CNO - Earnings call transcript Q3 2017 | CNO Financial Group, Inc.

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Operator

Good morning. My name is Migum, and I will be your conference operator today. At this time, I would like to welcome everyone to the CNO Financial Group’s Third Quarter 2017 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. you. Thank Instructions] [Operator Mr. may conference. you begin Auvil, your Adam

Adam Auvil

Chief Good CNO earnings Financial thank successor; you and Ed conference and Chief Bhojwani, us on for joining Bonach, from Group’s remarks Officer. Today’s Erik will morning, Officer; CEO presentation Gary President and call. include Executive Financial third Helding, quarter XXXX

for period. Following the have also question-and-answer will several other the presentation, we business leaders available

contained call, we will in information yesterday’s conference to press this During referring release. be

of release the today. by in at visiting our You our can section is in website X-K This media available website obtain Investors presentation morning’s earlier the a Form filed www.cnoinc.com. the of and also was section

expect website We it Form about post and on on file our to November our XX-Q or X.

statements a results subject of presentation Let statements. considered the most make which we than contains directly me materially remind number substitutes should forward-looking for number not factors, actual cause today contemplated GAAP to you to may measures. be those Today’s comparable a which different forward-looking any the of as measures, are by non-GAAP be that

non-GAAP will You’ll changes third be to to and And XXXX. a quarter turn call otherwise comparisons, I’ll and making the the comparisons presentation, in measures Throughout over to Ed. of reconciliation measures performance the corresponding we’ll any specified, third quarter unless be the appendix. referring find made GAAP this XXXX between with that,

Ed Bonach

share, up up and to disciplined in margins, share was was growth Adam, you, XX%, $X.XX, approach free The increases generation and strength per Thank book management flow value continued earnings capital. and good business morning evident leading per diluted in our strong cash which with of were XX%. again Operating our earnings, everyone.

returned the the in Annuity into investment somewhat this due first broker, premium, to segments. results. up values dealer $XXX registered turn have premium primarily in was varied Gary advisor. was XX%, and in With now account quarter will new shareholders by respectively. were were $XX to returned X% down year Our our quarter our I'll growth annualized collected that million hurricane and X%. up revenue recent Results and with XX% scorecard Fee and growth by or NAP, and Gary mixed segment call discuss to We to capital Gary? over now quarter year-to-date. million go impacted shortly. detail more the the that

Gary Bhojwani

Ed. Thanks,

in policies Bankers total driven X% impact Texas premiums premiums. driven sell Health with agents last producing annuity premium. collected annuity by third and year flat. later in life Moving sales more by persistency. Life in health in products X% decrease collected twelve agents including in increased recruit to older September. X. account XX% Average were to year Life and the our of insurance of the be operations Florida respectively. the and and Annuity and care NAP decreased Hurricanes XX% last agents the and Slide on collected X% comprehensive down long runoff from We twelve hurricanes annuity a first ability strong term declined average and prior effected months over estimate the X% both average sales year the second on months and and the NAP and to the new our approximately decreased agents values XX%

agent decline encouraging We those efforts. new early by retention seen pilot production in in agent the results counteract to have contracts continue new and initiatives and to increasing

agents. and longer of We of tenured more accelerate are types drive taking the these steps with to productive goal to retention initiatives

our provide This advising important strategy and middle in income the continue dealer see to and part business an complete customer We both our number under-served advisors wealth the in of to our to of market. business values. broker growth registered account is health

offset with runoff by approximately by flat were supplement impacted despite premiums collected of negatively closed total NAP. being the Texas Total X% supplemental the National, to Puerto X% was health Washington the sales NAP X% continued up in due to Turning hurricanes Rico. a and Medicare Florida, increase in

the stronger improved future is of related continues loss by continue was reasonable NAP XX% X%. to Individual This partner flat in to disasters, impacts similar to Supplemental to XQ with but Rico. levels was NAP productivity. the of initiatives XX% assume was it a PMA these to We sales particularly quarter Puerto XXXX benefit the assess drive NAP in up life key from operations worksite channel recruiting while by and growth independent channel. will in recent up driven respect in health to

channel New the PMA producing for quarter. agent last increase in twelve the X% the of recruiting average overall count agent worksite in contributed an to months

on to and Penn, sales persistency. up to Colonial collected X% year were X total premiums prior stable Moving into due Slide growth

high and First year line the in marketing We model opportunistic cost demand Due resulting due approach, remain advertising television opportunities invest inventory down were and results the disciplined with did not Penn sales reduced Colonial limited in collected to and attractive available. XX%. any and marketing both advertising premiums These to as spots. nationwide was material as spend in our were XX% our experience we’ll marketing and hurricanes. NAP expenses for disruption become of recent effective a television down with direct continued reflect response quarter expectations

million EBIT item call discuss the year to of million results. guidance to over Colonial for quarter. maintaining Erik? now the the $XX We in $XX turn our financial to full Erik excluding our Penn I’ll are significant range

