UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 29, 2016

CNO Financial Group, Inc.
(Exact Name of Registrant as Specified in Charter)

	
			
Delaware	001-31792	75-3108137	
(State or Other
Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer
Identification No.)	
11825 North Pennsylvania Street
Carmel, Indiana  46032
(Address of Principal Executive Offices) (Zip Code)

(317) 817-6100
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	
		
o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 	 	
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 	 	
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 	 	
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

	
		
Item 7.01.	Regulation FD Disclosure.	

CNO Financial Group, Inc. (“CNO”) previously disclosed that in December 2013, two of its insurance subsidiaries with long-term care business (Washington National Insurance Company (“WNIC”) and Bankers Conseco Life Insurance Company (“BCLIC”)) entered into 100% coinsurance agreements ceding $495 million of long-term care reserves to Beechwood Re Ltd (“BRe”), a reinsurer domiciled in the Cayman Islands. As a result of its non-accredited status, BRe was required to provide collateral that meets the regulatory requirements of the states of domicile in order for our insurance subsidiaries to obtain full credit in their statutory financial statements for the reinsurance receivables due from BRe. Such collateral was required to be held in market value trusts subject to 7% over collateralization, investment guidelines and periodic true-up provisions. Copies of the reinsurance agreements and related trust agreements were filed as Exhibits 99.1 - 99.6 to our Current Report on Form 8-K dated August 1, 2016 (the “August 8-K”).
We reported in the August 8-K that certain irregularities had come to our attention regarding BRe, including its potential relationship with Platinum Partners LP (“Platinum”) and the valuation of certain assets deposited in trusts by BRe for WNIC and BCLIC. As disclosed in the August 8-K, CNO commenced an independent third-party audit in late June of the valuation of certain Level 3 investments deposited in the trusts by BRe. Level 3 investments include assets valued using unobservable inputs that are used in model-based valuations that contain assumptions determined by BRe. As also previously disclosed in the August 8-K, the initial scope of CNO’s audit was on a subset of Level 3 investments with a reported amount of approximately $116 million (1) as of June 30, 2016. CNO’s audit of these Level 3 investments has progressed substantially, although BRe has refused to provide certain information requested by WNIC and BCLIC. The information currently available to CNO confirms that a significant portion of these assets bear some connection to Platinum or to parties that have had past or present associations with Platinum. CNO has serious concerns regarding BRe’s conflicts of interest and whether the assets related to Platinum were acquired in appropriate arm’s-length transactions.
Moreover, CNO and the auditor retained by CNO also have reason to believe that many of the values assigned to these Level 3 investments by BRe and its valuation firm, Duff & Phelps, were inaccurate and determined by inherently flawed methodologies. These flaws appear to include: (i) the use of public company data as comparables without any adjustment for the fact that the company at issue is privately held or the uncertainty of its future cash flows; (ii) the use of limited historical measures of EBITDA without taking into consideration forecasted future values or recent changes in the economic environment that would lead to different conclusions; (iii) the assumption that, if an entity’s publicly traded equity has positive value, its debt must be worth par; (iv) the downplaying of frequent deferred interest or principal payments and other restructurings, which suggest that the underlying companies have short-term liquidity constraints or longer-term profitability issues; (v) unreasonable changes in the valuation of certain assets over short periods of time; and (vi) the fact that the investments’ interest rates and/or structures are inconsistent with securities that a reasonable investor would consider to be safe and high-quality. While no assurances can be given, we anticipate that the audit of this first subset of Level 3 investments will be completed, to the extent possible given the availability of information, by the end of the fourth quarter of 2016.
In September 2016, BCLIC and WNIC expanded the scope of the audit to include additional Level 3 investments with a reported amount of approximately $90 million as of June 30, 2016. The audit of these additional Level 3 investments is still in its early stages. Based on the preliminary information presently available to CNO, these additional Level 3 investments do not have connections to Platinum or to parties that have had past or present associations with Platinum. Based on the information currently available to CNO, these assets appear to be less complex, more diversified, and more susceptible to reasonable valuation. While no assurances can be given, we anticipate that the audit of these additional Level 3 investments will be completed, to the extent possible given the availability of information, by the end of the fourth quarter of 2016.
On September 29, 2016, the New York Department of Financial Services (the “NYDFS”) issued a regulatory demand letter to CNO. In the letter, the NYDFS said it had conducted a “detailed analysis” of the assets in the primary BCLIC trust account, after which it had “concluded that a substantial portion of the current assets

