Business Context and Reporting Period
Company: Conseco, Inc. (Note: Filing header lists Conseco, Inc., though the request metadata references CNO Financial Group, Inc.)
Filing Type: Form 8-K (Current Report)
Date: November 20, 2009
Event: Regulation FD Disclosure regarding a new coinsurance agreement.
Key Financial Metrics and Transaction Details
This filing details a specific transaction rather than full-period financial results. Key figures include:
- Transaction Scope: Coinsurance of approximately 237,000 life insurance policies with Wilton Reassurance Company ("Wilton Re").
- Effective Date: October 1, 2009.
- Ceding Commission: Approximately $45 million payable by Wilton Re.
- Coinsurance Ratio: 50% of the policies.
- Assets Transferred: Approximately $95 million in investment securities and policy loans.
- Liabilities Transferred: Approximately $140 million in statutory policy and other liabilities.
Material Changes and Financial Impact
The transaction is expected to impact the fourth quarter of 2009 and future periods as follows:
- Deferred Tax Valuation Allowance: Expected increase of approximately $19 million in Q4 2009.
- Deferred Cost of Reinsurance: Expected pre-tax charge of approximately $30 million, to be amortized over the life of the block.
- Income Impact: Amortization will reduce quarterly pre-tax income from operations by approximately $0.5 million.
- Future Earnings Reduction: Future GAAP income will be reduced by earnings from the coinsured portion of the block. Pre-tax earnings before overhead for this portion were approximately $2 million in Q3 2009.
Outlook, Risks, and Contingencies
- Regulatory Approval: The transaction is contingent upon approval from insurance regulators in Illinois and Wisconsin.
- Completion Timeline: Expected to be completed in the fourth quarter of 2009.
- Administrative Continuity: Bankers Life and Casualty Company will continue to administer the policies.
- Legal Disclaimer: Information is furnished under Regulation FD and is not deemed "filed" under Section 18 of the Exchange Act.
Investor Verification Checklist
- Confirm the final regulatory approval status from Illinois and Wisconsin insurance departments.
- Verify the exact timing of the transaction closing within Q4 2009.
- Monitor the Q4 2009 earnings release for the actual recording of the $19 million deferred tax valuation allowance increase and the $30 million deferred cost charge.
- Review future quarterly reports to track the $0.5 million quarterly amortization impact on pre-tax income.