CNO - Earnings call transcript Q4 2017 | CNO Financial Group, Inc.

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Operator

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

Adam Auvil

Good you call. And Executive fourth include morning. thank from Officer; quarter Financial on remarks Chief XXXX Group's and CNO Erik earnings Financial Bhojwani, conference Gary Today's Helding, will for presentation Chief joining Officer. us

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

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

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

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

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

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

Gary Bhojwani

disciplined We for for approach Operating our Adam, enterprise. solid XXXX earnings Thanks, year XX% as were another growth CNO. share up the year, growing the we reported everyone. and and good financial per morning, earnings to strong full ongoing continued strength. was

$X.XX million returned AOCI the shareholders value during diluted reform. recently year. capital after of throughout Our due excluding the capital strong to to metrics impacts and the year. in tax enacted $XX.XX of reduction share U.S. We per a Book were was liquidity $XXX remained

details on of our XXXX. will reform tax the up was the on impact go X% effects value financials. book tax Erik the from yearend into of Excluding reform, per share

of modest the to time. bill. much due However, make I impacts of in be would included new final provide of benefit Not to Unfortunately, provisions indirect like should over benefits the all reform brief comments. direct sector legislation the will the near-term to the the a Passage life discussed presently meaningful a and are few known. CNO

will be affected. We how will and monitor continue to CNO assess

We XXXX, franchise presented at Many the and was year our offer. for full primarily are X%. increasing growth excited continue strategic Fee due from in to the up up The values in growth XX% and Growth account jurors to advisor. the possibilities diversify advancing. are by collected initiatives And we Day dealer of X% highlighted up Scorecard revenue registered measures year, majority XXXX. annuity about the our total premiums were Investor grow broker, they the and of investment

worth as noting As our time opportunity aggregate have and It in assumption is any expected, did remain testing. that report realization of that completed actuarial XXXX. of a pleased and to also annual I'm recently margins an rollout review, we pace the the to We result results report of is strong. taking charges not we accelerate

NAP in despite segment Annuity for collected premiums the collections. Moving quarter the XXXX, second declined annuity This decreased increased X% collected Bankers but by quarter, total primarily was success contributed XX% the for third quarter over continued flat. the quarter, Slide results, sales and driven Veteran in second in Annuity were recent production decline several XX X, and for the the year. down driven prior average Annuity GLIA strong from months X% half X% to year, We and X% comparable respectively by or year, a Life last these by created Lifetime account the Guaranteed respectively last values over success essentially our producing years. the for accounts flows The of for immediate GLIA. health agents driven were X% and launched strong premiums production the X% and primarily increased net both reporting and X% XXXX. of quarters. to the its the Life XX% the highest declines. with Income agents'

several of decline to counteract nationally, to continuing successful pilot programs our while on piloted results, we efforts. XXXX, recently Based agent recruiting as During agents. agent new different and we new to we new in and initiatives the modified improve retention reshape recruiting expected expanded those contracts programs our

these retention have we appear expect will to agent to for programs improvements take in our these it year account While results. impact will time and previously mentioned, as lead aggregate first positively we growth, some

observing successful that We in metrics us believe lead our our to will are new improvement efforts notable agent succeed.

grow, investment broker, and income Our assets fee dealer both providing registered client continued customer advisor retention. to increased and

we Life, continue While business wealth market. our of results part to complete sizeable middle-income not support a and grow to expect the providing health earnings and are to solutions of strategy under-served this Bankers the yet

drive by the health X% to key premiums X%, Supplemental with Washington life the partially growth in Moving a to run down partner of ongoing XX% independent channel off Rico these up supplement effects continued to total Rico. that increase block. progress operations recent in approximately in sales X% was PMA, by a the at future Puerto NAP the in quarter, National, impacts collected was only PMA Puerto disasters were with offset up related in negatively This minimal made over the with closed hurricanes the Total recruiting on Florida. NAP be to up while NAP up was was health, slightly, the being of challenges the X% Individual believe driven recent productivity. continuing initiatives the and from improved the worksite channel. strong channel. continues and benefit X% impacted quarter NAP in in to to We to Medicare related supplemental by due

up was driven year for PMA distribution This segment. owned record of full a our all-time year, wholly by total X%, was the high reflects for For $XXX this million an channel. NAP which

double-digit growth. In achieved consecutive worksite PMA of addition, fourth the year channel its

