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CNO Financial Upgraded to Buy

Zacks Equity Research

On Dec 3, Zacks Investment Research upgraded CNO Financial Group Inc. (CNO) to a Zacks Rank #2 (Buy).

Why the Upgrade?

CNO Financial has been witnessing rising earnings estimates on the back of strong third-quarter 2013 results, which included a 22.2% positive earnings surprise. Moreover, this multiline insurer delivered positive earnings surprises in 3 out of the last 4 quarters with an average beat of 15.4%.

CNO Financial reported its third-quarter results on Oct 28, 2013. Operating earnings per share came in at 33 cents per share surpassing, the Zacks Consensus Estimate of 27 cents per share. Results also reported a sharp improvement of 200% year over year from 11 cents per share earned in the third quarter of 2012.

Although top line were almost in line with the year-ago numbers, it comfortably surpassed the Zacks Consensus Estimate. Total annualized premiums also reported an improvement during the quarter whereas total benefits and expenses declined significantly leading to a margin expansion.

 Further, strong capital generation positions CNO Financial to undertake strategic investments and focus on profit generation.

CNO Financial further expects to spend $250–$300 million on the repurchase of securities in 2013. We expect efficient capital deployment to consistently cushion future buybacks and help the company achieve its long term Return on Equity goal of 9% by 2015.

The Zacks Consensus Estimate for 2013 increased 2.7% to $1.13 per share as some estimates were revised higher over the last 30 days. The estimate also represents a year-over-year increase of 63.77%. Over the same period, the Zacks Consensus Estimate for 2014 increased 0.8% to $1.23 as some estimates moved north. This estimate translates into a year-over-year improvement of 9.03%.

Other Stocks to Consider

Some other stocks worth considering in the insurance sector include White Mountains Insurance Group Ltd. (WTM), Assurant Inc. (AIZ) and Cigna Corp. (CI). While White Mountains carries a Zacks Rank #1 (Strong Buy), Assurant and Cigna carry a Zacks Rank #2 (Buy).

Read the Full Research Report on CNO
Read the Full Research Report on AIZ
Read the Full Research Report on CI
Read the Full Research Report on WTM

Zacks Investment Research