TEXT-Fitch rates CNO Financial Group

Fri Sep 21, 2012 3:40pm EDT

Sept 21 - Fitch Ratings has assigned a 'BB' rating to CNO Financial Group,
Inc.'s (CNO Financial) recently priced $275 million senior 
secured note. 

The newly rated debt is part of the holding company recapitalization plan that 
CNO Financial announced on Sept. 4, 2012. Fitch notes the size of the 
anticipated debt in the recapitalization plan has increased since the original 
plan was announced based on market acceptance for the debt. Fitch estimates the 
financial leverage ratio under the new plan will increase to 22% on a pro forma 
basis from 16.7% at June 30, 2012.

Fitch expects to rate the term loan bank facility proposed in the 
recapitalization plan once final terms and conditions have been negotiated. 
Covenants are expected to be similar to those in the current bank facility. 
Based on currently proposed terms, Fitch expects the ratings on the new 
facilities to be same as the existing bank facility.

Key rating triggers that could lead to an upgrade include:

 

--Continued generation of stable earnings free of significant special charges; 

--Expansion of cushion versus existing covenant requirements or refinancing of 
the senior secured notes to create a debt profile consistent with peer life 
insurance companies; 

--Maintaining increased GAAP interest coverage ratio and NAIC RBC above 6x and 
350%, respectively.

Key rating triggers that could lead to a downgrade include:

--Combined NAIC RBC ratio less than 300% and operating leverage above 20x;

--Deterioration in operating results;

--Significant increase in credit-related impairments in 2012; 

--Financial leverage above 30% and TFC above 0.65x.

Fitch has assigned the following ratings: 

CNO Financial Group, Inc.

--$275 million senior secured note 6.375% due Oct. 1, 2020 'BB'.