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

financial with turn call spend For over as the Colonial availability NAP TV. fourth premiums down growth a in for full Erik? Erik XX%, of advertising chose to to block television stable up now X% our I limited NAP the to in was by effective but reduce year the in total line the sales and the opportunistic expectations to of as investment slightly result persistency. increased the quarter collected and will Full productivity. and quarter cost was Penn, driven we X% due year, slots. were results. up in advertising discuss

Erik Helding

fronts. CNO Thanks, Gary. had on strong the earnings and quarter a capital

of net $X.XX assets enacted as a result the a the the charge in reported XXXX. was write by at Act end and we loss Cuts that a Tax quarter, driven related was to of the While of tax loss Jobs down the of

due capital reform, the return from million Excluding cash slightly the Tax the significant XX% a the Operating Reform We on up X was assets, as impact in share. was was price the X.X% equity net tax per in year. quarter. previously was Holding $XX.XX. up over Operating common stock of earnings result company down and decrease a $X.XX, an the excluding mentioned primarily prior statutory $XXX the earnings at repurchased third $X.XX, tax items third quarter, Act. share our points million, quarter. of from based income $XX XXX% $X.XX was in prior per slightly per investments quarter year. consolidated the share risk of to Estimated deferred admitted was average Operating up from of

repurchased the For an million year, $XX.XX. $XXX at average of we price

repurchases. dividends million, The are over based reduction will approximately other long-term to of into funding market free and factors stock. price committed continue business transactions, common we the to amount expect we cash deployment time stock of on forward, flow to generation care be our common to and free investments and timing Looking potential risk profitable conditions, cash flow share and including and annual accelerate deploying growth, be $XXX

National's Life the reflect and higher earnings Penn's supplemental reflect in quarter margins. results lower in Turning by Colonial the to for in approximately higher quarter segment Washington expenses, call earnings. investment $X and income stronger our were income prepayment slightly margins. health earnings Slide offset X partially line expectations. of LTC million favorable slightly Bankers with

significant also television advertising. the Penn excluding reported million. For under high end items EBIT, disciplined just to experience. primarily of the XXXX approach year, expectations our to favorable due full purchasing reflect our At $XX Colonial of mortality results

expectations. Colonial range. in LTC For results Penn line $XX to XXXX, continue in be the expect million to earnings for million to $XX in we run-off with be

lower and Lastly, results higher improved the to income segment due prior corporate year expenses. over investment

GAAP our the Turning of new driven to The X, $X.X primarily by to testing increased $XXX was in assumption overall, million approximately results billion. generation. business year-end margins our increase review, by Slide

GAAP year, and did a to stand Life the new with the no Consistent Our blocks our our testing GAAP With liabilities. last margins. of long-term to With and net loss rate, changes the no money of respect margins net represent liabilities. push assumption, we year quarter. to made we rate charges no our recognition fourth in - we ultimate incurred but XX% of rate X% the out care respect business, from negative which recovery prior LTC by unchanged was Bankers essential had margin one of modest at on impact year