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held within the Trust are not in compliance with the standards set under 11 NYCRR § 126 (Insurance Regulation 114).” The NYDFS also said that “[a]ssets within the trust were removed subsequent to the Department’s approval of the reinsurance treaty and replaced with assets that do not comply with 11 NYCRR § 126(a)(2), which states that ‘assets deposited in the trust account shall be valued according to their current fair market value, and shall consist only of cash (United States legal tender), certificates of deposit (issued by a United States bank and payable in United States legal tender), and investments of the types specified in paragraphs (1), (2), (3), (8) and (10) of subsection (a) of section 1404 of the New York Insurance Law.’” The NYDFS directed BCLIC “to remediate this deficiency within ten days of the date of this letter [ i.e. , by October 9, 2016] by ensuring the assets held within the Trust meet the requirements of Insurance Regulation 114.” The NYDFS said that “[f]ailure to bring the Trust into compliance may result in the denial of reserve credit and disciplinary action from the Department.” A copy of the NYDFS’s regulatory demand letter is filed as Exhibit 99.1 to this Current Report on Form 8-K.

On September 29, 2016, the Indiana Department of Insurance (“IDOI”) issued a regulatory demand letter to CNO. In the letter, the IDOI said that the reinsurance agreement between WNIC and BRe and the related trust are not in compliance with 760 IAC 1-55-4. The letter states that credit for reinsurance under the reinsurance agreement shall not be allowed for WNIC “unless corrective measures, satisfactory to the IDOI, are taken immediately.” A copy of the IDOI’s regulatory demand letter is filed as Exhibit 99.2 to this Current Report on Form 8-K.
On September 29, 2016, BCLIC and WNIC sent written notices to Wilmington Trust, N.A., the trustee of the BRe reinsurance trusts, pursuant to which BCLIC and WNIC notified the trustee that they are exercising their rights under the reinsurance agreements to withdraw all of the assets from the reinsurance trust accounts.
On September 29, 2016, BCLIC and WNIC gave written notice to BRe that they were terminating their reinsurance agreements with BRe effective immediately, after concluding that BRe’s material breaches of the reinsurance agreements are incurable, and that it is in the best of interests of BCLIC and WNIC policyholders and other key stakeholders to terminate the reinsurance agreements. We have formed this conclusion for several reasons, including: (i) BRe has represented that it would need until the end of the year to replace all of the Platinum-related assets in the trust accounts, and the NYDFS and IDOI have directed BCLIC and WNIC to take corrective action relating to these assets within 10 days, in the case of the NYDFS, and immediately, in the case of the IDOI; (ii) certain statements made to CNO by BRe called into question BRe’s financial ability to continue to reinsure the policies ceded to it; and (iii) BRe has, repeatedly and over the course of a prolonged period, acted in bad faith, engaged in self-dealing, and intentionally misrepresented and withheld key information about itself and its conflicts of interest from CNO.
On September 29, 2016, BCLIC and WNIC commenced an arbitration proceeding and demanded emergency relief, specifically, that BRe provide immediate access to certain documents and information concerning the trust assets. BCLIC and WNIC are also seeking compensatory, consequential, and punitive damages.
On September 29, 2016, BCLIC and WNIC filed a complaint in the United States District Court for the Southern District of New York against Mark Feuer, Scott Taylor and David Levy, current and former principals of BRe, for the damages caused by their actions. The complaint asserts claims against the defendants for, among other things, breach of fiduciary duty, fraud, and violation of the Racketeer Influenced and Corrupt Organizations Act.
CNO’s press release dated September 29, 2016 (the “Press Release”) announcing its termination of such reinsurance agreements and providing estimated pro forma financial information with respect thereto is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
Because WNIC and BCLIC are recapturing the ceded business, CNO is required to value the assets and liabilities as of the date of recapture based on valuation methodologies that are consistent with the methodologies used by CNO to value its other investments and insurance liabilities. Such valuations may result in valuations that are different from the amounts reported by BRe and such differences could be material. While the audit of certain Level 3 investments is still ongoing, preliminary information indicates that CNO would record an after-tax charge of approximately $55 million, calculated on a pro forma basis as if a recapture of this business had occurred on June

