CNO Reports Second Quarter 2011 Net Income of $59.5 Million, or 21 Cents Per Share

CARMEL, Ind., July 27, 2011 /PRNewswire/ — CNO Financial Group, Inc. (NYSE:
CNO) today announced results for the second quarter of 2011. “CNO continued to
generate earnings growth in the second quarter, driven by the performance of our
core businesses,” said CEO Jim Prieur. “Net income during the quarter increased
to $59.5 million, up 80% from $33.1 million in 2Q10, and net operating income
increased to $57.5 million, up 28% from $44.9 million in the prior year,” said
Prieur.

Mr. Prieur previously announced that he will retire at the end of September and
CFO Ed Bonach has been appointed by the board of directors to assume the CEO
position at that time. “We are also pleased that CNO’s capital strength
continued to grow, primarily fueled by our earnings, allowing us to buy back
shares and continue to pay down debt,” Ed Bonach said, “while still growing our
risk-based capital and increasing capital at the holding company.”

Second Quarter Results

— $108.5 million of income before net realized investment gains, corporate
interest and taxes (“EBIT”) (1), up 21% compared to $89.7 million in
2Q10
— Net operating income (2) of $57.5 million, up 28% compared to $44.9
million in 2Q10
— Net operating income per diluted share: 20 cents, compared to 16 cents
in 2Q10
— Net income increased to $59.5 million, up 80% compared to $33.1 million
in 2Q10 (including $2.0 million of net realized investment gains and
loss on extinguishment of debt in 2Q11; and $(11.8) million of net
realized investment losses and loss on extinguishment of debt in 2Q10)
— Net income per diluted share of 21 cents, compared to 12 cents in 2Q10
(including 1 cent of net realized investment gains in 2Q11; and (4)
cents of net realized investment losses in 2Q10)
— Total new annualized premium (“NAP”) excluding Private-Fee-For-Service
(“PFFS”) and Prescription Drug Plan (“PDP”) (3): $92 million, down 3%
from 2Q10 and up 7% from 1Q11

Six-month Results

— $209.6 million of income before net realized investment gains, corporate
interest and taxes (“EBIT”) (1), up 24% compared to $168.9 million in
the first six months of 2010
— Net operating income (2) of $109.4 million, up 32% compared to $83.1
million in the first six months of 2010
— Net operating income per diluted share: 38 cents, compared to 30 cents
in the first six months of 2010
— Net income increased to $113.4 million, compared to $67.0 million in the
first six months of 2010 (including $4.0 million of net realized
investment gains and loss on extinguishment of debt in the first six
months of 2011; and $(16.1) million of net realized investment losses
and loss on extinguishment of debt in the first six months of 2010)
— Net income per diluted share of 39 cents, compared to 25 cents in the
first six months of 2010 (including 1 cent of net realized investment
gains and loss on extinguishment of debt in the first six months of
2011; and (5) cents of net realized investment losses in the first six
months of 2010)
— NAP excluding PFFS and PDP (3): $178 million, down 2% from the first six
months of 2010

Financial Strength at June 30, 2011

— The consolidated statutory risk-based capital ratio of our insurance
subsidiaries increased 10 percentage points to 351% in 2Q11, driven by
improved asset quality and statutory earnings of $78.7 million partially
offset by $78 million of dividend payments to our holding company
— Unrestricted cash and investments held by our non-insurance subsidiaries
increased $65 million to $234 million during 2Q11, including the impacts
of the aforementioned dividend payments offset by $16.2 million
prepayment of debt and $16.2 million repurchases of common stock
— Debt-to-total capital ratio, as defined in our senior secured credit
facility (4), reduced to 18.7% from 20.0% at December 31, 2010
— Book value per common share, excluding accumulated other comprehensive
income (loss) (5), increased to $16.80 from $16.28 at December 31, 2010

Quarterly Segment Operating Results
Three months
ended
June 30,
——–
2011 2010
—- —-
(Dollars in
millions,
except per-
share data)
EBIT (1):
Bankers Life $84.7 $64.0
Washington National 22.7 21.1
Colonial Penn 7.6 7.6
Other CNO Business 4.8 8.8
Corporate Operations, excluding corporate interest
expense (11.3) (11.8)
—– —–
EBIT 108.5 89.7
Corporate interest expense (19.3) (19.8)
—– —–
Income before net realized investment gains
(losses) and taxes 89.2 69.9
Tax expense on operating income 31.7 25.0
—- —-
Net operating income (2) 57.5 44.9
Loss on extinguishment of debt, net of income
taxes (.4) (.6)
Net realized investment gains (losses) (net of
related amortization and taxes) 2.4 (11.2)
— —–