Erik Helding

per significantly Thanks, $X.XX, another per XX%. share Gary. strong earnings were prior of the up and on Operating the year. CNO up capital reported We quarter posted from fronts. $X.XX income earnings net share

impacted results offset segment personally underwriting higher by XXXX investment were by results margins corporate expenses. quarter favorable and Third

earnings net items operating significant Excluding share was XX%. up per $X.XX,

on equity Lastly, operating return was X.X%.

EBIT Colonial run-off business loss segment Washington health direct small care growth XX the of Turning reflect inforce a excluding at supplemental and margins call quarter Penn. CNO combined higher higher $XXX prepayment significant earnings at income Results margins to Slide XX%. in in up National; favorable spend but items nearly posted our with it marketing Bankers expectations. million, results. LTC lower reported in long-term and was inline Life; at in

Lastly, corporate higher by implementation, to compensation incentive expenses. DOL accruals results impacted segment expenses and were legal related

Slide in in our the XX% XX.X%, in favorable persistency XX was XX% to with key to in be expectations the and in quarter. benefit Bankers line quarter ratio due Medicare incurred Life benefit fourth was continue benefit and health the claims. expectations expect ratio care interest XX% lower benefit better Life ratios. to ratio to Supplement adjusted Turning this than range long-term slightly we to Bankers

additional of year-end XXXX adjusted accrual recognition as result XXXX the reminder, reflects future testing a a reserve As interest benefit loss loss results. no ratio

Washington We to interest continue to supplemental in the to XX% the adjusted be expect to expect XX% XX% benefit XX%, adjusted this in in LTC continue to ratio the range be the range was in fourth benefit quarter. XX% and the health interest National ratio line ratio to with we quarter. in expectations fourth

moving few a loss our on for Before about testing make long-term businesses. comments me let care recognition year-end

stable said small our of recognize charge. that position XXXX through we not deficiencies size run-off margin in recall we will LTC than would better of block there and and the what on From relatively resulting year course business, statement. business, income any Bankers changes first For we sine flow results this That given assumptions is a but we know the a and testing that block, this Life change are a in expecting the our result significantly over were ago. assumptions, today, are on material now based in zero

provides rates million a of had past $XXX of changes our end typically experience headwind, line year year not significant and charge. a has largely expectations at XXXX likelihood million $XXX changes in margin. if continue be to positive those a and with we assumptions this XXXX, but XXXX of been As slightly Through up resulted better. significant in to against from buffer not margin, Interest have end

what practices know new not on statutory margin we With to rules today, consistent the are fourth guidelines we not new change that based current and testing with procedures. quarter. to in expected charge regard as in flow for NAIC our impacted expecting result is LTC, cash CNO a are in be a would regarding the So

money estate the and grade allocations X.XX%, and to to in refinancing due the bond yield put investment commercial liabilities lengthening corporate periods Esoteric in duration primarily money somewhat business. higher corporate ABS, direct some Call a than securities and XX for investment of recent work longer Turning We of was results real match to activity new activity. and and large to volume at lines quarter to and Slide high our quarter. heavy to prepayment credit due

of as data most of some continue to elevated results due continues driven we credit in to tighter sectors advantage to experience data move and spreads hurricane realized good out strategies. quarter we across took catastrophes. Credit investment solid in losses names. no We be have alternative to especially Realized performance related were higher gains to the

of had $XX million at remaining XX, assets the down As from recaptured the September $XX million we quarter. end of second of approximately

