CNO - Earnings call transcript Q1 2021 | CNO Financial Group, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the CNO Financial Group First Quarter 2021 Earnings Call. [Operator Instructions]. I will now turn the conference over to Jennifer Childe, Vice President of Investor Relations and Sustainability. Please go ahead.

Jennifer Childe

Thank you, Operator. you XXXX us Earnings thank Group's CNO and Quarter First Conference morning, for on joining Financial Good Call. Chief Today's Gary presentation Officer. McDonough, Bhojwani, from Financial Chief Executive will Officer; and include remarks Paul

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

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

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

expect our to May file posted We our Form website X. and XX-Q on before on or

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

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

Gary Bhojwani

and everyone, you morning, thank us. Good for joining

to prior the items Slide $X.XX, in excluding or were $X.XX strong Turning which reported CNO start to the per There off $X.XX in to of share operating period. no a significant is X. in earnings prior XXXX. We period. compared significant items,

XX%. per AOCI, by share, excluding value book diluted Our grew

remained across in year than performance, solid slightly were activity. boosted ongoing both our results repurchase divisions. line expectations. care, the margins, strong medical Expenses collections share continued from which our period, benefited Our Premium and with ago investment deferral of higher health

We in quarter $XXX positioned. holding the Our an at of ratio and cash conservatively ended with million XXX% RBC liquidity the remained capital and company.

revised our path to the and investment activity and stable, from we number portfolio outlook momentum, in our exceeding returning nearing recognizing recently our A.M. levels shareholders or to of and continues pre-pandemic of high-quality the Sales acquisition. million operating Best to While our funding businesses gain strength positive core favorable $XXX direct a also sheet, metrics. balance are our in trends.

strategic to execute well continue We against our priorities.

highest implementing wealthier transformation successfully in and income strategic January a new growing and deploying right initiated use. including launching Specifically, business consumers to XXXX, new middle-income our the profitably, annuity, was best that within market, the its slightly excess and expanding services, younger, lifetime to guaranteed to the products capital

X scorecard All record record year-over-year, growth our back Slide scorecard. the momentum up sales field of us our by and the challenged, generated XX% XX% to X Health for were and over our production Life sales growth Turning up pre-COVID. which metrics down we a sales agents. fueled to were direct-to-consumer in exclusive the from year. increase prior significant brings a quarter remained

in As away our shift Medicare is secular a supplement experiencing discussed quarters, towards Advantage. Medicare market previous from

are recorded sell of we policies NAP. manufactured Medicare as fee record we policies, when income. reminder, Medicare Sales a As our third-party Supplement Advantage

second adviser, premiums growth client strong aggregate, and We NAP results. value Life within appreciation. the year-over-year new inflows investment DirectPath's Sequentially, this consecutive growth household recent fees health door-opening collected up in and Client of our collected target registered and XX% grew to WBD million assets which client by up Fee In accounts, inclusion and in fueled Annuity were advisory to revenue increase. Net up broker-dealer continue was assets quarters business. $XX and were X%. XX% solid in XX%, in and market grew customer to and quarterly the $X.X the up premiums brokerage reflecting important X%. of were X% penetration year-over-year asset in growth continued our billion, reflecting base. life persistency the

our Division Slide consumer to X. on Turning

continue leveraging launch, mark transformation of to see our success As our anniversary cross-channel the we we sales program.

exclusive a direct-to-consumer sales the grew agents a were record Our by improvements blends conversion and life field and up sales division. our completed sales generated customer has in within agents million. exclusive local hybrid total insurance to Supported our $XX.X comprised engagement the service sales our life nearly XX% million where virtual Direct-to-consumer by acquisition million. life sales business, to This lead to led business, sales XX% evident with to significant our life record of rates, model, X/X leads productivity. field costs for XX% which and in climbed was $XX quarter $XX from

mentioned, I prior XX% were year. annuity compared collected up the as premiums As to

continues be to or portfolio consumers products retirement. received indexed annuity approaching by in middle-market well Our of

continue environment. maintain in on discipline order sales growth balance We current to interest rate in pricing our profitability low to and strict the annuities

