CNO Financial Group's (CNO) third quarter earnings surpassed the Zacks Consensus Estimate and the year-ago numbers on the back of continued favorable trends in annuity spreads, annuity persistency and improving benefit ratios, and better investment results in the corporate segment. Besides enhancing shareholder value, the company remains focused on investing in its core business.

The latest recapitalization plan should improve the capital structure and debt maturity profile. It is also expected to augment earnings per share and ROE. Improved credit ratings, strong investment portfolio and declining expenses are the other positives. Although underwriting and pricing remain primary concerns, increasing new business volume, along with cost containment measures are expected to support the bottom line in the long run.

We retain our Outperform recommendation. Our six-month target price of $11.00 equates to 14.5x our earnings estimate for 2012. Given the expected annual cash dividend of $0.08, this price target implies an expected total return of 15.4% over that period.