On Monday, CNO Financial Group Inc. (CNO) announced that it repurchased approximately 8.64 million shares for $9.34 per share in the fourth quarter of 2012. The repurchased shares represented 3.8% of the 230 million shares outstanding at the end of the third quarter.
CNO Financial spent $80.7 million in aggregate for the buyback in the fourth quarter, thus taking the company’s total expenditure on share repurchase in 2012 to $180.2 million. The company repurchased 21.53 million shares at an average price of $8.37 per share in 2012.
In December 2012, the board of directors of CNO Financial approved a hike of $300 million in the company’s buyback program, which had an outstanding balance of $60 million at that time. The outstanding balance in the securities buyback program stood at $350 million at the end of 2012. CNO Financial can use the balance in the buyback program to repurchase its outstanding stock, warrants and convertible debentures through open market transactions, private transactions or via tender offers.
Additionally, CNO Financial made a principal repayment of 33% of the amount spent on share repurchases and dividend payments, as required by its senior secured credit agreement. This amounted to $28.4 million, while the company spent an additional $2 million for the payment of the residual portion of the scheduled installment of its term loans. The next installment payment of $12.5 million is scheduled on March 31, 2013.
CNO Financial’s strong organic growth and excess capital generation allows it to constantly return capital to shareholders. The company announced a hike in its securities repurchase authorization twice in 2012. CNO Financial also initiated a dividend policy in May last year.
CNO Financial carries a Zacks #3 Rank (Hold). We maintain a long-term ‘Neutral’ recommendation on the stock. Peer Prudential Financial, Inc. (PRU) carries a Zacks #2 Rank (Buy).