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CNO Financial Group's CEO Discusses Comprehensive Recapitalization Overview Conference Call (Transcript)

Turning to slide five, with the momentum we have in our strong operating performance credit profile and ratings progress combining with favorable market conditions, we have the opportunity to further improve our capital structure and lower our cost of capital. As detailed in the press release we issued last night, the transaction is expected to be accretive to both EPS and ROE, with our diluted share counts decreasing 12% as of June 30, 2012. In addition to significant improvements in EPS and ROE, the transaction will further improve financial flexibility, push out near-term debt maturities and rebalance our fixed and floating rate structure.

Lastly, it is important to note that as a result of a privately negotiated agreement with Paulson & Co. to repurchase their convertible debentures, at a discount to estimated market value, the transaction will significantly reduce the convertible overhang, which naturally leads to uncertainty over conversion timing or debt maturity in concentrated ownership.

Now I would like to hand it over to Fred, to discuss the transactions and the impacts in further detail. Fred?

Frederick J. Crawford

Thanks Ed. Before jumping into the recapitalization plan, it’s worth reflecting on our underlying capital strategy. The building blocks of the strategy include a capital base capable of absorbing market stress, maintaining ratios consistent with investment grade ratings at the holding company and lowering our overall cost of capital through proactive financing strategies and effectively deploying free cash flow. This strategy has yielded more specific capital targets including leverage in the 20% range. RBC in excess of 350%, interest coverage of five times, and liquidity sufficient to service our required holding company cash outflows in excess of a year. Our announced recapitalization plan is guided by these strategic targets. For some time now we have discussed recapitalization as a potential stair-step in terms of critical shareholder value metrics.

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