Half that clients. and person, with growing on the life also division's relationship advisory quarter with In clients now with is with consumers. billion not our our us consumers to our more during connect annuity other billion of a of first is strategy in penetration. to brokerage addition were access. assets distribution, have consumer $XX the focused which the to Recall been middle-income optimizing health quarter. assets. virtually. We're consistent expanding change our fundamentally -- household business consumer and we we focused this in were Client sold entrust how account their the completed profound the on XX% In with and our grew words, sales and $X.X than Combined values, deepen in

new strategy we We policyholders shift rely time. referrals with and on means This we registered of for our in stable. annuity assist financial number supporting on The This heavily that agents stay continues us personal X the reap responsible X remain was every fewer majority benefits more now agents securities other our approaches. several dual-licensed we appoint to and average, agents. recruiting insurance agent has our agent succeed force with resulted targeted These implemented have in X%. likely We are ago. planning registered agent years continue Overall, are the sales. but over agents the recruiting and of more agent to recruits, up to of a licensed do

Slide Worksite Turning our Division. X in to

We continue of recovery our signs in see worksite business. to

started down improvement relax, to vaccination and more access the ago we rates had quarters. this period, Relative but increased to over year to restrictions quarter. were the face-to-face As steady workplaces reflects worksite during sales first recent sequential XX%,

were sales For only of worksite XX% month the March, year-over-year. down

reopen, As business are expect offer groups, nicely. to to capture our maintain Division return Ongoing target and services and growth progressing new pilots new and Worksite programs more sequential growth. to year-over-year workplaces we new

investing levels BXB and representatives. target strong to businesses employee been have in online existing continued also healthy Retention small our generation lead remain persistency. with of We of customers resources HR and

and to counts. future. momentum instrumental rebuilding slowed up results near Veteran WBD agents sales of we been fee X%. agents in solid agents the prove pandemic have during remain the will with retention driving steadily This critical largely the the While our quarter new revenue veteran restrictions, recent force solid. was due to recruiting workplace delivered our in of improving employee in agent the by the driven

employer success pipeline have has retained our benefit access and new have as on opportunities referral bases. all through DirectPath The have gaining clients. to to business groups We employees key sales have cross-sell new across early all The February DirectPath also we their WBD's started of the supersites. X. acquisition joined and grow seen We teams closed employee CNO, customer identified

We the are excited about market. services products the combination bring now and of to truly unique we can

we'll offerings, speak these We and integrate future quarters. more all expect of to this in about

return to X. enabled to in million Turning $XXX shareholders A quarter, share Slide including robust cash us first in $XXX buybacks. free the million to flow

to and excess use time. best Our unchanged. of remains highest strategy deploy capital XXX% its intend allocation to We over our capital

component first share strategy, investments While critical and also role. million play in quarter of during acquisition DirectPath. organic invested of important repurchases the inorganic a the form We $XX an our

Slide to X. Turning

Before I to Paul, turn I ESG an on provide update efforts. over our it

our earmarking conduct. policy and $XXX impact In inventory, of recent a social our emissions establishing responsible inclusion cnoinc.com next our our creating outlined in corporate DE&I million report, and available including an target, equity performing first executive including on program greenhouse reduction objectives we website, advancing XXXX Our will code vendor report the investment XXXX diversity, emissions and in gas responsibility investments, week. be programs, accomplishments, compensation our

with While And turn there our is left over much Paul. to doing that, to do, part. I'll remains committed CNO to it

Paul McDonough

and Gary, morning, good Thanks, everyone.

Turning to the financial highlights XX. on Slide

per period. The modestly investment significant share XX the earnings performance up reflect with Expenses Excluding equity operating COVID-related net items, capital management. insurance stable basis strong and year favorable on prior return year-over-year, our continued margins, compared line underlying and disciplined increased points in improved impacts, results expectations. were to X%,

