q09 (reflecting dilution of 10 cents per share related to the
issuance of common stock and convertible debentures) (1)
— Total new annualized premium (“NAP”) excluding Private-Fee-For-Service
(“PFFS”) and Prescription Drug Plan (“PDP”) (4): $86 million, down 7%
from 3Q09
Nine-Month Results

— Net income of $116.4 million, up 72% compared to the first nine months
of 2009 (including $13.8 million of net realized investment losses and
loss on extinguishment of debt in the first nine months of 2010 vs.
$65.1 million of net realized investment losses, valuation allowance for
deferred tax assets and loss on modification of debt in the first nine
months of 2009)
— Net income per diluted share of 42 cents, compared to 36 cents in the
first nine months of 2009 (including 4 cents of net realized investment
losses and loss on extinguishment of debt in the first nine months of
2010 vs. 35 cents of net realized investment losses, valuation allowance
for deferred tax assets and loss on modification of debt in the first
nine months of 2009) (1)
— $262.7 million of income before net realized investment losses,
corporate interest and taxes (“EBIT”) (2), down 1.2% compared to the
first nine months of 2009
— Net operating income (3) of $130.2 million, down 1.8% compared to the
first nine months of 2009
— Net operating income per diluted share: 46 cents, compared to 71 cents
in the first nine months of 2009 (1)
— NAP excluding PFFS and PDP (4): $269 million, up slightly from the first
nine months of 2009
Financial Strength at September 30, 2010

— The combined statutory risk-based capital ratio of our insurance
subsidiaries increased 2 percentage points to 320% in 3Q10 (not
including the 9 percentage point increase related to the completion of
the merger of certain of our insurance subsidiaries completed in 4Q2010)
— Unrestricted cash held by our non-insurance subsidiaries increased $60
million to $190 million during 3Q10
— Debt-to-total capital ratio, excluding accumulated other comprehensive
income (loss) (5), improved to 20.8% from 21.5% at December 31, 2009
— Book value per common share, excluding accumulated other comprehensive
income (loss) (5), increased to $15.60 from $15.14 at December 31, 2009
— Accumulated other comprehensive income improved in 3Q10 by $369.3
million, to accumulated other comprehensive income of $688.1 million,
reflecting the increase in estimated fair value of our fixed maturity
investments

Quarterly Segment Operating Results

Three months
ended
September 30,
————-
2010 2009
—- —-
($ in millions,
except per-
share data)
EBIT (2):
Bankers Life $95.5 $85.4
Washington National 27.2 29.1
Colonial Penn 7.8 7.4
Other CNO Business (24.4) (7.5)
Corporate Operations, excluding corporate
interest expense (12.3) (7.4)
—– —-
EBIT 93.8 107.0
Corporate interest expense (20.0) (24.0)
—– —–
Income before net realized investment gains
(losses) and taxes 73.8 83.0
Tax expense on operating income 26.7 28.7
—- —-
Net operating income (3) 47.1 54.3
Net realized investment gains (losses) (net
of related amortization and taxes and the
establishment of a valuation allowance for
deferred tax assets related to such losses)
(6) 2.3 (18.9)
— —–
Net income before valuation allowance for
deferred tax assets 49.4 35.4
Valuation allowance for deferred tax assets
(excluding the establishment of a valuation
allowance for realized investment losses) – (20.0)
— —–

Net income applicable to common stock $49.4 $15.4
===== =====
Per diluted share (1):
Net operating income $.16 $.29
Net realized investment gains (losses), net
of related amortization and taxes .01 (.10)
Valuation allowance for deferred tax assets – (.11)
—-
Net income $.17 $.08
==== ====

Segment Results

Bankers Life: Pre-tax operating earnings were $95.5 million in 3Q10 up 12%
compared to 3Q09. Results for 3Q10 compared to 3Q09 reflect:

— favorable results across all lines of business resulting in $20 million
additional earnings, primarily due to higher investment earnings from
higher average yields on a larger asset base and an improved Medicare
supplement benefit ratio; and
— a reduction in earnings of approximately $13 million from the PFFS
business assumed through quota share agreements with Coventry (the last
of which expired on January 1, 2010).
Washington National: Pre-tax operating earnings were $27.2 million in 3Q10 down
6.5% compared to 3Q09. Earnings in 3Q09 were positively impacted by
approximately $4 million of reserve refinements related to supplemental health
products.

