Stancorp Financial (SFG) 8-K Regulation FD Disclosure

Floyd Chadee

Senior Vice President and

Chief Financial Officer

June 17, 2009 

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2

©2009 StanCorp Financial Group, Inc.

This presentation should be read in conjunction with StanCorp’s

most recent earnings release and Form 10-K.

Information in this presentation includes certain statements

related to projected growth and future events. These statements

are “forward-looking”

statements as that term is defined in the

Private Securities Litigation Reform Act of 1995. Because such

statements are subject to risks and uncertainties, actual results in

future periods may differ materially from those expressed or

implied by such forward-looking statements. See StanCorp’s

latest annual report on Form 10-K filed with the Securities and

Exchange Commission for a description of the types of

uncertainties and risks that may affect actual results.

Forward-Looking Statements

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©2009 StanCorp Financial Group, Inc.

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©2009 StanCorp Financial Group, Inc.

Key Messages

•

Our conservative financial strength is the foundation

on which we run a profitable business

•

Our focus on the businesses and investments that fit

within our expertise pay off in periods of economic

growth and decline

•

The preparations we have made in the past and the

actions we are taking today will help our businesses

exit this recession ready to continue our long history

of profitable growth

•

We will continue to make all decisions with long-

term shareholder value in mind

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5

©2009 StanCorp Financial Group, Inc.

Operating Segments

Pre-tax Income* ($ millions)

Insurance Services

$366.4

91%

Asset Management

$34.9

9%

2008

* Excludes net capital gains & losses and pre-tax loss in Other.

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©2009 StanCorp Financial Group, Inc.

•

Continue to generate capital in

excess of our RBC target of 300%

•

RBC target is based on Company

Action Level

•

RBC level is not impacted by

equity markets

•

Capital levels sufficient to meet

holding company needs

•

Debt interest payments

•

Shareholder dividends

•

Holding company expenses

•

No debt maturities until 2012

Conservative Financial Strength

Foundation of Profitable Business

Standard Insurance Company*

Rating

Outlook

S&P 

AA-

Stable

(4th of 20 ratings)

Moody’s 

A1

Stable

(5th of 21 ratings)

A.M. Best

A

Stable

(3rd of 13 ratings)

*Ratings as of May 2009.

TARGET RANGE 300%

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©2009 StanCorp Financial Group, Inc.

We have operated well in a challenging macro environment:

•

Solid operational results

•

Pricing and underwriting discipline are rewarded with

continued profitable business and ROE within our target

range

•

Continued growth in book value and capital position

•

Favorable incidence and effective claims management

•

Taken necessary steps to enhance the Company’s operating

efficiencies

Focus on the Business

Operating Overview

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©2009 StanCorp Financial Group, Inc.

Insurance Services:

•

Premiums are well diversified for economic pressures

•

Strong persistency in stable and growing markets and greater

turnover in areas with lower job growth

•

Have avoided distractions that others in the industry are

facing

Asset Management:

•

Retirement plans

–

Building on its customer base and capturing benefits of

the Invesmart

acquisition

–

Net deposits remain strong

•

No variable annuities

Focus on the Business

Experts In Areas In Which We Compete

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©2009 StanCorp Financial Group, Inc.

Favorable Benefit Ratio In Periods of

Economic Growth and Decline

* Source:  The Conference Board

GROUP BENEFIT RATIO &

CONSUMER CONFIDENCE *

GROUP BENEFIT RATIO &

UNEMPLOYMENT **

** Source:  U.S. Bureau of Labor Statistics.

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©2009 StanCorp Financial Group, Inc.

Long Term Disability Benefit Ratio Is

In-line With Group Benefit Ratio

•

Favorable claims activity and

product pricing

•

Very favorable 2008 benefit

ratio driven by LTD

•

1996 through 2000 show the

results of investments in the

claims operation

BENEFIT RATIO

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©2009 StanCorp Financial Group, Inc.

•

No preferred or common equities, or structured investments

•

Very minor ratings migration in bond portfolio

•

Generating higher yields than short-term investments

Invested Assets (12/31/08)

Source: SNL Financial

Focus On Our Investments

Superior Risk-Related Return

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©2009 StanCorp Financial Group, Inc.

COMMERCIAL MORTGAGE LOANS

UNDER MANAGEMENT ($ millions)

History of Excellent Performance

•

Niche of small, fixed-rate commercial

mortgage loans

•

Average loan size retained

approximately $766K

•

Weighted average LTV is approximately

58%

•

Portfolio yield of 6.38% at 3/31/09

•

We have been in the mortgage business

as long as we have been in the

insurance business

•

Seasoned underwriting staff

•

Steady demand from outside investors

$2,997

$3,696

$4,386

$4,723

$5,557

$6,610

$6,666

Focus On Our Investments

Steady Growth In Commercial Mortgage Loans

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©2009 StanCorp Financial Group, Inc.