XX% our favorable driven our in is of our particularly impact favorable and pre-pandemic across was continued Life Overall, long-term a health stable the business care. in generally the Insurance to mortality first offset line XX. Slide in primarily care This products. care margins remains quarter deferral up favorable was $XX elevated or partially generally products the COVID COVID margin $XX of impact Turning experience persistency in to due portfolio. unfavorable solid levels. of million impacting with by claims and product net product million The net otherwise across reflects impact by

products, gains income yield. interest was investments. which as extreme products COLI favorable decline translated notwithstanding related trading prior led flow in XX. offset Investment million to of liabilities significant severe through rates of decline Turning assets income. the and period in to to year investment to our flat in Slide Investment outperformance In where is alternative market favorable not prepayment declined a net the the net volatility the year-over-year, growth and allocated components the period, essentially income the unusually $XX allocated in to income was and variable by

X.XX% rates, these of our quarter offset quality rate by in money interest tightening was modest higher to spread new the higher in sequentially, invest credits Our given more reflecting decision for securities. flat

This investments our as of cash prepayments and assets with reflected average an new a XX elevated from reduced annuities comprised well of balance. billion Our as A- years. duration of of in proceeds rating higher level investment new an average $X.X

XX Our of detail the new investments presentation. on earnings are more summarized Pages XX in and

XXX of sequentially. Turning end, up in to maturity down were the up assets of To to quarter quality A-rated up our The alternatives. holdings, basis average XX% suitable a we holdings develop, allocation points points fixed with At This investment-grade portfolio balance is our rating $XX XX% investment-grade invested our BBB billion, XX% and A. single comprised modest our basis opportunities increase over Approximately extent time, of XXXX. Slide to with year-end allocation XXX rated year-over-year. and bias allocation may, from attractive recent an is XX. of

Slide Turning to XX.

of XXX% the cash this a to in holding million flow million of cash excess strong operating with or XX-month quarter on company continue quarter, operating income free We and basis. flow $XXX first generate or income $XXX of to the XXX% trailing

XX. targeted the capital down to end our quarter RBC This Turning end, was consolidated relative represents approximately ratio $XX range high of of Slide our to At XXX%, year-end. from slightly XXX% of to XXX%. excess million

liquidity liquidity relative to of million, Holdco $XXX excess maintained Holdco our target which early to levels conservative our in end in $XXX the the COVID-related million. we onset capital million a relative of at context capital of minimum have and pandemic Our of quarter the XXXX, represents intentionally posture target uncertainty. was $XXX Since liquidity

XX. Turning to Slide

of our base For our business, provide been adverse and pandemic year, running context to the impact and the the past scenarios on the uncertain its case outlook. in trajectory, we've

increasingly rates rates, scenarios, sales a year the all favorably economy as to death this infection expect case quarters. later continuation We be a to the case, both in the the although healthy adverse and United in appears we base the past the appears which States momentum herd run vaccination are COVID-XX immunity on trending solid our we've COVID unlikely increasingly In in seen U.S. rates footing. and to and continue of as assumes economy, X

will expectations. would favorable modest long COVID-related to There amount expected remains net pent-up for nature claims Examples due emphasize and potential our side on impact persist, care will implications during this how extent unfavorable that include COVID. the directional driven pandemic. We demand an in the uncertainty to on deferral expect long base product these mortality a how XXXX spike out. a insurance health the and and net are as impact margin balance of of the care of XXXX, demand I post-COVID health uncertainty modest of by morbidity and of case fair of pent-up play a in

were COVID Life the an about extent the pulled On impacts, the of deaths will side, remains by pandemic. uncertainty forward to and what persist mortality including endemic duration in there whether future the COVID state U.S. extent in and

remain to lower lower asset products both general, to a economic and to we the to in the reflective quality upside In shift interest allocated likely X% flat more in is with downside income yields, environment the investment expect in But rate actual relatively assets by as net revert offset will more current expect are We than up of allocation. of growth in investments X%. alternative certainly annualized mean to variable the given outlook. be return portfolio results near-term potential

be fee year modestly distribution and the as contribute. path design, we favorable of also direct the in grow Growth business. third-party our improve income benefit to We prior expect will and unit of earnings to economics that web the inclusion MA

