CNO Financial Downgraded At BTIG Following Reveal Of Long-Term Care Recapture

CNO Financial Group, Inc. CNO received a downgrade from Buy to Neutral from BTIG analyst Mark Palmer.

The bearish rating came after CNO's disclosure that two of its subsidiaries are recapturing a $550 million long-term care block and severing ties with private reinsurer Beechwood Re. These actions come after regulators in two states said the reinsurer didn't comply with insurance company guidelines, and is expected to result in a $55 million after-tax charge, according to Palmer.

With the recapture, SNO is contributing $200 million to the two subsidiaries absorbing the recapture and suspending its share repurchase program for the remainder of the year.

"CNO's ability to buy back its shares combined with its discount valuation – the stock trades at 0.62x the company's book value ex. accumulated other comprehensive income (AOCI) as of June 30 – had been a key aspect of our thesis," said Palmer.