$XX book to our non-life valuation million. X% a of to million On GAAP admitted Jobs million GAAP liabilities or $XX of perspective, represented XX, LTC We million our consolidated NOLs. tax changes we of write impacts block the approximately point in a our From million, a RBC but detail recorded which charge statutory approximately tax margin to was our allowance closed charge deferred The The a of utilization Act. of Slide Tax tax resulted negatively the share approximately comprised was decrease X Our in per $XXX a recently $XXX down in or XX%. reflect deferred assets by offset of $XX assets, quarter. of impacted partially slightly the of ratio. net the $X.XX increased Cuts decrease and value by enacted improved release charge

we rate net forward, in expect effective to annual GAAP be income Looking XX% approximately to the will tax which increase XX% million. $XX range, by our

reflecting NOLs. Our be of XX% will non-life utilization approximately cash continued tax rate

tax points cash the we impact next the increases of of eight GAAP was we substantial, share With per basis respectively. flows changes by $XX to in expect a changes income, to the from ROE, annual the in the XXX for change XX%, respect million to expect increase the approximately calculation years. While result and earnings modest to taxable because tax of

Lastly, corresponding reflect the decrease reflect that, to that the lower consolidated ratio RBC a capital not required important our to the required by points. estimate XX is it of tax in potential consolidated were approximately $XX approximately call that corporate And in does changes Gary. RBC calculation I'll we made million changes to to capital. over ratio note the with CNO's would increase turn If result and of back rate,

Gary Bhojwani

Thanks, Erik.

enter XXXX, strategic we remain As CNO's priorities unchanged.

will insurance offerings, and and our services right unique product the both by Growth our We through diverse expanding be products of experience. serve continue income middle and market securities through health combination a distribution of the achieved new customer channels wealth by and and enhancing will to the and solutions. combination to

Our unchanged. for also XXXX segment focus remains

will and on and Our and sales committed increasing initiatives diversification recruiting and balance recent Washington expansion, our further We Banker's and geographic Penn products on in exposure on legacy focus technology. capitalizing investments care and productivity, introduce insurance segment National lead addressing new business. market long-term its agent remain the reshape continue new sheet. BD/RIA grow will generation distribution retention the derisking Colonial to testing will its to Life new products processes, advance products.

than economics our to in This different As block the most makes the gives sense. the when you know, deal us is flexibility industry. transact

a We conditions. and Capital interested remain market we'll conversations important these to have the due appropriate. continue remains active it's priority and when with to flexible changing with ever to update parties deployment market decisions

team is customer to Our to Financial for will well exceptional the over service Group goal on and CNO the our positioned our maximize customers. is weigh current focused we is and value future, and options future return delivering motivated accordingly. long-term XXXX and capital on and our invested

success. is Our considerable. opportunity and our be sound strategy our Execution market is to key will the

We questions. for will now it Operator? open up

Operator

go from Instructions] first question Your Please B. Binner [Operator FBR. Riley comes with ahead. Randy

Randy Binner

Good morning. Thank you.

guidance want I on up the by detail, clarify more meaning high would be the just hold buyback it be I return But comfortable now. you a of to there is continuing there case, comments for size kind an capital in think at Gary at cash that options, if return to understand relative I that And holding So, buyback the flow your want helpful program, no end. is other I how XXXX co? long commentary to to capital I your ultimately understand to to ongoing free how guess, shareholders. return pick little cash around levels would might you or these And

Gary Bhojwani

let I'm he'd Randy, to then And comments. in like to. Erik going if make jump I'll and some add general

So just capital on all, continued generally for our for and share the to the entire and return of like thanks question share support question. perspective I'd first your of comment and buyback. thanks

The first is I'd point our thing actions. to past

I sense. if we've to it think to over we clearly actions willingness our a last look years, you when think return back at demonstrated the makes money several the shareholder

The to second thing I'd cash flow. point our strong free is

we have the to willingness, addition clearly the ability. in So

range appreciate, sense. cash I'm we market conditions on can the at, life, what options most a we've And going in correspond the is in to our trading as And of the our that directly makes flow way our are. it's believe in other options. well our as grow We is interest Now, stated business. as And that buying business. want the have options. of you one stock a to back want to the that's depend We in else sure what will our Like those everything to deploy stock price we back. buying

would are XXX% to cash you part. That's you have understanding don't range So But intentional anything free on flow. in we to that intend like in you're correct deploy that Erik, to we our to also that. add specific you. understanding of provide correct our

Erik Helding

No, it up summed you just perfectly.