of XXXX from the statutory and due prior on to consolidated the paid Turning ratio. quarter second was amend, holding and per value level XXX% to was common a points higher investments up cash income our $XX.XX an of share year. dividends We and and stock months facility $XXX statutory was XX% X approximately target year the level Estimated reflect six maturity capital $XXX to Results second with in our lower quarter position. but opportunistically risk-based capital and that facility. Slide $XX credit at XXXX, of XX executed repurchases. from down of million notes line our company to date diluted maturity. over company. steady of five Holding a dividends revolving provided refinanced are the to the million extend Book at has of up least XX.X%. upsize prior million amended increased The Leverage our

to via stock repurchased a incremental This $XXX portion contingent view maturity an for to $XX.XX. the [ph]. an the the from price at As access million $XXX lower average $XXX of This to to refinance with of six a We stock were an bringing million additional the $XXX million third significant provides is to price level prior customary it we the the Also we don't at somewhat twelve revolver this million issue. of of practice to notes while of drawn leaving $XX common upsize $XX million. reflects elevated plus company able maturity, portion months according quarter. as of the capital an repurchases million

it our said common stock. have repurchase Through quarter, to of the to third are trades the to stock we stock value, above repurchased price repurchasing million we past, As more. common we tend value, book book to closer less. the have below purchase When or sensitive we in trades when stock. comes we tend When $XXX

the in fourth Gary. level to XXXX will and on $XXX we're lower price of How the with over compelling be we be repurchases, dependent lowering quarter million stock other the Given call And I'll $XXX what to alternatives million. that repurchased to the might guidance available. much turn repurchase

Gary Bhojwani

Erik. Thanks,

to a to and progress priority our and is committed encouraged are of our disciplined the take over due long-term scale pilots these We by are with time complexity on Reducing implementation. important it making long-term conversations and relative in initiatives exposure the appear we growth We long-term. continue to It active remain early that remains to before remember underway. testing our the results have to interested currently and will parties. initiatives of growth results care

would CNO common of five final I call track XXXX upgrades. to earned followed the member his the service The by Under for consecutive Lastly, XX His he's company note itself, a earnings leadership, dividend highlights. like marks Ed’s but a ratings CNO. tremendous few stock stands leadership while Ed’s increases. Ed to for in record would key implemented annual family. CNO call of and like thank the with I this

wish total shoes missed. to Finally, in with be fill over be his and well Ed to shareholder I'll that for return His future call all comments. CNO he recorded the him will of turn hard will XXX%. endeavors. back And a closing We

Ed Bonach

needs with the on middle amazing team for an focus at bullish the salary as earn our for up I to shareholder a team, to the the complete I while income driving achieve that serve ten the you, for the your years CNO. will and It's and Thank franchise of my to Gary remain CEO privilege questions. been Gary. and open will you Thank of the future. value I year a that all greater now remain leadership been even And under-served markets. as leadership shareholder last six heights It's in seek of CNO’s confident your honor on meeting Operator? you and we’ll support. rest it an years.

Operator

first Our comes from Line Binner Instructions] is the question Randy with [Operator FBR. open. line of

Randy Binner

you've with miss there forward. going and just but we’ll all working of Yeah accomplished luck you, best to first congrats Ed

Ed Bonach

stock two, then lower might and the were is because multiple stock than what of an And I One, look should buy that Thanks, perspective, I below then preference the the understand buy alternatives you I the that cash book not not sits trade stock don't money is some that the twofold. like Randy. value; earnings yield buybacks, in be mean, kind if to the the – so from understand the guess but just returns your I commentary there the call you – on accounting at. that while at optimal and to price compelling in think indication question the book value that any is

bit understand kind to little better. like I'd the a dimensions that So of

Erik Helding

is Yeah, Erik. this Randy,

question So more stock at to when – value my I I answer when first book mentioned we your buy trades think value. book the and it’s prepared or think remarks above tend to less below that

I mean, going So I it imply terms know, not stock doesn't we're it's we buyback being value. buyback value, to don't certainly when creative more to book above shareholders, book necessarily preferred for below but of stock it's in that certainly

make So guidance, today XXXX stock have I want out that back bought updated yesterday. And was trades think and for repurchase put we what to there I we what you where year-to-date when look the which at just clarification.