that adverse certainly our financial suffer pandemic in our and expenses some expect economy current for excess U.S. which reported In Though while variants are we finally, this both continued total into levels, also continues out scenario balance excluding sit volatility and scenario, to our Gary. it be ineffective driving our the the shareholders year accordingly. modest COVID-related prior quarterly able to repurchase that of from our this be time. back that, we 'XX, of to protocols from or target where to prior in in assume past perspective maintain effective we liquidity liquidity And with to the new it These the news unlikely expense the that less base maintain The is over social we year the with our consistent this relaxed. as I'll COVID-related the we discipline, rule dividends good turn the levels, roughly for in case, uncertainty allowing year, emerge prior targeted to reflect compared resulting make first expenses of in for we decline, We efficiency the case, and for of and allocated the growth continues quarter for to in periods. the flat to operational investments. today, The amount gradually expect And still and capital higher continuing sum nonallocated markets levels with closer items target seems and XXXX over vaccines adverse distancing expect period expenses our capacity. our management-related reflect consistent year, a year, significant capital and cannot analysis the as and manage trends quarterly later and and share have capital to very trends the expense would agency to the year entirely. are reducing generally year, travel expected

Gary Bhojwani

Thank off you, very start a strong Paul. We're year. to this

our Our to quarter. to Consumer expect we distribution growth pre-pandemic performance, will in second vaccine to recovery and Worksite the largely economic returned our and return has continue Division momentum. year-over-year Division support growth to Accelerating

the and investment associates robust these our uncertainties defensively and continue sheet, and dedicated supported will still continue Group. successfully unprecedented of safe. remain interest navigate and ahead, other agents, serving risks and side. for portfolio healthy our and very While you positioned our to the Financial our stay balance to by through on flow strong lie generation. CNO we communities your through to customers both Please pandemic our and times, in We cash support committed Thank

We will Operator? now up it for open questions.

Operator

Partners. your question Instructions]. Humphrey first Lee [Operator comes with & Dowling And from

Humphrey Lee

understanding claims is reserve to that quantify IBNR in you first so, -- quarter is If My performance came from the related quarter? the the question strong My long-term benefit care your can experience. the in to the releases.

Paul McDonough

Humphrey, the for thanks question. Sure.

reduced claims to below in impact reserves. the claim $XX the COVID in mortality to releases in paid reserve million increase reduced due quarter. million well in $X And from favorable long-term claimants, about higher in COVID and then Due $XX new So about deaths. primarily of Reflects care normal benefit million expectations.

Humphrey Lee

Okay.

quarters, as So nursing that you defer level you're or over sitting care it through. come IBNR see starting you have decent incidents -- like -- a -- advantage and the you assume right sense several next people you're to additional been to of your coming feels defer reserve to the utilization through in for books reserves, as reserves see of taking not Do because continue still quarters? that booking the now? releases on by a full Could of IBNR have some the past of home. defer several And lower

Paul McDonough

less really IBNR our claimants it's about expectations. and building Humphrey, about continued more Yes, new reduced to normal the relative

Humphrey Lee

All guidance Okay. related second right. underwriting. My is question updated to the for

of if you in favorable bit impact in XXXX, your balance net of about I favorable you So mortality wondering a net was in product talked but unfavorable the little terms next can expectations half -- the by the morbidity of elaborate first lines. year. and

Paul McDonough

Sure.

So -- COVID unfavorable was we outlook we our X in COVID the the in COVID net X the first impact second the the changed utilization months the half, quarter be now alluded of of for XXXX refinement in had higher would the later, neutral. Humphrey, things months in we you reflective care. in we're what's of And to, deferral evolve net in conditions of that primarily than expecting anticipated. the as of care first of to our product where year. today, how as more half. a impact ago Unfavorable favorable return lead persistence health impact health the balance And a favorable the to from sit a a It's across view portfolio. will is also

care. more And see think Med we Supp, normal seeing above as across believe, claim due And we'll the return addition, so in already a health pent-up patterns expect about we're to portfolio, increase normal patterns. demand to in an that we we and product of some claim

a to and our play in longer take policies for health you'll the illness and sub see will an COVID to adverse dynamic, dynamic but out. that that that's due up products, have it we'll critical similar so And from impact

then So early impact next expect of in year, don't net sort care, in that end balance in care persist the the impact next favorable next normalizing deferral this of this In for the unfavorable claims modest of and through normalize sub will see a part of product. catch-up year on through an part expect opportunity year. of we COVID year we we the part health in this an and really of that middle the early of long-term year,

all is and by of it we timing of The play that other lot much. how emphasize, it, There's of will it as just thing we're really might would will the the I play this to view how this out, extent out, a giving a wrong. is Humphrey, directional. It's of of certainly question be how our but think uncertainty it