Randy Binner

does get tax to ask of think background the apply All I In right. drop the change I'll But the statutory appreciate that I rate does want we question. the did. doesn't to this the NOL, asked. queue, just now I of NOL calculation XX%? that doesn't, the new in detail In to that, but - the in you a And rate case, present non-life case the value at back the net it

Erik Helding

So, is Randy, Erik. this

the sort to the think of sort of life/non-life way So income is about this hasn't changed. dynamic

to extent So to non-life life if we greater our carry income we obviously, But, non-life we'll could than to continue a NOLs. over had utilize lesser income.

that I answer think Does So that dynamic your question? persists.

Randy Binner

by portion - over. used what is - now that rate? Well, there's that I portion portion Is XX% you a that when was Is be portion the that to use guess, a rate. I'm saying non-life, like life now comes XX% of it a a dictated

Erik Helding

times Yeah, it's I believe XX% still that XX the rate.

Randy Binner

times Yeah, so that's XX%? or times XX what I'm asking. Is it XX is the XX% XX XX it

Erik Helding

No, no, XX it's XX%. times

how to So cash tax rate that's get you the of XX%.

Randy Binner

Okay, it. you. Got That's Thank helpful. okay.

Operator

Your Krueger Ryan go from ahead. with comes KBW. question next Please

Ryan Krueger

detail to morbidity morning. Thanks. business within of you that kind aspects parts new that? moving in the Erik, of underlying in on like place provide Hi. same some you and mortality reserve got assumptions additional Good could the margin in changes other LTC the any terms and

Erik Helding

Ryan. Sure,

negative with bit movement annual process which offsetting was which a go a about perspective, was, consistent to $XX was kind dynamic of And money margin. out pushing impact roughly was expenses, an sort years, million, about little you saw actually to true-up then, saw is little related is that run-on/run-out incremental cost versus then we the related of So what saw movement actually morbidity from unit And just that assumptions. what And on past million mortality mid Where of of a by periods. we kind just experience see it single the we rate was new similar digits. to past an of to very assumption we added year. that $XX

Ryan Krueger

spend And to this starting picked there going you would conditions a Are up you that, bit forward? market growth in improving you I potential Thanks. are Penn, Colonial it. quarter. think Got marketing better that lead see the then, to

Gary Bhojwani

to for time. saw Yeah. on fourth some do to we relatively opportunities and see Thanks the the continue here we'll if doing don't And in say we've we seen disciplined a quarter. limited for quickly, we'll move degree. would but the the been that. question, definitely we'll quarter, not what opportunities stay some Ryan. same When I long We the in first opportunities We've

Ryan Krueger

Okay. Thank you.

Operator

Autonomous. Your Bass from from next ahead. comes go Please question Erik

Erik Bass

guess on less back the thing to and Thank flow company you. I past one guess have capital, holding generated year, XXXX. Good than I XXX% you looking deployed morning. in where up built to over come liquidity I of cash the wanted you

build opportunities being something we case just flow Or outside the in above there a transaction of reform? So, sort capacity should to or what there think opportunity we M&A? an up to into curious your capital there of a I as if it you want XXX% whether deploy And uncertainty going guess, to are with is an it's did cash read so? of around tax for to deployment cushion, should that. And, free is of do excess forward, LTC

Erik Helding

Yeah, Erik, this is Erik.