3

30, 2016. The pro forma estimated impacts of a recapture are summarized below (dollars in millions):

	
				
Pro forma estimated loss:	 	
Estimated market value adjustments related to:	 	
 Investments included in the initial scope of the audit	$	(50	)	
 Other Level 3 investments	(30	)	
Write-off of estimated receivables due from BRe     	(18	)	
Increase in insurance liabilities consistent with CNO valuation assumptions (primarily related to interest rates)	(60	)	
Expenses incurred	(7	)	
Reported amount of assets held in trusts in excess of liabilities	95		
Estimated loss before income tax benefit	(70	)	
Estimated income tax benefit	15		
Estimated pro forma net loss	$	(55	)	

The estimated pro forma net loss is based on numerous assumptions, including our current best estimate of the fair value of investments and the amount of insurance liabilities expected to be received as a result of the recapture. These estimated values are based on information currently available to us and may change based on, among other factors: (i) additional information we may obtain; (ii) the actual fair value of the related investments on the recapture date; and (iii) actual assumptions used to value the insurance liabilities.
After the estimated pro forma market value adjustments totaling $80 million (as summarized in the above table), the remaining value of the Level 3 investments is $200 million (1). On a pro forma basis as of June 30, 2016, the following summarizes the Level 3 investments by category (dollars in millions):

	
																	
 	 	Investments included in initial scope of audit	 	Investments included in additional scope of audit	 	Other Level 3 investments (2)	 	Total Level 3	
Commercial real estate	 	$	3		 	$	15		 	$	27		 	$	45		
Limited partnerships	 	—		 	—		 	35		 	35		
Transportation and auto	 	—		 	28		 	1		 	29		
Services	 	23		 	4		 	—		 	27		
Energy	 	24		 	—		 	—		 	24		
Life settlements	 	8		 	5		 	—		 	13		
Other	 	9		 	13		 	5		 	27		
 	 	$	67		 	$	65		 	$	68		 	$	200		
As explained in the Press Release, as a result of the recapture, related charge and additional capital required to support the assets and liabilities of this business, CNO will contribute approximately $200 million to its insurance subsidiaries. Approximately one-half of this contribution is attributable to the expected reduction in statutory surplus reflecting the charge recognized upon recapture of the business; and approximately one-half is attributable to the expected increase in risk-based capital primarily reflecting the additional credit and concentration risk associated with the trust assets. After giving effect to this contribution, CNO expects to have approximately $175 million of cash and investments at the holding company as of September 30, 2016 and expects its consolidated risk-based capital ratio to be approximately 450% (calculated on a Company Action Level basis: total adjusted capital divided by risk-based capital).

