CNO - Earnings call transcript Q1 2022 | CNO Financial Group, Inc.

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Operator

Good day and thank you for standing by and welcome to the CNO Financial Group, first quarter 2022 earnings results. At this time all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jennifer Childe, Vice President of Investor Relations and Sustainability. ahead. go Please

Jennifer Childe

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

available presentation, we leaders have period. Q&A other also the the Following business will for

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

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

We file to Xth. it before and post May on our expect Form on or our website XX-Q

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

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

Gary Bhojwani

everyone. Good Jennifer. morning, thank And you us. you Thank joining for

address if didn't remiss Before be the conflict we in get I started, I ongoing Ukraine. would

to impacted this by Our be people everyone and senseless thoughts with and prayers of continue Ukraine war.

sales strategic improvements and our and initiatives. quarter in our direct-to-consumer significant continued our business advancing pleased growth, agent four I'm within first with Slide to productivity. our particularly Turning We reported solid generated progress performance.

labor on focus offset productivity market. to to tight the the continued strategy to recruiting headwinds due long-standing helped Our agent

were compared experienced another factors, down carried We quarter, the XX% few share, to significant which will by we XX% to Operating levels. a capital portion items $X.XX earnings healthy. quite capital discuss increased and excluding the significant were margins the into which returned targeted the Paul latter over various in Normalizing period. share in in per while ending recruiting reducing our for has of or at addition, quarter traction the count moments, April. our prior In quarter, earnings shareholders

prior sales, Slide to momentum our to collected Total Four Turning towards compared metrics was from growth quarter. somewhat This the the the X% away X% continuing up XXXX lower -pandemic in life NAP premiums Total our shift a for first and the pre of remains consumers quarter down five metrics strong, growth production of scorecard. up were health Medicare most to and offset X% X% over sales was by Life five down for exceed by were levels. Health quarter. Medicare continued Advantage for Supplement year. quarter, up which the were reflecting products. scorecard

paid as We often slide give are sum. whole purposes a and providing that a purchased premium the business. within lump offer for state into are policies life single additional life detail our this distinctions to are We planning insight on

While these to sales, of around policies tend life typically X% they comprise be larger.

of XXXX. small sales the a in in of reported spike these even saw We to So a first the can quarter of in collected first cause volatility premiums. move quarter policies as our XXXX compared

Annuity worksite continued growth million, in growth $XX Client XX% increase. adviser, collected quarter, XX% reflecting to quarter business. the for significant traditional premiums products, investment our billion. year-over-year Fee to and our policies, registered of consecutive for XX% distribution assets fee in of were our up advisory third-party our expansion premiums was revenue the sixth broker-dealer up and were life grew in $X.X and brokerage single-premium Excluding collected X.X%. up

continued by were generated in Consumer up Slide XX% were in quarter, our strong direct-to-consumer that were on sales This benefit on top the sales to sales period. growth the Life X. of opportunistic direct-to-consumer for policies. and field Direct-to-consumer exclusive agents partnerships. XX% Division sales. recruitment year-ago Turning has driven who channel by X% from Life up higher distribution to of proportion the third-party campaigns, direct of enhanced investments XX% market in sell sales the generated spend, mail through applications, first to slowed year were advertising as labor self-directed our down a tend tight agents life continues

sales with agent care sales insurance supplemental sold to health life strong and supplement. levels by were expect as Health offset continued our X% recruiting rebound agent in We medicare normalize. long-term down weakness

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

customers Medicare to and continue to well Advantage to offerings we Supplement We needs invest our positioned and meet in Medicare our preferences. ensure remain both

we As product a to this Supplement launch current year, later new a reminder, well aligns with consumer that plan Medicare preferences.