Colonial Penn: Pre-tax operating earnings were $7.8 million in 3Q10 up 5.4%
compared to 3Q09. Results for 3Q10 reflect favorable life margins.

Other CNO Business: Pre-tax operating loss was $24.4 million in 3Q10 compared to
a loss of $7.5 million in 3Q09. Results for 3Q10 compared to 3Q09 reflect:

— a reduction in earnings of approximately $13 million primarily due to
additional amortization expense from decreased projected future
investment yields related to interest sensitive insurance products; and
— a reduction in earnings of approximately $6 million from the write off
of the present value of future profits related to this segment’s
long-term care insurance block.

Corporate Operations (including our investment advisory subsidiary and corporate
expenses): Results for 3Q10 reflect a $4.5 million legal settlement related to
an obligation assumed in conjunction with the acquisition of a subsidiary in
1991.

The results for the third quarter of 2009 also reflected the increase to the
deferred tax valuation allowance of $20 million that we established upon the
completion of a reinsurance transaction with Wilton Re.

Investment Results

Net realized investment gains in 3Q10 were $2.3 million (net of related
amortization and taxes), including total other-than-temporary impairment losses
of $22.8 million, of which $24.5 million was recorded in earnings and $(1.7)
million in accumulated other comprehensive income (loss). Net realized
investment losses in 3Q09 were $18.9 million (net of related amortization and
taxes and the establishment of a valuation allowance for deferred tax assets
related to such losses), including: (i) total other-than-temporary impairment
losses of $162.4 million, of which $35.7 million was recorded in earnings and
$126.7 million in accumulated other comprehensive income (loss); and (ii) $6.7
million increase to the deferred tax valuation allowance.

Sales Results

At Bankers Life (career distribution), total NAP (excluding PFFS and PDP) in
3Q10 was $55 million, down 11% from 3Q09, driven by lower NAP from Medicare
supplement policies due to customer preference for products with lower premiums
and lower benefits, and lower sales of long-term care policies following pricing
changes we made to improve the profitability of these products.

At Washington National (independent distribution), total NAP in 3Q10 was $19
million, down 4% from 3Q09. NAP in 3Q10 of Washington National’s core
supplemental health products (including specified disease, accident and hospital
indemnity policies) was $18 million, up 11% from 3Q09.

At Colonial Penn (direct distribution), total NAP in 3Q10 was $12 million, up 8%
from 3Q09.

Conference Call

The Company will host a conference call to discuss results on November 3, 2010
at 10:00 a.m. Eastern Daylight Time. The webcast can be accessed through the
Investors section of the company’s website: http://investor.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, Colonial Penn Life Insurance Company and Washington
National Insurance Company – serve working American families and seniors by
helping them protect against financial adversity and provide for a more secure
retirement. For more information, visit CNO online at www.CNOinc.com.

1. Net income per diluted share and operating income per diluted share for
3Q2010 and the first nine months of 2010 reflect the dilution from the
issuance of 65.9 million shares of common stock and $293.0 million of
convertible debentures.
2. Management believes that an analysis of earnings before net realized
investment gains (losses), corporate interest expense, loss on
extinguishment or modification 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 it excludes: (i) corporate
interest expense; (ii) loss on extinguishment or modification of debt; and
(iii) net realized investment gains (losses) that 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 3 and 9.
3. Management believes that an analysis of Net income applicable to common
stock before: (i) loss on extinguishment or modification of debt, net of
income taxes; and (ii) net realized investment gains or losses, 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 loss
on extinguishment of debt and realized investment gains or losses can be
affected by events that are unrelated to the company’s underlying
fundamentals. A reconciliation of Net operating income to Net income
applicable to common stock is provided in the tables on pages 3 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.
4. Measured by new annualized premium, which includes 6% of annuity and 10% of
single premium whole life deposits and 100% of all other premiums. PDP and
PFFS sales are not comparable to other sales and are therefore excluded in
all periods. Effective January 1, 2010, we no longer assume any of the
risks of PFFS business through reinsurance.
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
debt-to-total capital and book value per common share were 18.3% and
$18.34, respectively, at September 30, 2010, and 22.7% and $14.09,
respectively, at December 31, 2009.
6. Amount in the third quarter of 2009 reflects a deferred tax valuation
allowance of $6.7 million as it is more likely than not that tax benefits
related to investment losses will not be utilized to offset future taxable
income.