Operator

comes next Securities. B. Your Randy from question Riley Binner with

Randolph Binner

I wanted to ask regarding a buyback. couple

target favorable activity signals Or those that and of of kind triangulate earnings we a level? cash a of are with flow, with buyback improved we potential buyback the I the kind capital items. your And last good to commentary think So million. improving at target the through good business I quarters then seeing to And million. environment, RBC guess profile. $XXX with of an would X because XX well, kind $XXX business profile trying looking ratio the Slide mix? also, the revert? claim statutory in on from handles at cash free has the kind the Slide would in are, then assume questions go I is more letting is towards So of flow been the And guess, of XX about of hear excess mean, couple of go I into kind X just

Paul McDonough

Thanks for the question.

part way, and the other we'll we've the are in impacts COVID unwind are temporary, Those favorable right? quarter think, the certainly, next of noted, we in year. early as the go So

just already as project have you that for certainly, we've really speaking, to you forward. So made. reiterating Generally, points adjust

hasn't We liquidity diminished, Holdco maintained that, posture relatively has We to context away the RBC in our uncertainty have COVID. relative the target that gone of related entirely. intentionally but a to conservative and minimum it uncertainty think

conservative. it that we to relatively continue base expect as diminish, in be does case. But will our that we So will uncertainty and

to closer over will, We aggressive targets. less get conservative, more be and our time, gradually

$XXX So million on $XXX the inside liquidity. on closer million the Holdco of to RBC

Randolph Binner

follow-up, I an of profile an mean I the And helpful. guess earnings earnings because mean kind the better care that's long-term get helpful Yes, is should less becoming Because actuarial risky from I part. the from there. every perspective, statutory the on you COVID's year. just been company

little profile winding business of kind or adding for a would claims, we understanding expect looking given more and off for earnings out better year long you're more of So focused better of the kind underwriting margins fee -- favorable normalized has unusually a and I wouldn't care? X, normalize bit that's of the statutory kind term company or X

Paul McDonough

business there's and Randy, opportunity Certainly, and to grow directionally, an our earnings, both our grow GAAP think we that SASB.

context, you. So with I would in that yes, agree

Operator

KBW. Your next Ryan question comes from with Krueger

Ryan Krueger

think I was resulting sales, still kind on you pandemic they extent from are from the in first differently just was I think level doing give you that guess, perspective be to benefiting you can highest question versus, the the term? began. pandemic of could changes hoping some the were awareness I longer things sales guess My Life Life since on sustained at you're which meaningfully

Gary Bhojwani

the Ryan, Yes. There's for Thanks no several been is question awareness. for the last consumer increased that this there's quarters, question. Gary.

about look true. at quantify a I It's few So very would that. that think to And when I definitely question, that's difficult things.

question. First, did No it definitely benefit.

robust even correctly either sales before Second, showing string the of the serves growth. I had growth, before direct-to-consumer quite quarters of or pandemic, were if X memory remember, life believe we a please pandemic. we consecutive X

direct-to-consumer the we closer really we agents. frankly lift much January expectations. trajectory brought efforts Penn I and I the bankers the has telesales our went from life And that So separate pandemic. business that announced all it's to to think X and emphasize, from in we don't very companies our field things of exceeded X Colonial even on want our XXXX, And together closer where the with to efforts much X really COVID-related. were transformation, strong Then a brought our before divisions, of we

sharing entities data I we're points, benefiting that. X X from together and bringing really support think, that that those closer leads. I think

quarter, took over a either agents That's XX% meaning our this change remember First, you, a non-face-to-face or telesales in past of way. our setting, big, a sales, life us. what and big health but have or for online place virtual Zoom that sales or face-to-face in agents

we second this the but historically The Life field and if and by specifically, to were would ago recall agents. was out I of life sales number agents, called point that emphasize, virtually. XX% X the health I X. face-to-face by can't completed XX% years bankers completed And so