our in our with advisory which up of accounts. Medicare Annuity growing sales more local heels than Third-party $X.X the account prior in attribute our values, our first strength the an MyHealthPolicy.com recent by we premiums can agents fundamentally strategy the to Advantage XX% strategies nature, were on follows digital Bankers that investment insurance time. XX% up year over strong compared fewer personal and likely now tele new transactional and existing with the we Combined base. all productivity agent products quarter, of were platform, in rose Agent in new agent our levels recruiting approaches year-over-year capabilities is shifted years, more versus our policy agents, Advantage to cohorts Client longer-lasting the first succeed customer in annuity which relationships. new to in intentionally This stay in relationship have Medicare quantity. billion deeper products appoint remains We levels. which heavily historical the some boost to and productivity brokerage typically support agent on high-touch over blends create annuity and $XX quality with assets the third-party our assets In are shifted driven do fourth Life XX% up health in collected X%. the more grew be to we the quarter proactively for sales us size the clients. and billion Therefore, Unlike our our increase We quarter, with focus targeted increase customer of emphasizing XX%. our of base. and we online model, to recruit average of has agents. manage recruiting agent’s the

is addition, premiums In as This especially agents these policy. higher typically is retention for agent important generate veteran stable.

declined recruited continue That fewer of has always quarter, agent April. over first over course the recruiting said, during environment us first-year as to Of recruit agents. improved to momentum carried need and we XX% the The we quarter, impact and agents. that labor total the producing market into count tight course, new the steadily our

cautiously our that are have We challenges bottomed, recruiting although optimistic unclear. remains pace the improvement of

our Slide Worksite to Division and X performance. Turning

the to the new strategy see our this business despite reach expansion sales dormant first COVID enrollment vertical hybrid up focus reflecting they of rolled we improvement will tool out We our the quarter, steady Worksite continue and employees the accounts. in wherever our enable were agents recent that our sales to in career on prolonged allow video employee X% communication quarter, disruption. engagement our campaigns language both also first to stable. customers of in persistency employee groups to functionality then enrollment setting the are be participation. increase choice. And to video existing sessions. strong their within the that designed face-to-face of offers these to employees and sessions appointment facilitate provides It schedule and Retention are. employer either or It employer remains In continues

improve in continue pace to the to worksite subside. disruptions Covid, the recovery of expect We as quarters coming

of a of Consumer quarter year-over-year, agent from producing agent Our our course ongoing saw program. Division, result agent to count over as particularly field conditions. recruiting referral down was Similar steadily the market labor largely XX% improving we the our

higher We all first have agent year groups, significantly productivity including also agents. seen across

The our among the indicate Assets was for retention and size XX% cross is productivity integration up well levels and of administration business agents recent veteran of within of continue fee-based organic client quarter, progressing The revenue quarters, which average we generate to our businesses growth. nearly benefits grew sales success. XX%. due worksite was stable. our in Fee to XX% remained

We continue to growth counts. healthy month our see per per employee in

the $XXX in shareholders million X, Slide we've $XXX in including quarter, to buybacks. Turning returned first share million to

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

also repurchases form share While an important turn strategy, investments And organic play critical role. it with a that, I'll inorganic and component Paul. of our to over

Paul McDonough

everyone. Thanks, morning, Gary. And good

six of pressures annuities is expense sale market current reflects to returned This down quarter expense policies. growth we the impacted rate on year-over-year. highlights insurance XXXX, reflecting the which earnings. period the This offset quarter per Medicare in X. were for was profitable Turning Advantage efficiency the a consistent excluding of and disciplined higher four benefited which not up was but that allocated our the expense of products is the not and life quarters alternatives financial $XX first impacts Fee significant recent with versus more in year-over-year, and performance of quarter margin insurance sum was operating February. which COVID-related Number from level - to impacts by million, economic to items, first as management. X. excluding deferrable $XX.X periods. million, expenses to our of non a Annuity significant $X results, than solid X, X. elevated from XX% targeted share largely net generated margin the The down $X.XX $X things. and Results expectation. coupled we modestly is improvement - to XX% earnings variable Reduced advertising in third-party provided items capital long-term underlying both by favorable of to volatility, year back this continued which Number up X. mind the run non in with million. and deferrable, investment is margin quarter, the from income investments. products, allocated generates in think line last Moderating we Keep operating Largely with year-over-year, more outlook yield on in million of sales, Slide