4

The following summarizes the assumptions CNO made in estimating the expected reduction in statutory surplus on a pro forma basis as if a recapture of this business had occurred on June 30, 2016 (dollars in millions):

				
Estimated statutory pro forma impact on surplus:	 	
Estimated market value adjustments related to:	 	
Investments included in initial scope of audit	$	(50	)	
Other Level 3 investments     	(30	)	
Write-off of estimated receivable due from BRe	(18	)	
Increase in statutory insurance liabilities consistent with CNO valuation assumptions (primarily related to   interest rates)	(60	)	
Expenses incurred	(7	)	
Reported amount of assets held in trusts in excess of reported amount of liabilities	65		
Impact on admitted deferred tax assets	(15	)	
Estimated statutory pro forma impact on surplus	$	(115	)	
As stated in the Press Release, in order to increase its excess capital position at the holding company level, CNO has suspended its share repurchase program for the remainder of 2016. As of September 29, 2016, CNO had repurchased $203.0 million of common stock in 2016 at an average price of $17.37 per share. A recapture of the business is not expected to have a material impact to the ongoing free cash flow generation of the company, which is currently estimated at $75 million per quarter.
At this time, there is no evidence suggesting that policyholder obligations have not been met. CNO intends to exercise any and all of the rights and remedies available to it against BRe under the relevant transaction documents or otherwise in order to protect the interests of BCLIC, WNIC, CNO and their respective stakeholders. In connection with its termination of the reinsurance agreements, CNO will resume responsibility for all aspects of policyholder administration of the recaptured business.

The information contained under Item 7.01 in this Current Report on Form 8-K and the exhibits attached hereto are being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section. The information contained in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
___________________
NOTES -
		
(1)	Based on information obtained subsequent to the filing of our August 8-K, we have determined that the reported amount of the Level 3 investments subject to the audit was $116 million (rather than the $126 million reported in the August 8-K). In addition, we determined that $58 million, $253 million and $280 million of the investments in the trust at June 30, 2016 consisted of Level 1, Level 2 and Level 3 investments, respectively (rather than the $58 million, $231 million and $302 million of Level 1, Level 2 and Level 3 investments, respectively, reported in our August 8-K). After the pro forma market value adjustments of $80 million described above, the remaining value of the Level 3 investments is $200 million ($280 million minus $80 million).	
		
(2)	Based upon the nature of these investments and the information available to us regarding the investments, we have concluded that there is no need to include them as part of the audit as we are able to review and evaluate their value.	

5

	
		
Item 9.01(d).	Financial Statements and Exhibits.	

The following materials are furnished as exhibits to this Current Report on Form 8-K:

	
			
99.1	 	Letter dated September 29, 2016 from James V. Regalbuto, New York State Department of Financial Services Deputy Superintendent, Life Insurance, to Scott Goldberg, President of BCLIC, regarding Bankers Conseco Life Insurance Company Collateral Trust for the Reinsurance Treaty with Beechwood Re, Ltd.	
99.2	 	Letter dated September 29, 2016 from Cynthia D. Donovan, Indiana Department of Insurance Chief Financial Examiner, to Barbara Stewart, President of WNIC, regarding Indemnity Reinsurance Agreement by and between Washington National Insurance Company and Beechwood Re Ltd.	
99.3	 	Press Release of CNO Financial Group, Inc. dated September 29, 2016

6

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	
				
 	CNO Financial Group, Inc.	
 	 	
Date: September 29, 2016	 	
 	By:	/s/ John R. Kline	 	
 	 	John R. Kline	 	
 	 	Senior Vice President and
Chief Accounting Officer	 	

7

Exhibit 99.1

                                                            
Andrew M. Cuomo                                        Maria T. Vullo
Governor                                            Superintendent

September 29, 2016

VIA E-MAIL

Mr. Scott Goldberg
President
Bankers Conseco Life Insurance Company
350 Jericho Turnpike, Suite 304
Jericho, NY 11753

RE: Bankers Conseco Life Insurance Company Collateral Trust for the Reinsurance Treaty with Beechwood Re, Ltd.

Mr. Goldberg:

The New York State Department of Financial Services (the “Department”) has conducted a review of the New York Insurance Regulation 114 Trust (the “Trust”), established pursuant to 11 NYCRR 126, which collateralizes the reinsurance treaty between Bankers Conseco Life Insurance Company (“Bankers Conseco”) and Beechwood Re, Ltd. (“Beechwood Re”).