So think demand profound a there's shift and and on. happening both how in consumer so terms of decisions purchase they about

the But our break systems well reorganization, how as As very all a online efforts of to of and due is I of do. very much significant our our think difficult our just proficiency. is that, is there's that proficiency our agents and to to is portion growing down COVID -- that

Ryan Krueger

like method? other on excess Or it there then the use potential will are over primary that M&A down share add And target still be that and the bringing you anticipate repurchase time? capital bolt-on you'd of is, to towards your do capabilities

Gary Bhojwani

So wish this I every thank I you was I for surprised. know could say call. we question get in the We question.

line you Those bolt-on thank this Indeed, exclusive. repurchase QX, acquisitions with mutually past slight we both. and not did share So are remains that. for look at unchanged quarter. My party twist X

value CNO is of beyond of as about the are is good we we well capital. Financial price the think of share intrinsic today. a use There's know that. believe continue question I share repurchases to biased, that no where We but

book mindful thinking. company of what the believe GAAP course, impacts influences price We're, more really is share shares the our but of we is the showing. worth than of value, that So above buying

now, decisions. about we been make XX everybody, as reminder those bought reinsurance that the for was only for I've those stock LTC So in back quarter The XX prepping didn't CEO of XX quarters we when were transaction. quarters. we I think And we we when

I judge actions. So us our by to again, you ask

our of over put shareholders want and and We best highest its to continue time. that be mindful to capital what use

options of that many So to it consider. one be the will we continue

Operator

Erik Bass comes question Research. with from next Your Autonomous

Erik Bass

additional has on appreciate in of in color lower benefits care I it's Think a may trend to or health home. kind as preference your follow-up opposed forward. being happen, to more one outlook that for the And home on just nursing going claims another of for kind LTC. health utilization, addition of a happened

So just as care to people more does wondering cost elect your homes? health opposed from that how affect nursing of your perspective, home claim if option

Gary Bhojwani

Paul. Thank Gary. Go I'm go sorry, you. ahead. ahead,

Paul McDonough

just nearly out thinking all policies care of loud, home most Erik, our coverage a policies benefit. -- our have honestly, of as health

I want question -- as dynamics, opposed a towards if clarify a is to benefit Your that COVID and of of as question. utilization more there's post-COVID there skew heavy result facilities. just to the

Erik Bass

is Exactly. I versus one guess, it more other? terms providing favorable? in the is one there elect if of care your of So cost the a difference people option

Paul McDonough

Yes. question. head It's an interesting Gary, you're your shaking now.

Gary Bhojwani

Yes. A couple of things I'd remind you of.

X that would last benefit a couple we guess a more going hundred go bucks at several like home modest are material financial much they day. or It's for of is very in policies I X against the result would a that years, policies quite shift. that daily to think not modest. say, expect is not simple. reason to And that particularly have is least, that sold the be years those materially benefit whether of over $XXX to we've last a a impact unlimited health where of you're the because number facility see The we to benefit different different talking policies day, really the have a care, speaking, answer don't to that. would the are When they generally I nature. I Remember see about know, the of, claims a I that $XXX not into is

claims experience expect I out paid to that see differ that dollars wouldn't for materially. So reason, terms in of

be sliced but -- would haven't could we at haven't it looked least estimate. up way, I wrong, at that I or my be that Now

Erik Bass

then free perspective. cash flow. on Randy's one helpful That's on question it. Got And maybe follow-up

think I certainly I sales is grow from here. to other your that And the dynamic are recovering. you'd them expect think

on shift life about You've cash free business should How and that of we strain impact think level towards annuity products. seen new more the and flow? a

Paul McDonough

you certainly, that So lots call cash Erik, changes pieces on dynamic. it, a our number cash flow. and of the you to on reduces free flow. change put know, if creates of generate free -- but equation. healthy obviously time. capital, There's wouldn't moving I to a it levels continue We'll it will, It will as over directionally,

Erik Bass

of I perspective, don't I to disclosed to sort level it. you've know some capital you new year? sales approximate if Got last mean give allocated of the the

Paul McDonough

the I off Yes, head. we haven't. a And top of my don't number have

Operator

question Sandler. next your comes John And Instructions]. [Operator from with Barnidge Piper

John Barnidge

the I'm rates about once you conversion those just marketing in the last effectiveness several trying X sense the Can spend in to the improved brought all divisions? you better of get of together of directionality brands a talk years?