Focus on Our Investments

Steady Maturities In Our CML Portfolio

•

Represents the amortized

balance of maturing loans in

the year that they mature as

a percentage of the

commercial mortgage loan

balance at 3/31/2009

•

Our loans are substantially

amortized at maturity

•

Very few large “balloon”

payment situations

Maturity Year

Balance at

Maturity   

(in millions)

% of 3/31/09

CML Balance

2009

39.3

$          

0.9%

2010

51.1

$          

1.2%

2011

99.4

$          

2.4%

2012

173.0

$        

4.2%

2013

167.7

$        

4.1%

2014

229.4

$        

5.5%

2015

198.9

$        

4.8%

2016

133.5

$        

3.2%

2017

33.9

$          

0.8%

2018

25.3

$          

0.6%

2019

53.4

$          

1.3%

2020 & Beyond

339.5

$        

8.2%

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©2009 StanCorp Financial Group, Inc.

We Are Positioned For Growth

2009 and Beyond

•

Pursue a strategy of growth today for

an economy that improves tomorrow

•

Through one-time expenses, we will

achieve a lower long-term run rate

•

Maintain pricing flexibility / target

profitable business

•

Unprecedented level of investment in

new product and service capabilities

•

Earn loyalty through superior

customer service

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©2009 StanCorp Financial Group, Inc.

*

Excludes after-tax net capital gains and losses.

$2.56

$3.32

$3.74

$3.70

$4.35

$5.00

$0.35

$0.50

$0.63

$0.65

$0.72

$0.75

$0

$0

$0

$0

$0

$1

$1

$1

$1

$1

$1

$0

$1

$1

$2

$2

$3

$3

$4

$4

$5

$5

2003

2004

2005

2006

2007

2008

EPS*

Annual Dividend

STEADILY RISING EPS AND DIVIDEND

(per share)

We Continue to be an Industry Leader in

Providing Long-term Shareholder Value

Principal methods of providing

shareholder value:

1)  Earnings per share

2)  Shareholder dividends

3)  Share repurchases

Solid record of long-term

earnings growth

Issued a dividend of $0.75

per share in December 2008

4% increase over 2007

We have repurchased over

$500 million in common

stock from 2004 to 2008

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©2009 StanCorp Financial Group, Inc.

Conclusion

•

Our conservative financial strength is the foundation

on which we run a profitable business

•

Our focus on the businesses and investments that fit

within our expertise pay off in periods of economic

growth and decline

•

The preparations we have made in the past and the

actions we are taking today will help our businesses

exit this recession ready to continue our long history

of profitable growth

•

We will continue to make all decisions with long-

term shareholder value in mind

©2009 StanCorp Financial Group, Inc.

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©2009 StanCorp Financial Group, Inc.

Non-GAAP Financial Measures

($ millions –

except share data)

1999

2000

2001

2002

2003

Reconciliation of Non-GAAP financial measures:

Net income

79.9

$        

94.7

$        

106.0

$      

111.0

$      

156.3

$      

After-tax one-time costs

-

-

-

-

-

After-tax net capital gains (losses)

0.3

(1.2)

-

(12.6)

6.0

Net income excluding after-tax one-time costs and after-tax

net capital gains (losses)

79.6

$        

95.9

$        

106.0

$      

123.6

$      

150.3

$      

Net capital gains (losses)

0.4

$         

(1.8)

$        

-

$           

(19.7)

$       

9.3

$         

Taxes on net capital gains (losses)

0.1

(0.6)

-

(7.1)

3.3

After-tax net capital gains (losses)

0.3

$         

(1.2)

$        

-

$           

(12.6)

$       

6.0

$         

Diluted earnings per common share:

Net income

1.19

$        

1.48

$        

1.72

$        

1.86

$        

2.66

$        

After-tax one-time costs

-

-

-

-

-

After-tax net capital gains (losses)

0.01

(0.02)

-

(0.22)

0.10

Net income excluding after-tax one-time costs and after-tax

net capital gains (losses)

1.18

$        

1.50

$        

1.72

$        

2.08

$        

2.56

$        

Share data:

Basic weighted-average

67,261,384

63,757,668

61,106,098

58,871,840

57,979,100

Diluted weighted-average

67,348,734

64,251,192

61,671,444

59,544,804

58,669,118

At period end

65,548,196

63,130,972

59,565,932

58,370,552

58,601,446

Shareholders' equity

839.9

$      

924.4

$      

973.7

$      

1,152.6

$   

1,309.5

$   

Accumulated other comprehensive income (loss)

(37.6)

1.9

33.3

147.4

160.3

Shareholders' equity excluding accumulated other

comprehensive income (loss)

877.5

$      

922.5

$      

940.4

$      

1,005.2

$   

1,149.2

$   

Net income return on average equity

9.5%

10.7%

11.2%

10.4%

12.7%

Net income return on average equity 

(excluding after-tax net capital gains (losses) and

accumulated other comprehensive income (loss))

9.7%

10.8%

11.4%

12.7%

14.0%

Book value per common share:

Including accumulated other comprehensive income (loss)

12.82

$      

14.65

$      

16.35

$      

19.75

$      

22.35

$      

Accumulated other comprehensive income (loss)

(0.57)

0.03

0.56

2.53

2.74

Excluding accumulated other comprehensive income (loss)

13.39

$      

14.62

$      

15.79

$      

17.22

$      

19.61

$      

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©2009 StanCorp Financial Group, Inc.

Non-GAAP Financial Measures

($ millions –

except share data)

2004

2005

2006

2007

2008

Q1 2009

Reconciliation of Non-GAAP financial measures:

Net income

199.4

$      

211.1

$      

203.8

$      

227.5

$      

162.9

$      

32.7

$        

After-tax one-time costs

-

-

-

-

-

(5.4)

After-tax net capital gains (losses)

7.4

1.4

1.2

(0.4)

(83.4)

(17.3)

Net income excluding after-tax one-time costs and after-tax

net capital gains (losses)

192.0

$      

209.7

$      

202.6

$      

227.9

$      

246.3

$      

55.4

$        

Net capital gains (losses)

11.5

$        

2.2

$         

1.9

$         

(0.6)

$        

(128.8)

$     

(26.7)

$       

Taxes on net capital gains (losses)

4.1

0.8

0.7

(0.2)

(45.4)

(9.4)

After-tax net capital gains (losses)

7.4

$         

1.4

$         

1.2

$         

(0.4)

$        

(83.4)

$       

(17.3)

$       

Diluted earnings per common share:

Net income

3.45

$        

3.76

$        

3.73

$        

4.35

$        

3.30

$        

0.67

$        

After-tax one-time costs

-

-

-

-

-

(0.11)

After-tax net capital gains (losses)

0.13

0.02

0.03

-

(1.70)

(0.35)

Net income excluding after-tax one-time costs and after-tax

net capital gains (losses)

3.32

$        

3.74

$        

3.70

$        

4.35

$        

5.00

$        

1.13

$        

Share data:

Basic weighted-average

57,192,206

55,465,215

54,079,033

51,824,050

48,917,235

48,963,496

Diluted weighted-average

57,838,188

56,076,666

54,688,114

52,344,950

49,292,240

49,013,181

At period end

56,889,678

54,712,936

53,592,178

49,155,131

48,989,074

48,986,261

Shareholders' equity

1,401.1

$   

1,413.8

$   

1,464.5

$   

1,429.0

$   

1,380.3

$   

1,413.6

$   

Accumulated other comprehensive income (loss)

136.1

59.8

(8.1)

16.8

(153.9)

(157.5)

Shareholders' equity excluding accumulated other

comprehensive income (loss)

1,265.0

$   

1,354.0

$   

1,472.6

$   

1,412.2

$   

1,534.2

$   

1,571.1

$   

Net income return on average equity

14.7%

15.0%

14.2%

15.7%

11.6%

9.4%

Net income return on average equity 

(excluding after-tax net capital gains (losses) and

accumulated other comprehensive income (loss))

15.9  

16.0  

14.3  

15.8  

16.7

14.3

Book value per common share:

Including accumulated other comprehensive income (loss)

24.63

$      

25.84

$      

27.33

$      

29.07

$      

28.18

$      

28.86

$      

Accumulated other comprehensive income (loss)

2.39

1.09

(0.15)

0.34

(3.14)

(3.21)

Excluding accumulated other comprehensive income (loss)

22.24

$      

24.75

$      

27.48

$      

28.73

$      

31.32

$      

32.07

$      

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©2009 StanCorp Financial Group, Inc.

Jeff

Hallin

Assistant Vice President

Investor Relations

StanCorp Financial Group, Inc.

Phone: (971) 321-6127

Fax: (971) 321-5037

jhallin@standard.com

Contact