CNO Financial Group, Inc. (Conseco, Inc.) - Form 8-K Summary
Business Context and Reporting Period
This Current Report (Form 8-K) was filed on June 25, 2009, by Conseco, Inc. (d/b/a CNO Financial Group, Inc.). The filing discloses a significant reinsurance transaction involving the Conseco Insurance Group unit.
Key Financial Metrics and Transaction Details
- Transaction Type: Coinsurance agreement with Wilton Reassurance Company ("Wilton Re").
- Scope: Approximately 104,000 non-core life insurance policies.
- Effective Date: January 1, 2009.
- Ceding Commission: Approximately $57.5 million payable by Wilton Re.
- Assets Transferred: Approximately $409 million in cash and policy loans; $466 million in statutory policy and other reserves.
- Historical Performance: The block generated GAAP after-tax earnings before overhead of approximately $2.5 million in Q1 2009.
Material Changes and Accounting Impact
The transaction is expected to be completed in the third quarter of 2009, subject to regulatory approval in Illinois and Wisconsin. Upon completion, Conseco anticipates the following accounting impacts:
- Deferred Tax Valuation Allowance: Expected increase of approximately $18 million.
- Deferred Gain: Expected recording of approximately $25 million, to be recognized over the remaining life of the policy block in accordance with GAAP.
Outlook, Risks, and Management Commentary
Management notes that most policies involved were issued by companies later acquired by Conseco. Approximately 70% of the policies originate from Washington National Insurance Company, with the remainder from Conseco Insurance Company. The primary contingency is the requirement for approval from insurance regulators in Illinois and Wisconsin before the transaction can be finalized.
Key Facts for Investor Verification
- Confirmation of regulatory approval status in Illinois and Wisconsin.
- Timing of the transaction closing within the third quarter of 2009.
- Impact of the $18 million increase in deferred tax valuation allowance on net income.
- Amortization schedule for the $25 million deferred gain over the remaining life of the block.