Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Life Health > Long-Term Care Planning

CNO makes LTCI reinsurance deal

By Alexandria Baca

X
Your article was successfully shared with the contacts you provided.

(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.

CNO’s Bankers Life continues to sell LTCI products. The unit reported $5.7 million in LTCI sales for the latest quarter on $134 million in premium revenue, compared with $6 million in sales on $135 million in premium revenue for the fourth quarter of 2012.

The BRe risk-transfer deal is a “key catalyst that we believe could propel the stock to another level,” Mark Palmer, an analyst at BTIG LLC, said in a note to clients. The deal “will put CNO in a better position to bolster its already robust share repurchase program.”

CNO announced in December it would buy back as much as $300 million in securities. Palmer has a buy rating on the stock.

–Allison Bell contributed tothis article. Editors: Dan Kraut, Steven Crabill

See also:

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.