Gary Bhojwani

the closure rates, to about? are what asking How make just talking understand question, basically about is we? So effective you're that sure I you're sales

John Barnidge

of of Because channel Exactly. the growing shut previously. DTC over having more number Can the trajectory talk the the you clearly and benefits off some appears about into channels last years? it maybe you're traditional

Gary Bhojwani

Yes.

So a to couple of responses that.

XXXX. all, first was So January of move in of initiated that

So slowed That some relatively still in recent. down in us respects. because is relative COVID terms, move particularly

the that as It's So first a make. point trend. relatively I I don't want multiyear to overstate new. That's

to that grow And our way closure years. the that The agents. proxy best to several our that do I'd productivity or we is track rates think best and seen for about second point the of probably over make, continue we've materially the

improve. way do our close about really we think And to feel to continue the probably like it. that's best rates So

advertising, highly the final when business, to and and our make, seen I've advertise. XX choose and I'd know that. DXC we that tell in is never that following predictable. to business first what We point years, sensitive I or insurance how are a X can third to in sales spend in remember within the highly, going we're it's with X% be you my so over I've for business quarter so to when going frankly, been The

do buying produce And us, way. an in sure rates bounce you around that buy for so. exercise so why when DXC, we're and expenses ad in these that's favorable we And little can really in in dialing we believe a particular, the what a it bit is we most cost-effective will the at see make yield advertising

yield, and And we base the premium going on on dial ratchet annual some the We productivity, strongly. some and it, down time long what in on But in yield that allow -- the that yields. depending NAP or we'll it costs And cost up as is marketing the escalate that. for what's as we quarters, really quite what advertising at on.

both think of those productivity, very on that trend both metric MC getting a the we our our well time of better. numbers I as NAP which a proprietary So disclose, metrics, regard we MC nice those the quite agent we've don't NAP, our of over as seen some as

John Barnidge

fantastic. That's follow-up... my then Okay. And

Gary Bhojwani

expect, worksite. similar to Sorry, we and also John, insurance that. thing in the about I we business, offerings. worksite that want seen integrate a and add one was comments I some made mistake. We've I should up, have really open as to consumer, workplaces offerings, our focused on was trends the and

will at the expect also we offerings National the and have that, the close the technology increase service that benefits path and We offerings from web direct rates. PMA, Washington productivity from and

the of signs of saw growing, that happen, quarters front we X or business, that, we're PMA, and want we had before consecutive X that, at worksite believe, to to so Now been expect for early pre-COVID. I COVID. Recall overstate I but our that that don't at end particularly

get So rates we to and that productivity levels. those expect those close to back pre-COVID

for sorry interrupting, John. So

I question, believe. another had You

Paul McDonough

one I'd point. Paul. more It's data John, offer

sense annuity degree which a down for XX.X%. NAP, the agent in improved. consider consumer you If that slightly producing gives up to health year-over-year. premium And productivity and The collected up X.X% has you Life count and

John Barnidge

up good registered count, then And X%. That's agent follow-up a really point. the

agent, made or you maybe that referrals talk about finding from follow-through that how then of dimension within kind quicker? going is to as and going a fall registered out by potential that like and Can -- them. towards get timing, long recruitment the a doing be you you like think you're takes? more opposed when moving You more to referrals, do And that, comment through

Gary Bhojwani

years that X become our first agents we join insurance be to quickly. X been would in the if business. When on and to they if too want We don't force, agents didn't insurance registered hadn't field want and particularly converting the to in it in if started or really concerned quicker. we I insurance insurance spend they're that strictly get them new or understand come folks insurance, grow up to

premium XX we of what important I is depends the -- productivity. they're rule interested. now in more there's investment When Life assets caliber think increases to We there's and to agents thumb us, I But and So to important. a When decide the buy that's that's want that we've become fundamentally it points want they is changed certainly brand the And consumer. we than to more the with and of as if is paying for that But the get see X XX it with on they good expense. and them move things. changes relationship. and/or way the thought annuity, science, opposed about if experience now entrust recruit an it the an or they've these their policy point, months, to. more relationship art a between much from X frankly, the stop us licenses, think they an health an somewhere them really can are One they -- a expense. And it, those

first So we that. the much reason very like that's

us stream really a insurance enables insurance is are it to this career agent, that a yet career who but having up the also to who versus an That's caliber for purely being another make and purely second changes avenue The and of agents. people say path can't income out in agent they agents registered opens make better not to and wants of it. recruit of stay a business out someone

of is a different So of we not which number for reasons, the it productivity. do least