the for thanks question. So

there think are course couple I of the that XXXX. over So things a happened

So at bunch of XXXX to block utilize the a business. closed excess of had towards that the to support the the recall our of of we end - end LTC capital recapture

build. we back less And because time, went was was was as price that, there and before we cash through of we rebuild share-repurchase so, then, of a share because the And happened generation, now, we did the year, would we through where have. just market. got of course strong the flow did some And strong stock what the period did the balance otherwise stronger that went free year, reentering capital than as buy

been before. holding at is, What under to I that say a million, stand we've just at contributed kind that So today, would of $XXX growth accelerated where company. we the place the it's

pretty do we capital excess recall, like have you hand. this prior If on were. recapture, to We to where is much the

comfortable of us lot position a be in. a about deployment. It It in be us opportunistic $XXX gives have flexibility. to of very million to the opportunity We available. That's gives terms

either. I of So - about our consistent GAAP in this excess terms our don't peers. of most comfortable, think capital this and an equity, excessive level fairly is is X% pretty across of which is And about

gives it opportunities so. flow terms in Gary's I on dependent So annual million something free to that. yes, the your $XXX the going absolutely deploy us cash dollars mean, of earlier that's beyond to generation remarks, of question, flow, be cash other actually opportunity significant do to to But more

Erik Bass

guess, kind would helpful. there's at the base million it. level, outsized I capital to keep excess of Thank And, and a your then similar Got you. you think case $XXX deploy That's opportunity? an is unless

Erik Helding

to the Yeah, as would the sure. I of take going the over million It may doesn't were that time through over a case within expect best we're that mean, certainly, deployed very longer. as year. deploy little manage all it in kind to highest bit we It us I be said, say comments is, on indefinitely go And one mean that mean, what may time. possible we over Gary time. year. use that specific that my But capital not and deploy $XXX it's gets to I for

Erik Bass

And just it is like making then, to, bankers one the is is on sup. that temporary and ongoing? last something one, something just slightly. is more you. this And there think would Thank you're Look margin you an or I that's adjustment think med guidance changed due it for

Erik Helding

beginning guidance XXXX, ratio if XX% in there's our to you recall One the two Yeah, I things. at benefit was of Erik, is, so probably XX%. think fact

year, guidance of favorable half we had first some XX%. our the us the experience. lowering XX% through in to that went resulted to And we As

of new then something that going that portion portion, XXXX. is the And back is that a another think And sort for mean. there's to So there's revert I to of which result platform will portion to adjudication likely the of higher claims. our that in we've converted a small crossover for an that result auto dollar on business, of in is volume -

that's we And ratio. think point about a to probably add so going our to benefit

previous two increase to those of us guidance. to benefit back combination ratio the so And the the led factors

be rate second about we an get think to opportunity some for the there may back, XXXX. of piece on that increases Now as

Erik Bass

Thank it. Got you.

Operator

with go question Please ahead. from comes next Your Dan Bergman Citi.

Daniel Bergman

Good Thanks. morning.

generation specific cash to a how $XXX the both cash around get tax over tax nuances tax the your the of of time. current pass turn wanted asset. reform, some free just and it flow and I around annual should of sense guidance your Given million

more kind So think heads? applicable down is or or longer-term should any of our as we step it step there have of we up in

Erik Helding

is Yeah, for the Dan, Erik. question. this Thanks

or the the kind start pretty between expect would cash a years so, to close until the savings tax $XXX next eight I differential you really the actual GAAP the good tax GAAP isn't million eight or that savings. number be number, tax beyond where of For it and years to

again plus So nine years out. that's

So number. $XXX million for the a near to be and good intermediate pretty going term is

Daniel Bergman

be XX to XXX any right. on back so thanks. if towards or current RBC any are rating or then had not agencies All build thoughts would would RBC end or would formula here, you Do I'm any I a to lower sure initial you there thoughts producing think Great, so. you've the whether consider update that of appreciated? points target? And sense have up intend RBC from you the kind that RBC much by but the at

Erik Helding

has be have Dan, to and Yeah, have is going stand implement we that I is a think One change. it to things to determine, happen. to they right that implement the they'll NAIC to act change determined, of a how a couple remains and they're I there's when think, now where

a change gradual. point time, reduction we they with much more implement and change they it obviously, believe once be it to were be XXXX, in the So over XX would were faced then If in do to would the then all RBC. at in

stake of their and in companies view so they alpine to the the has have of how agencies happen that as tax light sort they and obviously react to changes. of financial the then to to the in condition ground have And rating put to insurance

levels - cash it's term. over is the of the now the should greater long be at you've to when Where lower time near where we even I intermediate TBD, term able dynamic stand stand right got I and flows intermediate run So increase over increasing of cash over capital. is here flows

Daniel Bergman

Got it. so Thanks much.