Net income $59.5 $33.1
===== =====
Per diluted share:
Net operating income $.20 $.16
Net realized investment gains (losses), net of
related amortization and taxes .01 (.04)
— —-
Net income $.21 $.12
==== ====

Segment Results

Bankers Life: Pre-tax operating earnings were $84.7 million in 2Q11 up 32%
compared to 2Q10. Results in 2Q11 were favorably impacted by: (i) higher
investment income reflecting high persistency and growth in the annuity block;
(ii) bond prepayment income; and (iii) additional spread earned on investments
purchased with the proceeds of borrowings from the Federal Home Loan Bank.
Pre-tax operating earnings in 2Q11 included: (i) bond prepayment income of $6.0
million; and (ii) $3.7 million of earnings from the PFFS business assumed
through our reinsurance agreements with Coventry (the last of which expired on
January 1, 2010) due to premium adjustments received in 2Q11.

Washington National: Pre-tax operating earnings were $22.7 million in 2Q11 up 8%
compared to 2Q10. These results were consistent with our expectations.

Colonial Penn: Pre-tax operating earnings were $7.6 million in 2Q11 and 2Q10.

Other CNO Business: Pre-tax operating earnings were $4.8 million in 2Q11
compared to $8.8 million in 2Q10. Results in this block are expected to
fluctuate from period to period and the results in 2Q11 were within the range of
our expectations.

Corporate Operations (including our investment advisory subsidiary and corporate
expenses): Net expenses, excluding corporate interest expense were $11.3 million
in 2Q11 compared to $11.8 million in 2Q10.

The results for 2Q11 include a $.4 million loss on extinguishment of debt, net
of income taxes, related to the prepayment of $16.2 million principal amount
outstanding under our senior secured credit agreement. The results for 2Q10
include a $.6 million loss on extinguishment of debt, net of income taxes,
related to the repurchase of $52.5 million aggregate principal amount of our
3.5% convertible senior debentures.

Investment Results

Net realized investment gains in 2Q11 were $2.4 million (net of related
amortization and taxes), including total other-than-temporary impairment losses
of $10.1 million, all of which were recorded in earnings. Net realized
investment losses in 2Q10 were $11.2 million (net of related amortization and
taxes), including total other-than-temporary impairment losses of $29.3 million,
of which $27.9 million was recorded in earnings and $1.4 million in accumulated
other comprehensive income (loss).

Sales Results

At Bankers Life (career distribution), total NAP (excluding PFFS and PDP) in
2Q11 was $60.1 million, down 6% from 2Q10. NAP in 2Q11 was up 9% from 1Q2011.

At Washington National (independent distribution), total NAP in 2Q11 was $19.4
million, up 2% from 2Q10. NAP in 2Q11 of Washington National’s core supplemental
health (including specified disease, accident and hospital indemnity policies)
and life products was $18.7 million, up 3% from 2Q10. Core product NAP in 2Q11
was up 14% from 1Q11.

At Colonial Penn (direct distribution), total NAP in 2Q11 was $12.8 million, up
5% from 2Q10 and down 6% from 1Q11 (reflecting the seasonality of this segment’s
sales).

Conference Call

The Company will host a conference call to discuss results on July 28, 2011 at
9:00 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, Washington National Insurance Company and Colonial Penn
Life 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. 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 8.
2. 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. The impact of fair value changes in embedded
derivative liabilities caused by interest rate fluctuations was
insignificant in 2Q11 and prior periods. 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
8. 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.
3. 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.
4. The calculation of this non-GAAP measure differs from the corresponding
GAAP measure because: (i) debt is defined as par value plus accrued
interest and unused letters of credit; and (ii) 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 as the level of such ratio impacts certain provisions in our
senior secured credit facility. The corresponding GAAP measures for
debt-to-total capital were 17.0% and 18.8% at June 30, 2011 and December
31, 2010, respectively.
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 $18.30 and $17.23 at June 30, 2011 and December
31, 2010, respectively.