As a result of this review, which included a detailed analysis of assets and multiple rounds of communication between the Department, Bankers Conseco and Beechwood Re, the Department has concluded that a substantial portion of the current assets held within the Trust are not in compliance with the standards set under 11 NYCRR § 126 (Insurance Regulation 114), which is also required under the express terms of the reinsurance treaty. The Department observed that certain assets within the Trust were removed subsequent to the Department’s approval of the reinsurance treaty and replaced with assets that do not comply with 11 NYCRR § 126(a)(2), which states that “assets deposited in the trust account shall be valued according to their current fair market value, and shall consist only of cash (United States legal tender), certificates of deposit (issued by a United States bank and payable in United States legal tender), and investments of the types specified in paragraphs (1), (2), (3), (8) and (10) of subsection (a) of section 1404 of the New York Insurance Law.”

Bankers Conseco is hereby directed to remediate this deficiency within ten days of the date of this letter by ensuring the assets held within the Trust meet the requirements of Insurance Regulation 114. Failure to bring the Trust into compliance may result in the denial of reserve credit and disciplinary action from the Department.

	
	
Sincerely,	
 	
/s/ James V. Regalbuto	
James V. Regalbuto	
Deputy Superintendent, Life Insurance	

(212) 709-3500 | One State Street, New York, NY 10004-1511 | www.dfs.ny.gov

Exhibit 99.2

September 29, 2016

VIA E-MAIL AND REGULAR MAIL

Barbara Stewart
President
Washington National Insurance Company
11825 Pennsylvania St
Carmel, IN 46032
Barbara.Stewart@cnoinc.com

RE: Indemnity Reinsurance Agreement (“Reinsurance Agreement”) by and Between Washington National Insurance Company (“WNIC”) and Beechwood Re Ltd (“BRE”)

Dear Ms. Stewart:

The Indiana Department of Insurance (“IDOI”) has reviewed the above referenced Reinsurance Agreement and related trust funds (“Trust”) as part of its Confidential Target Examination of WNIC, Appointment #3920 (“Exam”).

The Reinsurance Agreement and related Trust are not in compliance with 760 IAC 1-55-4 (“Rule 55”). The Reinsurance Agreement, in substance or effect, does not properly transfer all of the significant risks inherent in the business being reinsured, including credit quality risks. At least some of the Level 3 Trust assets cannot be relied upon. The Reinsurance Agreement provides for withdrawals from the Trust by BRE, which are therefore based on unreliable valuations. This is in violation of Rule 55, and places policyholders of the reinsured business at risk of potential harm.

Additionally, BRE is in violation of IC 27-6-10-11 (a). That section of the Indiana Code requires BRE to report annually to the Indiana Commissioner substantially the same information as that required to be reported by licensed insurers on the National Association of Insurance Commissioners' annual statement form. BRE has failed to file any such reports.

Further, the trustee of the Trust, Wilmington Trust (“Trustee”), is in violation of IC 27-6-10-11 (h). That section of the Indiana Code requires the Trustee to, not later than February 28 of each year, report in writing to the Indiana Commissioner the following information: (1) The balance of the Trust. (2) A listing of the Trust's investments at the preceding year end. (3) A certification of the date of termination of the Trust, if applicable, or a certification that the Trust shall not expire before the following December 31. The Trustee has failed to file any such reports.

Credit for reinsurance ceded under the Reinsurance Agreement shall not be allowed WNIC, for all of the above reasons, unless corrective measures, satisfactory to the IDOI, are taken immediately. Such corrective measures must not include moving Trust assets to reinsurance trusts or investment accounts of other domestic insurers of US jurisdictions.

WNIC shall report its planned corrective measures to the IDOI, and shall thereafter file monthly progress reports, under the Exam, which shall remain open until all issues are resolved.

WNIC, BRE, and the Trustee, are subject to potential disciplinary action, based on the above violations.