Operator

Your Fargo. Sean with ahead. next question from comes Wells go Please Dargan

Sean Dargan

the good me Yeah, the right perspective, seems kind back that care long-term capital you're If thanks, thinking a way. It about make rating I to of to the build, want morning. and transaction topic sure, damned I Because I'm go agency you, from sort could a potential shareholders' it's do you if of perception if is don't. negative they equity, you damned my that be negative. leverage if transaction would a probably of then LTC of and there some credit your view a impact But would be higher. to

wondering I'm leverage an capital so within that the range? you building behind And transaction, is a be thinking if part of if do would your acceptable

Erik Helding

Yeah, Sean. This is Erik.

that think I a probably a are correct, of is we go capital have this under is and sort consideration. a you're is clearly So levels thinking and a explore of about relative scenarios are reduction, consideration of cash flows risk the multifaceted options as to is, consideration, through kind stress especially way, it that we exercise and coverage

to and all of calculus we put have do company outcome determine sort together to sort for that of and for our stakeholders. and the best what's So of the the

Sean Dargan

what think you know, below to intrinsic it's kind to don't needs And of Can stock more buyback multiple sound thought an the because - have us like So it use I'm accretive what if just you what through I just Okay. wondering capital? immediately your - walk process of you there. or is deploying doesn't be trading stock. your when value, about value but

Gary Bhojwani

Yeah, Sean. Gary. This is

less gets years, for in given more the quarter, that is it we'll we're when in will what And and always we're a that a do on available we by relative the it the trying look we expensive value and several again actions buy said to to those. guys walk then and x, see alternatives more don't when question, have have that. that. specific last to stand y, when quarter below balance here, us, a not in We've specific that in multiple it's range, providing of gets z number you what the are and if we So when our your cheaper terms heads we answer noted

our have don't mind. in we So a multiple

Sean Dargan

Thank Okay. you.

Operator

Your next Humphrey & comes from go ahead. Partners. with Lee Dowling question Please

Humphrey Lee

taking morning you thank for and Good my questions.

terms just at performance pretty But has in some deteriorate XXXX benefit target. of been case, reversion would kind the XXXX XXXX to why guess, for but better XX% in you further unchanged it think favorable be in guidance would than that mean, your the your interest some repeatable? experience, do is to in XXXX versus long-term we ratio how which the expect care XX%. experience like not adjusted of think I point outlook? remains Is simply even In and about you your should

Erik Helding

is Hi, question. Erik. Humphrey. This the Thanks for

guidance I think, our you it gave the if when that interest go expected XXXX, was benefit for is the fair of to than performance better we say in to adjusted XXXX, back beginning ratio.

And guidance XX%. that running XX% recall couple You may were adjust did down favorable to and it by points. we actually a was then XX%, we of XX% to to to

much little range. it range, end the that continue favorable or to and material of variance get a a a very we doesn't point is to two end back to run high not us for So bit that low to of take

characterize performance the it be middle the to as XXXX. expect and in our more for would I outperformance So XXXX range

Humphrey Lee

claims about in outperformance business? when But of the related you all your XXXX think it was management in place we mortality blocks or put for that

Erik Helding

any Yeah, expected. bit there's a more was reduced claims I than really lighter was general, just little call specific of frequency don't just terms planes it think, I in in it thing think, in I severity, or think to was general. it out

Humphrey Lee

I'm expect, improvement thinking is would that in it perform not about I the structural would would block then it or your claims case, to, be management But a properly? how I guess,

