CNO takes big earnings hit to dispose of old business

Casting off a legacy life insurance unit was costly for CNO Financial Group Inc. in the first quarter, resulting in a loss of $228 million, the Carmel-based firm reported Monday.

The loss is a reversal from the first quarter of 2013, when CNO posted a profit of $11.9 million, or 5 cents a share. The loss in the latest quarter equated to $1.03 a share.

CNO is the parent company of Bankers Life, Washington National and Colonial Penn insurance companies.

The financial services company last month announced it was selling Conseco Life, which lost $5.1 million in 2013. It represented a block of business from predecessor firm Conseco Inc. that CNO had been trying to divest.

The sale of Conseco Life and a recent deal to reinsure another block of old business “enable us to shed the legacy of the past and devote our attention to core business segments and meeting the needs of the large, growing, underserved middle-income market,” CEO Ed Bonach said Monday in a prepared statement.

Excluding the effect of the $298 million charge related to the sale of Conseco Life, CNO reported higher net operating income of $59.9 million, or 27 cents a share, compared with $45.6 million, or 19 cents, in the first quarter of 2013.

Sales, as measured in new annualized premium, rose 4 percent, to $101.9 million. Collected premium rose 2 percent, to $815.7 million.

Shares of CNO fell about 3 percent Monday in mid-morning trading, slipping to $16.87. Shares traded as high as $18.97 on March 4.

CNO inherited a number of volatile, interest-rate-sensitive products from predecessor Conseco Inc. Under Bonach, CNO has been shedding those old legacy lines that were prone to crimping quarterly results.

The company also has been busy repurchasing its shares. In the first quarter, it bought $41 million of its own shares.