XXX rate up shares XX.X%, state weighted a million repurchases, basis points $XXX We capital was on share Illinois reducing by XX%. by deployed average to taxes. outstanding tax of effective change in income driven Our excess

March months significant equity XX operating return XX.X% was ending the XX.X% XXXX, or excluding For items. on XX,

million, in across on the our was on items, of the product in increase XX, $X down of significant our quarter the the advertising impacts prior-year products referenced as all total about excluding $XX margin expense to the market business. Turning insurance FIA XX% to stable reflecting the Adjusting COVID slide, for first Slide or as and up period. million was non-deferred dynamics compared margins, underlying the margin, impacts

reflecting million, were turnover product our $X items, the in in takes puts there on a usual, annuity to to allocated pronounced these assets. products some decline and more margin yield assets lines for due compared other by the invested As to down our was greater the these Adjusting as line. product about

will moderate We over expect time. this

Our these this that the is our health Supp of real Health was and margin, adjusting about but do remainder We on rather refinement a underlying, Med The million for to million; $X of believe COVID $X on to the for in LTC this in block. is the the is not benefit on impact a increases LTC. in method due impact rate Supp. up due estimating items growth

down our experience. current again, period, reflecting some favorable items, was these for but adjusting Finally, less the million, $X in within life variation normal persistency margin, of about

as to allocated and the net in income investment was was a products XX, flat offset impact decline from by assets Slide the liabilities growth essentially yield. to related in Turning

where second income solid moderated of flow portfolio. Our within in conditions. rate million yields reflecting not components decreased through the The higher but to is to our $XX was prevailing points up allocated X.XX% would based products or basis continued on be and bias. in later of XX% higher expect investment the our market for six income performance was quarter quarter rate new quarter, variable we which and money sequentially, higher the still Investment up-quality reflecting it investment the alternative

an with an average of investments new of average A-minus comprised at XX.X years. $XXX rating million assets Our of duration

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

year-over-year. single B approximately XX, reflecting quarter-end allocation XX% the is to year-over-year, quarter-end, securities to grade, average allocation rating fixed points X% of our is basis our invested single up-in-quality up at Turning points Slide below which basis basis assets a with triple points The XXX ten points and the maturity rated portfolio investment an or $XX XXX basis while bias. at down at XX totaled year-over-year, investment-grade higher sequentially. fixed remaining portfolio year-end The down X% of is income rated rated was was as, year-over-year of our billion up

Turning to the in and level the quarter driven stat of the new declined the volatility market was incremental of out program. capital strong companies by XX, FABN though year-over-year, the flow conversion quarter, impact free by the in on Slide of absolute operating cash dividends largely capital absorbed

Turning approximately RBC XX to consolidated $XX our ratio Slide capital. to XX, was at of our quarter target points end below equates XXX%, of which RBC million XXX%,

company million, $XXX liquidity is million which minimum our $XXX holding Holdco was liquidity $XX above target. Our million

together, essentially markets the and XXX% Over with manage liquidity. in to back $XXX Taken stabilize, levels. million line look to Holdco we're individual as we target capital will consolidated our targets, time RBC,

continued still has be strong cash changed most Slide a much the given Recognizing to outlook since in our quarter. sales not momentum peer Turning expect continued relative and for We outlook shared XX, flow flow in group. pressured year the cash conversion may free we to respects, February. positive in our

and we conditions. to respond absorbed As market adverse

respect Our income have impacts, income, expectations and not materially. earnings directional expenses with investment COVID to changed fee

our hand, in the did On the year other first not adversely volatility impacted beginning results of at the the the anticipate market that quarter. we

together, of to to over rates volatility trend several for capacity managing reverse. In markets persist. last these as reduces If interest quarter years. Higher our they of of on are would yield we beginning year circumstances to relative long repurchase now up. capital portfolio, up, levels equity the adverse Holdco and rates date, improve the closer the our other rates, run, taken equity the money change persist, business they reverse those forward. have interest conditions new also down, reversing impacts also to is as our the share the target Specifically, the good would course, as overall at If those market that going in at are levels, time opposed the liquidity which with higher impacts and second