Erik Helding

claims mean, I over not it properly, about initiatives long benefit management expect the I company don't thinking think you're we certainly ongoing term. the to

think, segment. would we've Life billion I lot to that by two. remember of care around And claims got a Bankers just move reserves caution it percent a in $X.X take our doesn't I or long-term

Humphrey Lee

Okay. And then just shifting gears on capital.

think organic I list how So growth would it deployment growth based to flexibility like the of the if I and it you'll maintain they options, prospect any that normal under given about year? seems - kind excluding in What want need be line were acquisitions. But requirement your organic basis, you those the you some of priority. would that growth be sequence looks probably any hear up base - organic

Gary Bhojwani

Gary. of Humphrey, want what what question. want question? Are sure make organic your to asking sure is I invest I me make would the or I type growth level this and growth organic to we expect to understand want we you

Humphrey Lee

Yeah.

the you requirement anything but organic So augmented of I organic assume the business be of your given $XXX what growth any in absence acquisitions in - to for organic would would that growth, need year? some like investment, the would overall so million growth profile, deploy or

Erik Helding

Humphrey. Yeah,

best that of or think going out allocation release is we're in sort the amongst to of call on here to alternatives give either just laid say, and to not I we specific that Gary's any way the to the the so. and answer comments back a go press

those conditions risk and and Our dividend to opportunities see commitment an the repurchases there to objectives see going specific ongoing price and daily for. growth make stock are manage our and allowed reduction what basis decisions sense out market if what We're the on pretty common so. stock share are

Humphrey Lee

Okay. Thank you.

Operator

Goldman Sachs. from comes question Alex next with Your Scott

Alex Scott

the could interested spend would any expenses. First and And incorporate for as expense was be appreciated? level higher that will well it expect and question Washington bit Life. had just the was investment in you I tax the as of some guidance kind commentary if get does business National we little Bankers of XXXX, a around, in continue, any what just for on was given

Erik Helding

the Yeah, Alex. question. Thanks Erik. This is for

profitable of think I the just related of had of story. some increase incur a investment periods, say, of mix to of sort accruals, balance build of about in initiatives and half building of I So litigation have roughly we it's out our growth, out was little related largely quarter And expected incentive a for the year-over-year, - mainly the quarter. timing sort I'd a and initiative and were would Bankers, advisor. spend that But then say probably bit full about other And and about was of just half broker-dealer both we think, similar increase just fourth balance then the registered National, cases shouldn't. to the pretty then We to a higher I was seasonal accelerate related. Washington is compensation prior up half again excess new in some for here timing. in the one-third

Alex Scott

are and implied decisions the price about and sort data actuarial in Or around in of like, Okay. do it sensitive risk on - price But you be your you And so you sensitive what about is say was of you more the in transaction. thinking a wondering, Why share and seeing those then on think testing, terms when flow the would hear how would valuation, see the the price doing where the step of transaction? forth? I sort about stock cash of, dilution made sort that use you from transfer what repurchase. thing capital you think being you're on generation, basis you're and of towards I

Gary Bhojwani

This is Gary, Alex.

see want causing can we're that that the I longer will That's that we to risk that's in the it We be really of it think terms, us benefit driver tradeoff trend and clear, the not the driver between and for what block We having a that's some risk for us. us do on be performing gigantic adverse seeing we term we the valuation. the actuarial makes that transfer. future our to to well. have if modeling sense consider right think consider is

they come, terms those to hold that's can okay right come we for So out don't too. wait if

to some later. really It that's So than where what come it'll problem coming do there us there's want the come do. sooner really rather be about not would price. it That's to cause giant would

Alex Scott

Thanks. great. Okay,

Operator

comes go question with ahead. next Tom Gallagher from Evercore. Please Your

Thomas Gallagher

morning. Good

block or there on you're care age thinking more you should transfer we a Like thinking here? nuances it any anything and from hypothetical the opportunity? also. you sense a a Just Bankers, bit Is be there about I reinsurance which and solutions structuring but as and the from would potential about an few guess - risk recaptured want make are talk long-term from more Re thinking seeing sort about risk probably to more this of realize opportunities standpoint about Beechwood be - what I your along is a legal understand if would where about a to is question, the the lines, we transfer have being entity of available - with we transaction? Or I be blocks? should what little be about should Can

Erik Helding

Yeah, Tom, this is Erik. Thanks for the questions.