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 thefederal 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 a reduction in investment income, the
margins of our subsidiaries’ fixed annuity and life insurance businesses and
demand for their products; (ii) general economic, market and political
conditions, including the performance and fluctuations of the financial markets
which may affect our ability to raise capital or refinance existing indebtedness
and the cost of doing so; (iii) our ability to generate sufficient liquidity to
meet our debt service obligations and other cash needs; (iv) our ability to
obtain adequate and timely rate increases on our health products, including our
long-term care business; (v) the receipt of any required regulatory approvals
for dividend and surplus debenture interest payments from our insurance
subsidiaries; (vi) 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;
(vii) changes in our assumptions related to deferred acquisition costs or the
present value of future profits; (viii) the recoverability of our deferred tax
assets and the effect of potential ownership changes and tax rate changes on
their value; (ix) 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; (x) changes in
accounting principles and the interpretation thereof; (xi) our ability to
continue to satisfy the financial ratio and balance requirements and other
covenants of our debt agreements; (xii) 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, (xiii) performance and valuation of our investments, including the
impact of realized losses (including other-than-temporary impairment charges);
(xiv) 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; (xv) the ultimate
outcome of lawsuits filed against us and other legal and regulatory proceedings
to which we are subject; (xvi) our ability to complete the remediation of the
material weakness in internal controls over our actuarial reporting process and
to maintain effective controls over financial reporting; (xvii) our ability to
continue to recruit and retain productive agents and distribution partners and
customer response to new products, distribution channels and marketing
initiatives; (xviii) 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; (xix) the risk factors or uncertainties listed from time to
time in our filings with the Securities and Exchange Commission; (xx) 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 financial services affecting (among
other things) bank sales and underwriting of insurance products, regulation of
the sale, underwriting and pricing of products, and health care regulation
affecting health insurance products; and (xxi) changes in the Federal income tax
laws and regulations which may affect or eliminate the relative tax advantages
of some of our products. 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.

- Tables Follow -

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

September December
30, 31,
2010 2009
—- —-
ASSETS (unaudited)
Investments:
Fixed maturities, available for sale, at
fair value (amortized cost: September 30,
2010 -$19,664.5; December 31, 2009 -
$18,998.0) $21,007.5 $18,528.4
Equity securities at fair value (cost:
September 30, 2010 -$40.7; December 31,
2009 -$30.7) 41.1 31.0
Mortgage loans 1,825.6 1,965.5
Policy loans 290.9 295.2
Trading securities 389.7 293.3
Investments held by securitization entities
(1) 454.8 -
Securities lending collateral – 180.0
Other invested assets 189.5 236.8
—– —–
Total investments 24,199.1 21,530.2
Cash and cash equivalents – unrestricted 548.8 523.4
Cash and cash equivalents held by
securitization entities (1) 18.3 3.4
Accrued investment income 345.3 309.0
Present value of future profits 1,028.3 1,175.9
Deferred acquisition costs 1,612.7 1,790.9
Reinsurance receivables 3,315.7 3,559.0
Income tax assets, net 536.7 1,124.0
Assets held in separate accounts 16.7 17.3
Other assets 352.0 310.7
—– —–
Total assets $31,973.6 $30,343.8
========= =========

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Liabilities for insurance products:
Interest-sensitive products $13,217.6 $13,219.2
Traditional products 10,253.0 10,063.5
Claims payable and other policyholder funds 939.4 994.0
Liabilities related to separate accounts 16.7 17.3
Other liabilities 833.9 610.4
Investment borrowings 653.9 683.9
Borrowings related to securitization entities
(1) 425.0 -
Securities lending payable – 185.7
Notes payable – direct corporate obligations 1,029.8 1,037.4
——- ——-
Total liabilities 27,369.3 26,811.4
——– ——–
Commitments and Contingencies
Shareholders’ equity:
Common stock ($0.01 par value, 8,000,000,000
shares authorized, shares issued and
outstanding: September 30, 2010 -
251,046,412; December 31, 2009 -
250,786,216) 2.5 2.5
Additional paid-in capital 4,421.6 4,408.8
Accumulated other comprehensive income (loss) 688.1 (264.3)
Accumulated deficit (507.9) (614.6)
—— ——
Total shareholders’ equity 4,604.3 3,532.4
——- ——-
Total liabilities and shareholders’ equity $31,973.6 $30,343.8
========= =========

(1) In the first quarter of 2010, the Company began reporting assets
and liabilities related to securitization entities required to be
consolidated under a new accounting standard effective January 1,
2010.