	
	
Indiana Department of Insurance	
 	
/s/ Cynthia D. Donovan	
Cynthia D. Donovan	
Chief Financial Examiner	

cc:
Mr. Matthew J. Zimpfer
General Counsel
CNO Financial Group
11825 North Pennsylvania Street
Carmel, IN 46032

Wilmington Trust, National Association
Attention: David B. Young
1100 N. Market Street
Wilmington, Delaware 19890

Mark Feuer
Chief Executive Officer
Beechwood Re
1370 Avenue of the Americas, 32nd Floor
New York, NY 10019

Exhibit 99.3
 For Immediate Release

		
Contact:	(News Media)  Barbara Ciesemier +1.312.396.7461	
 	(Investors)  Adam Auvil +1.317.817.6310	

CNO Financial Group Announces
Termination of Long-Term Care Reinsurance Agreements with Beechwood Re
and Recapture of Assets, Liabilities and Policyholder Administration

CARMEL, Ind., September 29, 2016 - CNO Financial Group, Inc. (NYSE: CNO) announced today that its subsidiaries, Bankers Conseco Life Insurance Company (BCLIC) and Washington National Insurance Company (WNIC), are terminating reinsurance agreements with Beechwood Re (BRe) and recapturing approximately $550 million of closed block long-term care liabilities.

As previously disclosed in a Form 8-K that was filed on August 1, 2016, CNO had commenced an independent third party audit of approximately $116 million (1) of Level 3 investments that were held in trusts on behalf of BCLIC and WNIC. Based on the information obtained in the audit, CNO, along with the New York Department of Financial Services (NYDFS) and the Indiana Department of Insurance (IDOI), have concluded that a significant portion of the investments do not comply with applicable regulatory requirements for assets supporting the reinsurance agreements. As such, the NYDFS and IDOI directed BCLIC and WNIC, respectively, to remedy the resultant deficiency.

In order to protect the interests of CNO, BCLIC, WNIC and their respective stakeholders, the CNO companies have taken the following actions:
		
•	BCLIC and WNIC sent written notice to Wilmington Trust, N.A. (Wilmington), as trustee to the reinsurance trusts, that BCLIC and WNIC exercised their rights to immediately withdraw all assets from the trusts, and instructed Wilmington to deliver the assets to custodial accounts of BCLIC and WNIC.	
		
•	BCLIC and WNIC gave written notice to BRe that they are terminating their reinsurance agreements with BRe, effective immediately.	
		
•	BCLIC and WNIC recently expanded the scope of the audit to include additional Level 3 investments with a reported amount of approximately $90 million.	
		
•	BCLIC and WNIC commenced an arbitration proceeding and demanded emergency relief, specifically, that BRe provide immediate access to certain documents and information regarding the trust assets, which will allow the audit of the aforementioned Level 3 investments to be concluded. BCLIC and WNIC are also seeking compensatory, consequential and punitive damages from BRe as part of the arbitration.	
		
•	BCLIC and WNIC have also commenced litigation against current and former individual principals of BRe (Mark Feuer, Scott Taylor and David Levy) for the damages caused by their actions.	

CNO Financial ( 2 )
September 29, 2016

		
•	The CNO companies are resuming responsibility for all aspects of policyholder administration. We expect no impact to policyholders as a result of these actions.	

A recapture of this business requires CNO to revalue the assets and liabilities based on valuation methodologies that are consistent with the methodologies used by CNO to value its own investments and insurance liabilities. While the audit of certain Level 3 investments is still in progress, preliminary information indicates that CNO would record an after-tax charge of approximately $55 million, calculated on a pro forma basis as if a recapture of this business had occurred on June 30, 2016. The pro forma estimated impacts of a recapture are summarized below (dollars in millions):

	
				