increase tax use Illinois limit XXXX, significantly XXXX this will law Illinois rate driven triggering the in states. retaliatory was Finally, an that taxes by in quarter expect in in tax our state income effective NOLs other we and our of

for the the But the are expect to working strategies on being, mitigate to rate We impact. time higher you persist. should

our on in I as Before back XX, standard. the brief to to stand we I'd turn turning improvement ASCXXX, targeted like Gary, adopting a where Slide now update known it with to provide progress also long-duration

profits, no a reminder, and the impact impact accounting when the lifetime no impact capital does the accounting modify as will regulators, on statutory emerge required or time. have First, change it no profits GAAP over by flows, on although cash on will

discount the be to with of result rate the on matched the $X.X the range a transition the discount the new future to equivalent approximately yield liabilities. determine A update benefits resulting at requirement expect decrease impact policy duration $X.X balanced liability to to to the generally we for date January most zero to a method, that retrospective used to X, value to in the is assumption approximating significant modified the a is single impact in We rate a upon XXXX, of estimate transition of currently in the date. the AOCI our million transition billion, Based likely rate

negative to We older certain be decrease also margin long-term million due to our to the positive. primarily transition the impact a cohorts of having in range retained $XXX that margins. care million earnings policies overall will long-term block on estimate approximately on care $XXX date continues be of The

a carrying income on at lifetime index date Uncertain retained In recently addition, our small annuities value. earnings estimate of of fixed riders. our impact fair impact includes the transition issued

and Gary. In of provide quantitative the I'll to that, standard to the We toward to have more or able third January significant to And second back turn be it begin impacts. X, the XXXX made expect adoption progress quarter. with over

Gary Bhojwani

Thanks, Paul.

We against the in we've are made the with pleased strategic quarter progress performance our our and priorities.

remain power the We of thank deliver you ahead. environment global is CNO the the strategy cash believe of in robust. stakeholders Group. interest earnings our and confident all well-positioned Financial flow in to CNO and of remain value remains and generating in for years significant We our company support to While uncertain, your long-term the

for now We up will questions. it open Operator.

Operator

compile Instructions]. standby we Thank Q&A while Please roster. you, sir. the [Operator

Your KBW. Krueger of Ryan comes first line from question the from

open. Your line is

Ryan Krueger

thanks. was, detail first more drivers Hi, bit RBC you little Good a ratio on through question of My could morning. in the quarter. key reduce the the go some that

Paul McDonough

Sure. Good morning, Paul. Ryan. It's

project dividends the in the three In process $XX quarter, out XXX of order really we quarter, mid we what the to quarter, have just current XXX. million the context plan quarter where another where XXX. by every So primary expect projected hindsight, the target we on out mid out some for to end million conditions. mid in a to of OpCos our reduced through then end at this we of actually quarter, we by of There quarter. context, In the OpCos, the versus dividends solving go $XX and them provide actuals then we about we instance, reduced of should versus drivers sort are

the was the quarter. in two XXX days was of that first S&P The the index down last in fact about couple points the

thing. between options. the equities the the using the that value fixed the reserve carbon the reserve, that first of fair value index market So the value have When the and impact and than of coal liabilities markets the carbon down assets equity significantly, on was the the of [Indiscernible] annuities, decreases methodology, increased dynamic are more

mortality was is anticipated mid very The then thing a unique than And quarter. was circumstance. elevated life had COVID the we third really that second -- more thing a bit

of and value NAICX, to bonds -tax. point quarter really at impact with were market much wouldn't capital immaterial about mark and in bonds had Russian a about the The capital the a RBC. end market that We the have value at on coming. much On adverse we with thought those mark-to-market on million downgraded it's million portfolio. also the in impact, of downgrade combination as million. an marked RBC. a energy which $XX margin of seen Those attracts, the But $XX have combination, to the downgrade you meaningful four know, In the had pre blush, par charge. higher impact first we step have again, the And $XX context investment of the the hindsight, to six company par we should of overall an the has