comes I think through. that

can numerous do talked terms capital. lots times. our in compelling with things we think alternatives, of excess So that of this are we've There I about

of One dividend is dividend pay common over is time and that stock if warranted. our them stock common increase it to

indeed in of things June. that of about that. reinvestment as our and can repurchase one we noted Another and our the our as Investor in those got at doing and common that is doing record and we've proven are we've to back we business stock Other track do discussed this a we Gary talked Day

alternative compelling We would talked to care also be potential about on have fund long-term seating capital a negative a for transaction. our commission reinsurance

a sort gives alternatives. kind as you compelling of a that flavor of we So of view what

Randy Binner

the we Sure can be and just potential and would up for this. there where mean is I characterize for LTC this that kind the you the is read is a follow transactions that? market should is of closer

Ed Bonach

Randy, Ed here.

we be have interest still our dialogue As remarks we with today, said in parties. continue said we we to the those continue to interested past in and There's in conversations. there and

Randy Binner

you. All right, thank

Operator

comes from the of question next Research. Bass Erik Autonomous with line Your

Your line is open.

Erik Bass

congratulations And to Hi. retirement. best Thank wishes you. first, Randy's Ed, and want to in echo you

Ed Bonach

Thanks, Erik.

Erik Bass

the progress show in I encouraged to spur Gary And growth. results. then And to that’s some the in take commented time you that up going of consolidated by initiatives realize to some the you're release on

you’re could provide at you or hoping just seeing point? successes this of maybe more where some So detail examples

Gary Bhojwani

Sure.

examples first give point that to, would few a for different details you. So the thanks recognition few and a to I that questions for show of Erik through. different the all for thanks I and these the take some time thanks things There's support would

actually life to dividends that's that's that's been several The work starting pay at something Washington first some and be sales National. of quarters already over from done the would

supplemental a at the that they're comment the this, but Washington and setting actually happening at health Now Life good work off there at offerings we to aren’t historically I particularly going that got to some quite want field are I'm And material emphasize a other things base, to very enough the we've are to by of small looked encouraged been working specifically look have beyond some that’s the at. force sales National. yet very like that but by products time on PMA diversify coming relative our they've to for things doing in

the one In The other this is you into Life. take there, And fall given any off scale categories. things of efforts of the will there, doing and if that organization the the one, take It we're doing the here base we're different that’s much broad what a of the much bigger Bankers turn. think of at a time four Life, about just larger efforts time. recruiting. coming particularly aimed bigger number will our or Bankers a to it's battleship more more complexity really case And

some pilots sourcing trying with methods are We different of agents.

methods you compensating. some the trying even trying as are competitive agents. XXXX. We've different down some selecting on buckets. some And encouraging respects a again appreciate different I'm this with and And broad as seen I'm in then respects results also a efforts of We're things design can of of things We’re and general as of in issue. doubling sure fourth as we of four those very couple this those being some those actually some training of each because by early quarter categories, four

So invest we efforts as try back some speak would and example where even further along more early are up to today. the a good move and quickly, National that Erik, that your your point I actually will we encouraging see showing results but signs, of or did Washington concern again to question?

Erik Bass

you capital I with portfolio. the thank or there where I of assets provide kind of if some either for is and you then in Erik It Johnson. Erik a could progress maybe that the am just on just that the you’ve That’s And this games Yes, Beechwood guess drove also acquired you. question Beechwood another exiting at benefit Recapture looks maybe update some wondering an quarter. made the stand some of Helding associated if on and like helpful.

Erik Helding

cover the a will implications bit and is about Erik capital rest. out hand happened to quarter the This this Erik. Hey, in the is then I holding. of little what Eric to talk it

of some is Washington residing and balance capital a million money used in in say did in $XX freed as of million down and sort up quarter. to about of rate actually that about the result in York execute that million the achieving work That on $XX X.XX% the So the though portion would we from New entity. the $XX National we new was to I noted, the of quarter.

sort to fair used the rate we that million a in produce of So quarter. $XX new bit of money outsized an result

Erik Bass

just Got acquired? higher it, charges the capital on of because securities

Erik Helding

we of higher purchases were little going investment is a bit you like some which NAIC X things look stuff. that. they're NAIC X And charge, and some did. to type have capital things if the grade below net than at Yeah, a There and

Erik Bass

it. Got

Operator

the next Wells Sean Fargo. line comes Dargan Your question of with from

is line open. Your

Sean Dargan

also congratulations It's I’d pleasure over to extend the my wish with you a Ed. to been years. working

Ed Bonach

Thanks, Sean.