Pro forma estimated loss:	 	
Estimated market value adjustments related to:	 	
 Investments included in the initial scope of the audit	$	(50	)	
 Other Level 3 investments	(30	)	
Write-off of estimated receivables due from BRe     	(18	)	
Increase in insurance liabilities consistent with CNO valuation assumptions (primarily related to interest rates)	(60	)	
Expenses incurred	(7	)	
Reported amount of assets held in trusts in excess of liabilities	95		
Estimated loss before income tax benefit	(70	)	
Estimated income tax benefit	15		
Estimated pro forma net loss	$	(55	)	

The estimated pro forma net loss is based on numerous assumptions, including our current best estimate of the fair value of investments and the amount of insurance liabilities expected to be received as a result of the recapture. These estimated values are based on information currently available to us and may change based on, among other factors: (i) additional information we may obtain; (ii) the actual fair value of the related investments on the recapture date; and (iii) actual assumptions used to value the insurance liabilities.

After the adjustments summarized above, the remaining value of the Level 3 investments is $200 million (1) (including $67 million of investments included in the initial scope of the audit, $65 million included in the additional scope of the audit, and $68 million of other investments).

As a result of the recapture, related charge and additional capital required to support the assets and liabilities of this business, CNO will contribute approximately $200 million to its insurance subsidiaries. Approximately one-half of this contribution is attributable to the expected reduction in statutory surplus reflecting the charge recognized upon the recapture of the business; and approximately one-half is attributable to the expected increase in risk-based capital primarily affecting the additional credit and investment concentration risk associated with the trust assets. After giving effect to this contribution, CNO expects to have approximately $175 million of cash and investments at the holding company as of September 30, 2016, and expects its consolidated risk-based capital ratio to be approximately 450%.

In order to increase its excess capital position at the holding company, CNO has suspended its share repurchase program for the remainder of 2016. As of September 29, 2016, CNO had repurchased $203.0 million of common stock in 2016 at an average price of $17.37 per share. A recapture of the business is

CNO Financial ( 3 )
September 29, 2016

not expected to have a material impact to the ongoing free cash flow generation of the company, which is currently estimated at $75 million per quarter.

About CNO Financial Group
CNO Financial Group, Inc. (NYSE: CNO) is a holding company. Our insurance subsidiaries - principally Bankers Life and Casualty Company, Colonial Penn Life Insurance Company and Washington National Insurance Company - primarily serve middle-income pre-retiree and retired Americans by helping them protect against financial adversity and provide for a more secure retirement. For more information, visit CNO online at www.CNOinc.com .

NOTE
		
(1)	Based on information obtained subsequent to the filing of our August 1, 2016 Form 8-K, we have determined that the reported amount of the Level 3 investments subject to the audit was $116 million (rather than the $126 million reported in our previous Form 8-K). In addition, we determined that $58 million, $253 million and $280 million of the investments in the trust at June 30, 2016 consisted of Level 1, Level 2 and Level 3 investments, respectively (rather than the $58 million, $231 million and $302 million of Level 1, Level 2 and Level 3 investments, respectively, reported in our previous Form 8-K). After the pro forma market value adjustments of $80 million described above, the remaining value of the Level 3 investments is $200 million ($280 million minus $80 million).	

