On Jul 4, 2013, Zacks Investment Research upgraded CNO Financial Group Inc. (CNO - Analyst Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Strong organic growth and excess capital generation of CNO Financial prompted the company to undertake the recent capital deployment measures. The company’s regular capital deployment and dividend hike reflect management’s confidence in the financial strength of the company.
CNO Financial deployed $50 million to repurchase 4.4 million shares during the second quarter of 2013. The company also spent $9.4 million to buy back convertible debentures worth $4.5 million at a premium. This takes the total expenditure on buybacks in the second quarter of 2013 to $59.4 million.
CNO Financial also made a principal prepayment of $18.9 million to fulfill the terms of its senior secured credit agreement. Further, the company made a scheduled principal payment of $5.7 million toward its term loan installment during the second quarter. The company expects to spend another $65.7–$115.7 million on the repurchase of securities in 2013, taking the total amount to $250–$300 million.
Further, on May 8, 2013, the board of CNO Financial announced a 50% hike in its quarterly cash dividend. Moreover, on May 20, 2013, the company amended its senior secured credit facility to reduce the interest rate and increase financial flexibility.
These capital deployment measures are expected to boost CNO Financial’s earnings per share in the future. Currently, the Zacks Consensus Estimate for the company’s second-quarter 2013 earnings stands at 26 cents, up 31% year over year.
Other Stocks to Consider
Other multi-line insurance companies worth considering are AXA Group (AXAHY), Assurant Inc. (AIZ - Analyst Report) and Enstar Group Limited (ESGR - Snapshot Report). All these companies carry a Zacks Rank #1 (Strong Buy).