Ryan Krueger

helpful. was free capacity first? I That share follow-up from repurchase thinking here RBC really hold backup like then dividends are to And guess, some you. is, would Thank ratio you how forward? you you all I or cash flow generation you Buybacks the expect feel return to -- between guess, about -- build Do would back you can going and

Paul McDonough

-- So capital. we're with capacity, diminished capital target excess at respect sitting certainly not we're the as we capital the on not to now that last holding without quarters. is done have several capacity given a excess We're for

capacity. So free as and last the we've first and and The impacts, absolute cash also itself several of in for in flow quarter, that saw quarters alternative for earnings are repurchase that reduces levels levels as there cash we capacity. outlooks free earnings of COVID indicated reduces our the investment favorable returns. by flow, moderating in and the moderating given share that If

margin capital. that deployed Free re-purchase changed will Cash and Flow about be uses Beyond the we of that, think on share haven't alternative also we deploying Ryan, how consider we really

Ryan Krueger

you. Thank Got it.

Operator

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

line is Your open.

Erik Bass

you. Hi. Thank

was that be Ryan's XX think going to First do around rate there a we free Recognizing cash quarter. can run questions, about going view as reasonable on as think this forward? about to you think forward, million it volatility, flow I follow-up just

Paul McDonough

fair sort to flows between There's know a the I just it's anything Erik. Holdco. a know, Yes. pieces rate. fixed run so free I mean, morning, you there's and I at statutory as volatility. rate. amount operating reasonable don't run a company wouldn't Inter-company cash many the flow of very as basis. the a that OpCo level represent determine moving by nature Good if of cash its on want

Erik Bass

were disclosure the at the value Got under been provide XQXX, of down then, that we interest forward any if gave. but the you from higher And transition you it. guess it sensitivity will affect liability rates, the LDTI, end wondering have the to I just reduced. come you rates relative I date if was LDTI carrying balance portfolio. due I imagine movements liability your of investment will lot to was appreciate I a roll the in how where to value the your changes to have on AOCI can has in also

sense you what would be impacts point? those offset balance of So this positive to expect the any at or or have negative AOCI

Paul McDonough

Yes.

the remains our balance as plus don't have sense or the of with that through we a So would I balance forward for from in would this better end sensitivity conceptually, AOCI a much minus. say sheet the we roll work will directionally, zero reasonable expect I to year. progress. around some range XX/XX/XX That be

in spread specific the LDTI, with qualities main while has Number more will prescribed not know, the two portfolio. they'll aligned time and part all not tandem credit LDTI; and certainly discount liability and you asset consistently, of rate blocks our not one, all two, move under reasons. LDTI really As the are of assets number for perfectly liabilities move the under

Erik Bass

you. Thank it. Got

And tax it to sorry, sustain to you and I the the rate on I rate, more if just in could think said sneak higher 'XX. in 'XX expect one

as Just is or is impact? just impact this taxes was GAAP wondering, cash an a well have does a on -- it it cash

Paul McDonough

the strategies in what 'XX. the if that is rate hold mitigated potential actually Its declared companies cash you with identify in tax and We should effective that strategy tax X, Illinois in X. upside think that assume outlook in Knowles being, that we're provided that offset and I credits But the and we 'XX, 'XX, that some we that 'XX is are use had and working we taxes. The driver time not for that Illinois on and will is could effective.