Sean Dargan

I have Penn. a question on Colonial

EBIT expensive keeping You're you guidance remind intact, or quarter been fourth can that? just more think or or – how is is the typically less expensive but about we us, should the that’s

Erik Helding

Sean. is Helding. Hey, Erik This

speaking tend the we So in amount the quarter. seasonally fourth least to spend

So quarter, the $XX to million million we’re EBIT was guidance back for you the the $X I item out maintaining rationale million year-to-date. million $XX about significant in think $XX the if

results So at It's been probably or EBIT million of you $X prior less. our in what when look if in that been million spending we're quarters. around had quarter $X fourth

we would out the if end spending we the Again may it's of that. range quarters. range we there. something of of have opportunity that line to maybe four high-end increase the sort spent with if the opportunistic, lower So represent prior The in was recognizes

it aggressive the so, just to if end quarter in an fourth opportunistic And the be and exists. simply more more of reflects low range the opportunity

Sean Dargan

to back with just do us I and hold not you your value getting going you're what think stock it? co the intrinsic suppose of to to Okay. And tell you're going what is? then the cash

Erik Helding

Yeah, fair question.

of goes is making value statement lot beyond intrinsic stock all is book that believe the us that. I'm the that that value think of is comfortably I than that I of stock, a the subjectivity that into higher the there's but value intrinsic the of think

think of to than I And so, but higher difficult be is it value pin I book all us believe stock can of down, do believe the and value. intrinsic that the

Sean Dargan

got Okay, Thank you. it.

Operator

the of Dowling from & Humphrey line Partners. comes with question Lee next Your

is Your line open.

Humphrey Lee

you congratulations Good you working again morning taking you retirement. really and in the wish best And and you once questions. I enjoyed, and thank for my with Ed to enjoyed

Ed Bonach

Humphrey. Thanks,

Humphrey Lee

some upon A question for initiatives Washington in and National Bankers. Gary, of so the you touched

Colonial a a coming Looking of at given bit kind sales Penn spending. the and definitely lower off bit ad

of about expect line more advertising. past better some see You’ve you’ll Penn? the do there in talked targeted talk initiatives you maybe top the of on of some terms kind initiatives in alternative a Can in results advertising the of and solutions you to Colonial about when

Gary Bhojwani

Sure.

So, Humphrey, the for and for thanks the question. support thanks

Colonial The greater Penn. is first want impediment that would thing sales Penn I us. to largest single is with emphasize The Colonial at to

I more comfortable yield Colonial we that that Penn CP. think at it's at tomorrow seeing sales sale of spending with we consciously important the up remember the not dollars. is we level are from We reduced to really making the get a because you're are choice could turn ad

more If track more. this you in sales. we dial pretty, look know we past record, precisely get pretty could We at when spend we much in our how

to So sales I part I is the the this think the thing manage it's important a to to That’s want remember our on out. choice profitability. level conscious first point that against

terms things Colonial in of a there are grow that for have and for things that underway our opportunities things handful some some we of sales are we've time underway had new, Now some had time. of Penn, to

away frankly Historically, the do to web people what away two a lead We XX, need television. be third but most from continue media XX critical and terms slow and been costly we've says diversify continues, the underway sales continue that's continued and one progression. probably old XX, to in that. significant is over diversification about from so work television leads source, and about a The thirds and has of our where specifically it That been to of the other Television it's that buying we press most you next making television. really believe will first decisions is if years, on.

an impact implemented that makes order doing we've thing that as if The processes take that some related paper. phone, and some, to over having with which have of types and timeliness able to the we've buyer to results will from increases of that are a Colonial allow efficiency interesting we different a efforts. Penn technological ways seen is signature solutions a there various the us we been a verbal There second those opposed we've you with to deal seen being with in other do decision marked that like can are playing

things the do Now at to the and beyond really need more buckets that will Colonial we into substantive that move two needle related. fall they're Penn

first Penn will we right The a the putting beyond really is that small in the to piloting extends a honest yet things consumers really larger more see way. credibility that one Colonial slowest would done is currently and couple the be product products into to portfolio we're found this We've brand one brand give and products of. what how haven't extensive That we of and off buy moving nothing comfortable in way, an a be about way. I that talking in but comfortable other

the with demand with so consumer when moving we ability the business seen the but and with and mix over we a Colonial way profitable that's more drive When slightly on obviously we growing pleased The we're mix. new product is Penn what you've do as returns, But it we we significant in frankly that We're think build on right. are comfortable we're internally being formula there's mix in focused as we middle presently a last a quarters. to that’s that I the in appealing to do and these a sales what pleased Penn. but to two mix, then Those disciplined that and to we get of refer consumer profitably the with second we're we remain still not at market, the way out franchise really current do income won't is products product than right about to is terms area grow it. that that's with take words of and things Colonial have our related, doing current will years believe most discipline affluent the couple to working of couple will our other