Bankers entities within other have, reside block or the business, policies think unquote, in quote the I those legal care all stuff do for businesses that the in them. either closed business long-term So Life

entity of spin-off or legal less is sale a likely. the outright So

be so, as likely. option result, a reinsurance And would more a

of preference respect in on sort attained-age the very it's with differences closed got one depends. look mid-XXs. other, block, very It's in stable. Now, the versus mean, if I a the transacting high you to or at

so at XX% times. pace, it the XX% perspective last a us surprised recent per fairly from year. hasn't rapid And running a about - to off of And of liability it's

little don't I I if think transact to also a is books. have there's but that have for different. age, But So business feel our outsized business, an rest the CNO. has that in necessarily Life attained to we a not we it Bankers keeping And Bankers but our The reserve of an comfortable opportunity think Life relative does there. It didn't, would on I to. bit balance only higher

reserves And bulk business that billion business. more so, - there's have $X.X in the has concentrated of legacy we and that is comprehensive

is but tail there. industry, have to risk. going a is the more still different the that And of risk it rest tail tail risk lot than You're

have and at there risk margin the of we is and highlighted capital mindful that. risk we stress we Day, when Investor be to there. this so, And And do testing,

have risk that, we to be thinking So mindful when about reduction. about

Thomas Gallagher

to related Genworth went that deterioration they guess helpful. seeing about a benefits That's just as lifetime talking result. point, and on business question margin down block Erik, their portion were I the the its a call And on of that

of I looked versus benefits and at performance a are benefits, your claims lifetime seeing non-lifetime lifetime are as smaller But in of a development? benefits divergence your - percent much block. also Just have the you know you guys

Erik Helding

study, we But to in was older age saw of Tom, XXXX. claims. We inflation, did but it claims. a I to related in - when was to claim ago, not years more related, comprehensive think couple it a specifically deterioration cost

increases. that XXXX, And And bit. as saw a so actually we on little that a it round we rate And was embarked abate steady. got we there it's through from new of been very

acute lifetime would we've anything as you and note of book, is to more in that well, I So I is over limited the steady. that overall risk don't our experience noted but know of anyway. just policies specifically very couple terms years - seen last inflation there the also has been related inflation, X% there so

Thomas Gallagher

annuity started this you topic, final do on any regulation? is guys - Right. know real question I variable and they're that like looks it change in the And expect with then NAIC reform done to would getting - expect long-term big to closer you might how of being care Do NAIC for with that. be evolve? and the ideas focus a where that any - you next

Gary Bhojwani

do regulators me It's Gary. is recognized this clear to I've pretty with folks Thanks recently they to meetings well Tom, the question. something as got regulators. Yeah. that some for industry the with as here. had

demographic see I problems the And have. coming. the they need been they clear. see also that think They some that's of eminently

it's to and so they not care of As you've in press, the there. next would I'm sure want standards tackle, about I industry talking guess thing other to some to some not whether with hazard on. or things, the interest they're seen best

for their moving be next. on know But what's definitely you XX I up that don't on my conversations list. I top this So to will based going confirm is

Thomas Gallagher

All Gary. right. Thanks,

Operator

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

Adam Auvil

call operator, your Group. and Financial in interest Thank on you, the to thanks everyone for CNO

Operator

ends call. This today's

now disconnect. may You

CNO Financial (CNO) 14 Feb 182017 Q4 Earnings call transcript