OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has commented that the Credit Ratings (ratings) of CNO Financial Group, Inc. (CNO Financial) (headquartered in Carmel, IN) [NYSE:CNO] and its life/health subsidiaries remain unchanged following the Aug. 1, 2018 announcement that Bankers Life and Casualty Company (Bankers Life), a wholly owned subsidiary of CNO Financial, has entered into an agreement to cede all of its legacy (prior to 2003) comprehensive and nursing home long-term care policies to Wilton Reassurance Company through a 100% indemnity coinsurance arrangement. The outlooks of these ratings remain stable.
Bankers Life will pay a negative ceding commission of $825 million to reinsure the block and will transfer assets equal to the statutory liabilities supporting the block, which are expected to be approximately $2.7 billion. As part of its de-risking strategy, CNO Financial will reduce its long-term care reserves by more than 50% after completing this transaction and reduce potential earnings volatility and related capital at risk. While the impact to CNO Financial’s balance sheet is material given the size of the reinsured blocks, A.M. Best notes that pro-forma risk-adjusted capitalization will remain supportive of CNO Financial’s current ratings. The transaction is expected to close in the third quarter of 2018, pending regulatory approval and other customary closing conditions.
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