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 a reduction in investment income, the
margins of our fixed annuity and life insurance businesses and demand for our
products; (ii) 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; (iii) the ultimate outcome of lawsuits
filed against us and other legal and regulatory proceedings to which we are
subject; (iv) our ability to make changes to certain non-guaranteed elements of
our life insurance products; (v) our ability to obtain adequate and timely rate
increases on our health products, including our long-term care business; (vi)
the receipt of any required regulatory approvals for dividend and surplus
debenture interest payments from our insurance subsidiaries; (vii) 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; (viii) changes in our
assumptions related to deferred acquisition costs or the present value of future
profits; (ix) the recoverability of our deferred tax assets and the effect of
potential ownership changes and tax rate changes on their value; (x) 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; (xi) changes in
accounting principles and the interpretation thereof (including changes in
principles related to accounting for deferred acquisition costs); (xii) our
ability to continue to satisfy the financial ratio and balance requirements and
other covenants of our debt agreements; (xiii) 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, (xiv) performance and valuation of our investments,
including the impact of realized losses (including other-than-temporary
impairment charges); (xv) 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; (xvi) our
ability to generate sufficient liquidity to meet our debt service obligations
and other cash needs; (xvii) our ability to maintain effective controls over
financial reporting; (xviii) our ability to continue to recruit and retain
productive agents and distribution partners and customer response to new
products, distribution channels and marketing initiatives; (xix) 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; (xx) the risk
factors or uncertainties listed from time to time in our filings with the
Securities and Exchange Commission; (xxi) 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 (xxii) 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.

- Tables Follow -

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

December
June 30, 31,
2011 2010
—- —-
(unaudited)
ASSETS
Investments:
Fixed maturities, available for sale,
at fair value (amortized cost: June
30, 2011 -$20,893.1; December 31,
2010 -$20,155.8) $21,622.9 $20,633.9
Equity securities at fair value (cost:
June 30, 2011 -$128.6; December 31,
2010 – $68.2) 129.6 68.1
Mortgage loans 1,752.8 1,761.2
Policy loans 279.5 284.4
Trading securities 83.5 372.6
Investments held by securitization
entities 414.0 420.9
Other invested assets 252.2 240.9
—– —–
Total investments 24,534.5 23,782.0
Cash and cash equivalents -
unrestricted 580.2 571.9
Cash and cash equivalents held by
securitization entities 25.3 26.8
Accrued investment income 314.3 327.8
Present value of future profits 936.5 1,008.6
Deferred acquisition costs 1,762.6 1,764.2
Reinsurance receivables 3,172.5 3,256.3
Income tax assets, net 703.5 839.4
Assets held in separate accounts 17.4 17.5
Other assets 349.8 305.1
—– —–
Total assets $32,396.6 $31,899.6
========= =========
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Liabilities for insurance products:
Interest-sensitive products $13,152.8 $13,194.7
Traditional products 10,424.4 10,307.6
Claims payable and other policyholder
funds 978.0 968.7
Liabilities related to separate
accounts 17.4 17.5
Other liabilities 703.7 496.3
Investment borrowings 1,305.3 1,204.1
Borrowings related to variable
interest entities 317.3 386.9
Notes payable – direct corporate
obligations 934.5 998.5
—– —–
Total liabilities 27,833.4 27,574.3
——– ——–
Commitments and Contingencies
Shareholders’ equity:
Common stock ($0.01 par value,
8,000,000,000 shares authorized,
shares issued and outstanding: June
30, 2011 – 249,415,210; December 31,
2010 – 251,084,174) 2.5 2.5
Additional paid-in capital 4,414.3 4,424.2
Accumulated other comprehensive income 372.7 238.3
Accumulated deficit (226.3) (339.7)
—— ——
Total shareholders’ equity 4,563.2 4,325.3
——- ——-
Total liabilities and shareholders’
equity $32,396.6 $31,899.6
========= =========

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

Three months ended
June 30,
——–
2011 2010
—- —-
Revenues:
Insurance policy income $679.6 $667.9
Net investment income:
General account assets 342.2 321.1
Policyholder and reinsurer accounts
and other special-purpose
portfolios 3.1 (22.7)
Realized investment gains (losses):
Net realized investment gains,
excluding impairment losses 13.0 11.2
Other-than-temporary impairment
losses:
Total other-than-temporary
impairment losses (10.1) (29.3)
Portion of other-than-temporary
impairment losses – 1.4
recognized in accumulated other
comprehensive — —
income
Net impairment losses recognized (10.1) (27.9)
—– —–
Total realized gains (losses) 2.9 (16.7)
— —–
Fee revenue and other income 4.2 3.6
— —
Total revenues 1,032.0 953.2
——- —–
Benefits and expenses:
Insurance policy benefits 684.4 651.0
Interest expense 28.9 28.7
Amortization 101.5 96.6
Loss on extinguishment of debt .6 .9
Other operating costs and expenses 124.4 124.2
—– —–
Total benefits and expenses 939.8 901.4
—– —–
Income before income taxes 92.2 51.8
Tax expense on period income 32.7 18.7
—- —-
Net income $59.5 $33.1
===== =====
Earnings per common share:
Basic:
Weighted average shares outstanding 250,933,000 250,994,000
=========== ===========
Net income $.24 $.13
==== ====
Diluted:
Weighted average shares outstanding 308,048,000 302,648,000
=========== ===========
Net income $.21 $.12
==== ====

