(Bloomberg) — CNO Financial Group Inc. is using a reinsurance deal to manage its exposure to a closed block of long-term care insurance (LTCI) business.
CNO (NYSE:CNO) recently reported $106 million in net income for the fourth quarter of 2013 on $1.1 billion in revenue, up from $101 million in net income on $943 million in revenue for the fourth quarter of 2012.
The company – which counts John Paulson’s hedge fund firm as one of its biggest investors – impressed investors by announcing the reinsurance deal.
Beechwood Re Ltd., a reinsurer domiciled in the Cayman Islands, agreed to take on obligations tied to the LTCI policies. Beechwood invests in the businesses of acute care and long-term care (LTC) providers as well as in the reinsurance market.
CNO ceded $590 million, mostly in reserves, the reinsurer said in a statement.
CNO has been struggling to overcome the effects of lower-than-expected policy lapse rates and lower-than-expected earnings on the assets supporting its LTCI business.