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

Three months ended
September 30,
————-
2010 2009
—- —-

Revenues:
Insurance policy income $674.5 $772.0
Net investment income (loss):
General account assets 326.5 306.3
Policyholder and reinsurer
accounts and other special-
purpose portfolios 43.3 56.5
Realized investment gains
(losses):
Net realized investment gains,
excluding impairment losses 28.1 15.4
Other-than-temporary
impairment losses:
Total other-than-temporary
impairment losses (22.8) (162.4)
Change in other-than-temporary
impairment losses recognized in
accumulated other comprehensive
income (loss) (1.7) 126.7
—- —–
Net impairment losses recognized (24.5) (35.7)
—– —–
Total realized gains (losses) 3.6 (20.3)
— —–
Fee revenue and other income 4.6 4.1
— —

Total revenues 1,052.5 1,118.6
——- ——-

Benefits and expenses:
Insurance policy benefits 700.0 782.7
Interest expense 28.4 31.9
Amortization 118.6 113.3
Loss on extinguishment or
modification of debt – -
Other operating costs and
expenses 128.2 126.6
—– —–

Total benefits and expenses 975.2 1,054.5
—– ——-

Income before income taxes 77.3 64.1

Income tax expense:

Tax expense on period income 27.9 22.0
Valuation allowance for deferred
tax assets 26.7
— —-

Net income $49.4 $15.4
===== =====

Earnings per common share:
Basic:
Weighted average shares
outstanding 251,045,000 184,886,000
=========== ===========

Net income $.20 $.08
==== ====

Diluted:
Weighted average shares
outstanding 306,040,000 185,846,000
=========== ===========

Net income $.17 $.08
==== ====

Nine months ended
September 30,
————-
2010 2009
—- —-

Revenues:
Insurance policy income $2,007.0 $2,346.1
Net investment income (loss):
General account assets 962.8 923.6
Policyholder and reinsurer
accounts and other special-
purpose portfolios 44.6 47.3
Realized investment gains
(losses):
Net realized investment gains,
excluding impairment losses 54.7 120.8
Other-than-temporary
impairment losses:
Total other-than-temporary
impairment losses (69.8) (324.2)
Change in other-than-temporary
impairment losses recognized in
accumulated other comprehensive
income (loss) (2.9) 159.9
—- —–
Net impairment losses recognized (72.7) (164.3)
—– ——
Total realized gains (losses) (18.0) (43.5)
—– —–
Fee revenue and other income 11.7 10.2
—- —-

Total revenues 3,008.1 3,283.7
——- ——-

Benefits and expenses:
Insurance policy benefits 2,050.0 2,317.3
Interest expense 84.6 87.8
Amortization 317.8 335.9
Loss on extinguishment or
modification of debt 2.7 9.5
Other operating costs and
expenses 370.8 377.3
—– —–

Total benefits and expenses 2,825.9 3,127.8
——- ——-

Income before income taxes 182.2 155.9

Income tax expense:

Tax expense on period income 65.8 54.7
Valuation allowance for deferred
tax assets 33.7
— —-

Net income $116.4 $67.5
====== =====

Earnings per common share:
Basic:
Weighted average shares
outstanding 250,942,000 184,820,000
=========== ===========

Net income $.46 $.37
==== ====

Diluted:
Weighted average shares
outstanding 300,256,000 185,277,000
=========== ===========

Net income $.42 $.36
==== ====

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES
Operating Results
(Dollars in millions, except per-share data)

Nine months ended
September 30,
————-
2010 2009
—- —-
EBIT (2):
Bankers Life $212.7 $193.4
Washington National 75.9 87.9
Colonial Penn 20.7 23.5
Other CNO Business (17.5) (13.9)
Corporate Operations, excluding corporate
interest expense (29.1) (24.9)
—– —–
EBIT 262.7 266.0
Corporate interest expense (59.3) (61.6)
—– —–
Income before loss on extinguishment or
modification of debt, net realized
investment losses and taxes 203.4 204.4
Tax expense on operating income 73.2 71.8
—- —-
Net operating income (3) 130.2 132.6
Loss on extinguishment or modification of
debt, net of income taxes (1.8) (6.1)
Net realized investment losses (net of
related amortization and taxes and the
establishment of a valuation allowance for
deferred tax assets related to such
losses) (12.0) (39.0)
—– —–
Net income before valuation allowance for
deferred tax assets 116.4 87.5
Valuation allowance for deferred tax assets
(excluding the establishment of a
valuation allowance for realized
investment losses) – (20.0)
— —–