Humphrey Lee

to related softer refresh you order a launch full if a think sense your that makes appreciate because – that Bankers business? full of That much year And how is do little don't comparison have it’s I shifting a this product attract on I much a related a and that. to bit have new how that the to is a of difficult forma, know or quarter; comparison of to year of in kind the is annuity, it to you impact? product of bit the And hurricane kind you just

Gary Bhojwani

I'm need I not yet at the believe point product. refresh the we to where

selling there we are excuses. we're no doesn't it more would that comparables, of have so about when and play things just a want to think like have that. I number making But There's sound sold be look think I at pent product. there liked up to question clear we the annuities. I that’s these right. lot waiting this QX our was quarter we believe really our the was annuities of first first We were that believe issue our think for demand. and last you touched force I distribution and full that's year on and consumers a

were So at tougher no X%. absolutely September. that an comparable. estimate Bankers We by There's currently were that's The it issue. issue. hurricanes that question in an impacted makes We roughly Life a it

impacted were sales Our there.

a there's So question factor. factor that play. no was a broader that's There's would also

the Now on was X% but third industry not out sales. down for quarter over industry the second FIA quarter, the yet is data the through

I'm And consumers modifications. this something to if line really industry into us to we're with But to Humphrey. start the the very thing that we quarters believe in income that the space ended move down perform. also don't impacted is and an the annuity there we yet that when this, play that keeping us. want at So accumulation of that's yet, for can how sure that's see sales. an is I success of industry progress is we I make a be and we data where Again, an this really I at bottom respond have because more formula us quarter the let need very, trusting our other couple this our major the a for term where consumers for don't we're was watching on the and to on longevity point us we're assets how more the but eye carefully. trend X% third does advisor that many step long first their consumers then

how that's think about that. So I

Humphrey Lee

That's Thank you. helpful.

Operator

Gallagher question ISI. comes from line with next the of Thomas Your Evercore

Your line is open.

Thomas Gallagher

I it’s been also my and morning. good Good working luck congratulations you. Ed, will great say and with

Ed Bonach

Thanks, Tom.

Thomas Gallagher

questions. of couple a Hey,

$XX that. or quarterly about you’d to that think just in terms of a $XX – about. heard to think kind staying range the to get into amount and standpoint from that next think this buyback is as philosophy. capital just head the we But end it least of the minimum go kind better year range of First, even it lighter million side return I buyback million better on of of way makes sense you or sort that are more if – a sustain is to for the Gary, to sense valuation on assume at we below possible you’re you'd thinking I buyback modeling the the if comments a want your

Erik Helding

is this Helding. Tom, Erik Yeah,

comments. So I couple think a of

on really of share remainder to February. at when it's early to the go provide XXXX given again this mid look We're would guidance something report now and that earnings one, guidance repurchase that That's at So, point right only going we particular in quarter practice. time time. particular in essentially this we beyond fourth to we've for our not

fundamental think say company that want back thing as – that a – to commitment is to fundamental is make comment efficiently sure there's in the no what understands I bought there's with capital there general of So respect quarter, in I'd what the I there's effectively make excess capital. we sure to our a the change excess generation or to our of power deploying our everybody view and I something think

is to the where we Does stand quarter. so, effectively persists sense? to deploy to the least that And capacity at continue fourth capital now beyond going makes

Thomas Gallagher

be meaningful then or modest to decision Erik. guess related you in the dividend does still the dividend? assuming again is That territory. – potentially at Would a other remain does. is, That common you looking potentially question better adjustments be on I a there And valuation the

Erik Helding

we too dividend that's as it's approach It Yeah, meeting. the time, tell. do shareholder I our revisit annual will to our we it doesn't can't think that stock been common practice. another Tom, mean I mean early typically but we policy

think shareholder I rest XXXX we and to exit going what and how dividends, we're annual that for the into consideration what that common the peers. enter stock up is year So approach what yield and stacks end as against ratio our paying dividend is, our payout we're of meeting, take