Erik Bass

you. Thank it. Got

Operator

comes Jefferies. line from the question from Bergman Dan next of Your

line is open. Your

Daniel Bergman

more mostly in a I like direct we on any just I'll wanted I is if somewhat seeing a from declined see color Should which any vintages quarter. in of recent life then morning. insurance Good little to give sounded due first or trends again, the guess think or to you elevated persistency, the first are Thanks. particular policy? persistency pattern So versus as persistency agents. And in you that just periods normalization in COVID? concentrated in channels

Paul McDonough

Bergman. a was Dan it the as bit think morning, bit elevated period, It's It Perhaps prior the Good We of of current lower. but period. mostly variation. normalization. within in a a long-term range trend in the normal

expectation it's to think as remains tuned our stayed that experience. how a in that range I based but evolves, on is it normal historical

Daniel Bergman

you Anymore rationale, week. we'll helpful. capital and Great, just be wanted or thanks. your the strategic if around to see investing much any minority portfolio with the very detail could last I amount the would the provide any them be color you interest that the how acquisition levels announced in there's of on impact Capital paid you And separately, around Rialto more then

Paul McDonough

was I'll here defer Eric we're the with But or it he got color. more you strategies. $XX in the we us deploy Eric, We've and million terms various of additional Sure. so $XXX amount to paid, Johnson some to to in and can provide intending around million color. the provide

Eric R. Johnson

has will overtime. good generate underweight very have that rate over a estate, be assets it's $XXX capital of minority that heavy think record North in management of And to strategies stream. a and very the is our loans, interest the million about a diversified, capital to allocate a through has are portfolios of opportunity the a going period Rialto nice good In They billion to Rialto of long regard Capital we're for weather morning some it's really for invest good our a structure good two-thirds adequate commercial to and regarded it, take should should will which chance such company marketplace, capital generate think happy that be increasing should been and they're efficiency sense, good cash strong well be, required. to risk the pretty for and long that it the investment in It's capital corporate cash-generating good good returns Rialto us, for interest think pro lot fixed steady think should has, Yeah, bespoke the term, We a I or Paul cash income. and that governance, to under all protections our all and to that as everybody. that, the are mentioned track we that partner in and intellectual very, $XX as our a time. returns real a generate will efficient, of to probably in strong targeted also opportunities well. exposure a of vehicle, have it that income while half some And we're time. us cyclical. in I Paul floating level company, of relative produce the a company strategy.

for excited of it, doing So, good with very passage about to forward time, us. it the really things and look

Daniel Bergman

so Thanks much. it. Got

Operator

John Your Barnidge next question from comes from the of Piper line Sandler.

open. is line Your

John Barnidge

stubbornness care back. you to why on back? experience just Thank you. don't Long-term hasn't come seem Do be coming that claims

Paul McDonough

of have all out It's that's do is a it's Hey, I demographic policyholders don't our are But theory, respond versus to others. think that sort the seeing. speculation. Paul. John. of I experience companies the that, experiencing. claims I sync presume of other profile with we a we know of I reflection that can beyond be that we seem understand to we're that

John Barnidge

you. really income on tailwind that? my a QX then directionality 'XX. had about Any thinking in income, Okay. investment how been prepayment follow-up, And be moderated Thank we should

Eric R. Johnson

Paul, -- do don't mind, Yeah. don't you one. if Why you I'll this

Paul McDonough

Please, thank you.

Eric R. Johnson

income. Prepayment Thanks. Yes.

prepaid quarters, back and 'XX, quarters, experience the when rates have same in and early with of last up. four quarters. had Very income, quarter. year, had recent is incentive so We quarter look prepayments a affecting third in rate-driven of portfolio. two mortgage we or in the turnover seen few you bond diminished consistent couple a had three moving basically very big The loan commercial greatly If it's of lot first experience you're rate calls fourth our you what with valuation, is with left

as of So diminishes a be rate higher, would incentive way go rates thinking the about and it. that

affects puts we're a to normal past, I driven experience takes the what prepayment lunch have of level obviously prepayment, rates is the commercial to reasonable the $X expectation last extent of couple the more a portfolio, buy seeing rate one we've going. the $X of given for I quarters, to be mortgage next a were which level $X think quarter at think by it's quarters the that is level and seem because in free we've in a book than interest experienced negatively. call here, income, where had level now, you ahead, couple with that the reasonable really So loan million, incentive the million, it, think yields actually you're it's but about and million now, higher It's no

John Barnidge

Thank And RBC lastly, all? have you. then for forma the at you. a LDTI pro you do impact Thank

Paul McDonough

don't will target Hi, again, John. It's impact any RBCs. expect LDTI have on our Paul I

target standard. XXX. that continue mind change It doesn't Keep anything GAAP steps. purely in LDTI So is would we to a in

impacted dividend capacity operating be by won't it. So

John Barnidge

you, Thank Paul.