Net income applicable to common stock $116.4 $67.5
====== =====
Per diluted share (1):
Net operating income $.46 $.71
Loss on extinguishment or modification of
debt, net of income taxes – (.03)
Net realized investment losses, net of
related amortization and taxes (.04) (.21)
Valuation allowance for deferred tax assets – (.11)
—-
Net income $.42 $.36
==== ====

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

Three months
ended
September 30,
————-
2010 2009
—- —-
Bankers Life segment:
Annuity $265.8 $284.7
Medicare supplement and other supplemental health 333.4 440.7
Life 54.8 63.2
—- —-
Total collected premiums $654.0 $788.6
====== ======
Washington National segment:
Medicare supplement and other supplemental health $140.7 $144.5
Life 3.8 8.4
— —
Total collected premiums $144.5 $152.9
====== ======
Colonial Penn segment:
Life $46.9 $45.6
Supplemental health 1.5 1.8
— —
Total collected premiums $48.4 $47.4
===== =====
Other CNO Business segment:
Annuity $3.6 $25.2
Other health 7.6 8.4
Life 47.8 51.9
—- —-
Total collected premiums $59.0 $85.5
===== =====

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

Three months ended
September 30,
————-
2010
—-
Bankers Life segment:
Medicare Supplement:
Earned premium $178 million
Benefit ratio(a) 69.5%
PDP and PFFS:
Earned premium $19 million
Benefit ratio(a) 29.5%
Long-Term Care:
Earned premium $147 million
Benefit ratio(a) 114.2%
Interest-adjusted benefit ratio (a non-GAAP
measure)(b) 73.2%
Washington National segment:
Medicare Supplement:
Earned premium $39 million
Benefit ratio(a) 67.0%
Supplemental health:
Earned premium $101 million
Benefit ratio(a) 81.3%
Interest-adjusted benefit ratio (a non-GAAP
measure)(b) 50.5%
Other CNO Business segment:
Long-Term Care:
Earned premium $7 million
Benefit ratio(a) 201.7%
Interest-adjusted benefit ratio (a non-GAAP
measure)(b) 116.9%
——————————————- —–

Three months ended
September 30,
————-
2009
—-
Bankers Life segment:
Medicare Supplement:
Earned premium $166 million
Benefit ratio(a) 72.4%
PDP and PFFS:
Earned premium $108 million
Benefit ratio(a) 74.2%
Long-Term Care:
Earned premium $150 million
Benefit ratio(a) 108.3%
Interest-adjusted benefit ratio (a non-GAAP
measure)(b) 70.4%
Washington National segment:
Medicare Supplement:
Earned premium $45 million
Benefit ratio(a) 68.2%
Supplemental health:
Earned premium $95 million
Benefit ratio(a) 76.6%
Interest-adjusted benefit ratio (a non-GAAP
measure)(b) 42.9%
Other CNO Business segment:
Long-Term Care:
Earned premium $8 million
Benefit ratio(a) 154.2%
Interest-adjusted benefit ratio (a non-GAAP
measure)(b) 73.8%
——————————————-

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

(b) The interest-adjusted benefit ratio (a non-GAAP measure) is
calculated by dividing the product’s insurance policy benefits less
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 interest income
earned on the accumulated assets. The interest-adjusted benefit
ratio reflects the 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.

SOURCE CNO Financial Group, Inc.

Subject Codes: PC/t.101102160511806, PT/lang.en, PC/ticker, IN/INS,
IN/FIN, SU/ERN, SU/CCA, RE/Indiana, PC/priority.r,
PC/category.f, PC/class.1248, PC/WAVO_….k.,
PC/APT_….k, PC/trade_k, PC/wavo5_k, PC/class.1030,
PC/WAVO_l….., PC/APT_l…., PC/state_l, PC/wavo1_l,
PC/class.1278, PC/DataFeat_indpr, PC/port_32,
PC/Billing_FC1, PC/Billing_INI, PC/Billing_IRW,
PC/Billing_RWB, PC/Billing_TNW, PC/1stAcc_158676,
PC/bureau_DE, PC/port_01, PC/port_96, PC/port_31,
PC/port_33, PC/port_19, PC/port_91, PC/contact,
PC/website, PC/id_DE93424

Company Codes: NYSE:CNO, NYSE:CNO