Six months ended
June 30,
——–
2011 2010
—- —-
Revenues:
Insurance policy income $1,346.8 $1,332.5
Net investment income:
General account assets 678.3 636.3
Policyholder and reinsurer accounts
and other special-purpose
portfolios 40.5 1.3
Realized investment gains (losses):
Net realized investment gains,
excluding impairment losses 31.4 26.6
Other-than-temporary impairment
losses:
Total other-than-temporary
impairment losses (23.4) (47.0)
Portion of other-than-temporary
impairment losses – (1.2)
recognized in accumulated other
comprehensive — —-
income
Net impairment losses recognized (23.4) (48.2)
—– —–
Total realized gains (losses) 8.0 (21.6)
— —–
Fee revenue and other income 7.6 7.1
— —
Total revenues 2,081.2 1,955.6
——- ——-
Benefits and expenses:
Insurance policy benefits 1,367.6 1,350.0
Interest expense 58.1 56.2
Amortization 238.2 199.2
Loss on extinguishment of debt 2.0 2.7
Other operating costs and expenses 239.5 242.6
—– —–
Total benefits and expenses 1,905.4 1,850.7
——- ——-
Income before income taxes 175.8 104.9
Tax expense on period income 62.4 37.9
—- —-
Net income $113.4 $67.0
====== =====
Earnings per common share:
Basic:
Weighted average shares outstanding 251,027,000 250,891,000
=========== ===========
Net income $.45 $.27
==== ====
Diluted:
Weighted average shares outstanding 307,773,000 297,364,000
=========== ===========
Net income $.39 $.25
==== ====

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

Six months ended
June 30,
——–
2011 2010
—- —-
EBIT (1):
Bankers Life $148.6 $117.2
Washington National 47.9 48.7
Colonial Penn 13.0 12.9
Other CNO Business 11.9 6.9
Corporate Operations, excluding
corporate interest (11.8) (16.8)
expense —– —–
EBIT 209.6 168.9
Corporate interest expense (39.9) (39.3)
—– —–
Income before net realized investment
gains (losses) 169.7 129.6
and taxes
Tax expense on operating income 60.3 46.5
—- —-
Net operating income (2) 109.4 83.1
Loss on extinguishment of debt, net of
income taxes (1.3) (1.8)
Net realized investment gains (losses)
(net of related 5.3 (14.3)
amortization and taxes) — —–
Net income $113.4 $67.0
====== =====
Per diluted share:
Net operating income $.38 $.30
Net realized investment gains (losses),
net of related .02 (.05)
amortization and taxes
Loss on extinguishment of debt, net of
income taxes $(.01) $ -
—– — —
Net income $.39 $.25
==== ====

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

Three months
ended
June 30,
——–
2011 2010
—- —-
Bankers Life segment:
Annuity $259.1 $281.1
Medicare supplement and other
supplemental health 329.1 332.4
Life 62.0 52.1
Total collected premiums $650.2 $665.6
====== ======
Washington National segment:
Medicare supplement and other
supplemental health $142.4 $139.9
Life 3.9 3.8
Total collected premiums $146.3 $143.7
====== ======
Colonial Penn segment:
Life $48.5 $46.7
Supplemental health 1.5 1.7
Total collected premiums $50.0 $48.4
===== =====
Other CNO Business segment:
Annuity $5.9 $4.2
Other health 7.6 8.2
Life 48.9 46.9
Total collected premiums $62.4 $59.3
===== =====

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

Three months ended
June 30,
——–
2011 2010
—- —-
Bankers Life segment:
Medicare Supplement:
Earned premium $179 million $178 million
Benefit ratio(a) 69.8% 70.7%
PDP and PFFS:
Earned premium $20 million $19 million
Benefit ratio(a) 72.4% 68.8%
Long-Term Care:
Earned premium $143 million $145 million
Benefit ratio(a) 115.0% 113.0%
Interest-adjusted benefit ratio
(a non-GAAP measure)(b) 71.6% 71.9%
Washington National segment:
Medicare Supplement:
Earned premium $35 million $40 million
Benefit ratio(a) 71.1% 65.8%
Supplemental health:
Earned premium $107 million $99 million
Benefit ratio(a) 82.7% 83.2%
Interest-adjusted benefit ratio
(a non-GAAP measure)(b) 54.1% 52.0%
Other CNO Business segment:
Long-Term Care:
Earned premium $7 million $8 million
Benefit ratio(a) 205.8% 212.9%
Interest-adjusted benefit ratio
(a non-GAAP measure)(b) 106.4% 128.0%

(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.