Paul McDonough

Yes.

Operator

of line the comes Haug from Your next Evercore question ISI. Russell from

is line open. Your

Russell Haug

good Hey, morning.

really in are yield? gap sense or being of interest a compression Is for new level with sizable still not move headwind? a the provide higher With the your to you yield runoff rates, closer a rates the we two the money compares higher to how Thanks. spread there pretty can between

Paul McDonough

XXX, this, of money of provide Sure. and if XXX, crack a at want so was I color, you there's the rate so lot in the the quarter very It's Eric, higher take the of was level -- early was part to A latter XXX quarter gap in high and quarter. is the portfolio was new so is narrowing. gap. still the part the certainly the in yield on higher a put that clearly of can first that currently,

certainly point new I we a share currently, several inflection rates last direction becomes that money they could where that reach look continue think other at putting has current And a and new rates interest any at we other conceivable the if above to dynamic. provide it's certainly portfolio to here color? yield. are any forward Eric, money work rate the in you for what -- that an headwind or been years in the tailwind, we're --

Eric R. Johnson

what new for that you've the came XX% the quarter. And back around that basis during first basis tighter probably half when period, of was to quarter, points rate justice just the XX the were money looking reinforce us generated I the to XX, to Paul, spreads of the XXX XX-year lighter, was during and that probably and said, money was rough investment XXX. well, points as first think credit

looking to of quarter And half are you really quarter when north and lot a now, which of money to basically second of to after the I February, we then middle of new didn't X%. invest will subsequent new X.XX%. was rate higher much During at money of a up the have the the around say number north

saying I'm to portfolio with conclude from average book now. our of a around what on expanding point yields reasonable that about the probably a of business, with crossover bulk it's yield, I right for lines think So we're -- that for of you X.XX%,

yields, life now. average, to the really are just the and like much X's and and lower longer grabbing those. quality In I care good lines so we've general over with and fixed yields, book we're we're have lines of and those wanting also probably some long-term again, asset were higher the have of annuities crossed in but match. a think on some pretty But liability not there And health

balance -- quarter, continued think on see quality, up the go to in in you're up that to all our stay factors, trend in I so portfolio of our quality, And going we're those part money tailwind -- balance. the this certainly headwind, will the being think rather you than see matching keep new a perhaps good asset second of our I quarter. And liability the

I hope think helps -- you I with that that question.

Russell Haug

that. the impact, if LDTI on I on color otherwise, from have then the sense Yeah. or missed But impact do you'd this. you I any earnings directionally LDTI expect? of appreciate apologies And the

Paul McDonough

to is sometime process and to we've it's we a be to at estimated as 'XX X-X-XX the next on earnings or that's balance in the point will disclose process forward we're in thing will. third disclosed disclose where subsequent impacts step quarterly only move here from don't and work the to impact in The the That through roll The we balance when currently this a transition. sheet is and that that ready 'XX, We yet. sheets second quarter.

will than who think insight is where industry good on feel where a have the about very good that's the assessment just in we that in of consultants probably. be it also from more the understanding likely process But September. our I in industry we are based on based own

Russell Haug

you. Got it, thank

Operator

over Presenters, [Operator continue. questions phone. are Instructions] the There no please

Jennifer Childe

speaking again Thanks you Operator. forward us everyone with to We Thanks, joining today. soon. look for

Paul McDonough

Thank you.

Operator

today's you This for Thank call. participating. conference ends

You disconnect. now may

CNO Financial (CNO) 3 May 222022 Q1 Earnings call transcript