Thomas Gallagher

just related question care And then you. different your just to block. Got long-term final

have And trends largely now here? seeing sounds are lapsation. you increases of process expect you trends lot is forward you going to and from also it what the are gotten now or Can good of both an get terms claims about rate still ongoing a increases on you need are So that comment a bankers the you rate significant you and just in reasonably for you on block. guys bit block like in shape recapture the right

Erik Helding

again. Erik Tom, Yeah,

So years we just largely we ago. rate increase are rate process about started on two the that through front, increase the

assumption what And it's even financial assumption. had into of expected to really we our so, receive our actually been anymore, vast realized. been It's majority not the an incorporated has statements

round in cash It's of low isn't future And rate a flow single loss from recognition expected double perspective, probably increases. future or there of digit rated so, to high testing testing, really terms millions digit benefits millions. much

much we're very more expecting to not there's So get. that

round, rate start a be tends ends. you Now it never to once that it the case increase

so, to small didn't out. we something small is would here call why the And but activity, And in and immaterial every a be be several had level going very quarter. even I of fairly some like the which it third and amount expect for there's It was going always to next quarters. we it's that

So rate we're of for what I an kind think essence increases. that covers expecting

true expectations largely of were. than terms better run-off experience those business same in in think I the to line In running I mortality although trends assumptions our in is think say our has bit respect little Bankers would Life been a what And I we're business generally with morbidity with the persistency.

So it's too early.

the We to have run end process. year through

a to get and we that to too claim margins detailed it's that victory assumptions say calculation hundreds and need go there that updated. are up it's very go to because So are through early of going

And so, into we end. feel good in today going pretty I are general, year about where

Thomas Gallagher

thanks. Okay,

Operator

[indiscernible]. the line of from comes question next Your

Your line is open.

Unidentified Analyst

taking you Ed. the Thank congrats for and questions

Ed Bonach

Thanks.

Unidentified Analyst

with term So actually more care, are less is positive the how When that drag of older GAAP care the I about I on think you that. earning sort a Could margin? positive earning margin are on the the or one had the earnings just characterize and underwriting much underwriting on on of caps long term you the blocks shorter of one term quick guys margins, from comes you underwriting from sort long care.

Erik Helding

about Alex, to it’s haven't I know we a question answer. talked that that publicly. difficult

essentially you you margin. tends been written some business a a are different some blocks Day. has more kind tends need that know mean so think business to have of that that contributing we a zero. to refer cohorts comprehensive would been talking then that I here negative, XXXX I bit And is everybody, of to talking you significant been at And negative since I XXXX, in is terms the and everybody of there has positive this and then that margin which to that overall about be positive, little business XXXX margin were million. else $XXX refer underlying have of be some about issued Investor business think older profitability to that. back business I the about And our are And the are the since we of the have that more positive to the ever is that what

margin. all testing with of you when of together, end million so that up And $XXX positive you put

Unidentified Analyst

is spend the of or okay. you be at do it, new here? build point one investment mean the products. will I from some of And there that and rate little of a more think Got sort the on more out run the fully incremental in this

Erik Helding

think – the of of element is company investment I there always answer some to and case a three, four, for think the as are been has years. that that five doing last – so is way the yeah, I of investing we that

incremental spending don't think are have increase an the we but would different spending, I been or say in I really so, places. are I spending what see that expect dollars we to we that And what expecting be I to in know

going in And focused was couple those on systems And years future focus. drive allocated help to we so, our investing a done now when consolidating say of and things that dollars that's that transforming back we our now us we've heavily ago really were growth. general financial be to ledgers are and office

So that I amongst reallocation a think it's see, spending really not spending but necessarily the incremental initiatives. you'll various of

Unidentified Analyst

thanks. Okay, That’s helpful.

Operator

presenters back hand This will ends to remarks. over the Q&A the for it session. closing I now

Ed Bonach

service continued kind Thank for and everyone and support thanks my your to and the relative This Financial you, Group. CNO in operator, remarks your for again to call. interest ends

Operator

today’s call. ends This

You now disconnect. may

CNO Financial (CNO) 26 Oct 172017 Q3 Earnings call transcript