Cautionary Statement Regarding Forward-Looking Statements.  Our statements, trend analyses and other information contained in this press release relative to markets for CNO Financial's products and trends in CNO Financial's operations or financial results, as well as other statements, contain forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified by the use of terms such as "anticipate," "believe," "plan," "estimate," "expect," "project," "intend," "may," "will," "would,"
"contemplate," "possible," "attempt," "seek," "should," "could," "goal," "target," "on track," "comfortable with," "optimistic," "guidance," "outlook" and similar words, although some forward-looking statements are expressed differently. You should consider statements that contain these words carefully because they describe our expectations, plans, strategies and goals and our beliefs concerning future business conditions, our results of operations, financial position, and our business outlook or they state other ''forward-looking'' information based on currently available information. Assumptions and other important factors that could cause our actual results to differ materially from those anticipated in our forward-looking statements include, among other things: (i) changes in or sustained low interest rates causing reductions in investment income, the margins of our fixed annuity and life insurance businesses, and sales of, and demand for, our products; (ii) expectations of lower future investment earnings may cause us to accelerate amortization, write down the balance of insurance acquisition costs or establish additional liabilities for insurance products; (iii) general economic, market and political conditions, including the performance and fluctuations of the financial markets which may affect the value of our investments as well as our ability to raise capital or refinance existing indebtedness and the cost of doing so; (iv) the ultimate outcome of lawsuits filed against us and other legal and regulatory proceedings to which we are subject; (v) our ability to make anticipated changes to certain non-guaranteed elements of our life insurance products; (vi) our ability to obtain adequate and timely rate increases on our health products, including our long-term care business; (vii) the receipt of any required regulatory approvals for dividend and surplus debenture interest payments from our insurance subsidiaries; (viii) mortality, morbidity, the increased cost and usage of health care services, persistency, the adequacy of our previous reserve estimates and other factors which may affect the profitability of our insurance products; (ix) changes in our assumptions related to deferred acquisition costs or the present value of future profits; (x) the recoverability of our deferred tax assets and the effect of potential ownership changes and tax rate changes on their value; (xi) our assumption that the positions we take on our tax return filings will not be successfully challenged by the Internal Revenue Service; (xii) changes in accounting principles and the interpretation thereof; (xiii) our ability to continue to satisfy the financial ratio and balance requirements and other covenants of our debt agreements; (xiv) our ability to achieve anticipated expense reductions and levels of operational efficiencies including improvements in claims adjudication and continued automation and rationalization of operating systems, (xv) performance and valuation of our investments, including the impact of realized losses (including other-than-temporary impairment charges); (xvi) our ability to identify products and markets in which we can compete effectively against competitors with greater market share, higher ratings, greater financial resources and stronger brand recognition; (xvii) our ability to generate sufficient liquidity to meet our debt service obligations and other cash needs; (xviii) our ability to maintain effective controls over financial reporting; (xix) our ability to continue to recruit and retain productive agents and distribution partners; (xx) customer response to new products, distribution channels and marketing initiatives; (xxi) our ability to achieve additional upgrades of the financial strength ratings of CNO Financial

CNO Financial ( 4 )
September 29, 2016

and our insurance company subsidiaries as well as the impact of our ratings on our business, our ability to access capital and the cost of capital; (xxii) regulatory changes or actions, including those relating to regulation of the financial affairs of our insurance companies, such as the payment of dividends and surplus debenture interest to us, regulation of the sale, underwriting and pricing of products, and health care regulation affecting health insurance products; (xxiii) changes in the Federal income tax laws and regulations which may affect or eliminate the relative tax advantages of some of our products or affect the value of our deferred tax assets; (xxiv) availability and effectiveness of reinsurance arrangements, as well as any defaults or failure of reinsurers to perform; (xxv) the performance of third party service providers and potential difficulties arising from outsourcing arrangements; (xxvi) the growth rate of sales, collected premiums, annuity deposits and assets; (xxvii) interruption in telecommunication, information technology or other operational systems or failure to maintain the security, confidentiality or privacy of sensitive data on such systems; (xxviii) events of terrorism, cyber attacks, natural disasters or other catastrophic events, including losses from a disease pandemic; (xxix) ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks; and (xxx) the risk factors or uncertainties listed from time to time in our filings with the Securities and Exchange Commission. Other factors and assumptions not identified above are also relevant to the forward-looking statements, and if they prove incorrect, could also cause actual results to differ materially from those projected. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statement. Our forward-looking statements speak only as of the date made. We assume no obligation to update or to publicly announce the results of any revisions to any of the forward-looking statements to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward looking statements.

Contacts:
Media:
Barbara Ciesemier
312-396-7461
barbara.ciesemier@cnoinc.com

Investors:
Adam Auvil
317-817-6310
adam.auvil@cnoinc.com

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