Operator

with Humphrey Dowling next Our comes & Lee Partners. from question

Humphrey Lee

is want in on I My that long-term I benefits. to for make the first question your just comment Gary. sure right heard care daily

You which seems said $XXX per and to $XXX me. day, high

just sure mishear make didn't you. I want to I So

Gary Bhojwani

lower environment. know Recall side high you that benefit, we're sorry, the we I'm waiting slightly the I average. I'm side the is believe Or to the sell of my colleague, policy a is at average from that's that -- even the on what, virtual average in policy looking probably I looking saw. think colleagues. Yes, than that we that's if a closer I'm high for $XXX short-term my potentially correct. the $XXX.

point I you offered. think nature what of long-term to this Thank policy of clarifying Humphrey. industry and they terms, misstated our consumer My relative what historically simply was they that. the middle-market care I the So the that can we benefit for in quite buy is, that has because for, offer that, modest overall what afford and

correct. is and it works what to I for short-term And X around earlier Our a nature. that $XXX less resolved number, care policy, the The sell day. thank is going But the is X I you're in that care was clarifying, claims way out period. point out they typically total whether year that health know home are benefit are much really still you don't is. was, the sale that trying the we or of $XX,XXX a and to benefit And X-year be is Humphrey, average around a they spread policies within average work per believe over total years, to I than make

less. average think closer I $XXX our is or to

Humphrey Lee

And for talked think get biggest based on regarding then opportunistically follow-up second where about you bang I it. will expenses can Okay. is advertising, the my buck. you the the for you doing think be you Got

that I little seasonality on since and recent used expenses have so just of changed. long to have quarters. quarter this advertising But kind clearly So much you third the think -- first about quarter but higher thinking moved expense. compared for a to ads away for quarter, advertising from ago, TV have may relying And you were the

first like think shouldn't quarter, in looking We how seasonality third think quarter we about the would should higher forward? expenses just so -- back? advertising should the come like -- looking quarter. Or like we the going So at expenses of the

Gary Bhojwani

always factors. this be and X by business, product to will going to There it's line. fair the vary some one, bit a seasonality Number

QX, you if Medicare about, annual all of the period for So think example, policies, as the enrollment an QX.

myhealthplan.com So get there. our out those as products, some as proficient build offering more online, we at selling seasonality would you we expect and

terms that advertising. thing it drives is what's of second in The happening other

event significant some up So or drive driving running rates, as an it. election if example, other that's a going happening presidential that's there's advertising to

X that seasonality relevant are beyond pure are So would factors just we talk the about. those that

Humphrey Lee

we so quarter the of away quarter, But should way Okay. from correct? old thinking first and third just stay

Gary Bhojwani

terms on to one. that haven't Paul, I of in to trended the few data lately look over how looked I'm last going you it's at that years.

Paul McDonough

Yes.

it was quarter then in first the down example, last highest So and trended thereafter. for year,

quarter that spend. an dynamic year, highest XX so and last is ad you tailwinds had higher it TV that a year, election, was the Not generally last XX have we quarter speaking, bit. bit first momentum. year, surprising But the just opportunity have, given given changes we this course, our Of a the the the versus of

current slightly expect year I last given think directionally, and just Humphrey, spend should you by this where the than quarter we higher dynamics. are year, again,

Operator

further now over no to the turn conference back for are closing remarks. questions. will there And Jennifer I

Jennifer Childe

you with Thank to you, again forward morning, us speaking joining look and everyone, for we this soon.

Operator

concludes This today's conference call.

You may now disconnect.

CNO Financial (CNO) 2 May 212021 Q1 Earnings call transcript