- Earnings call transcript Q3 2022

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Operator

Hello and welcome to today’s CNO Financial Group’s Third [Quarter 2022 Earnings] [ph] Results. My name is [Bailey] [ph] and I’ll be your moderator for today’s call. All lines will be muted during the presentation portion of the call. [Operator Instructions] I would now like to pass the conference over to our host Adam Auvil. Please go ahead when you’re ready.

Adam Auvil

you XXXX us earnings thank Group's CNO and quarter third 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

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

We expect Form our November file on our XX-Q it to X. and website before post 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 third specified, and GAAP presentation, will between to over be appendix. with quarter any measures the we will call the third measures Gary.

Gary Bhojwani

morning Good and Adam. everyone joining for Thanks thank us. you

our quarter Turning to earnings performance. of X Slide $X.XX. per third and We reported share operating

the income yield in years low led are long-term yields. insurance money quarter allocated margins have assets, on declining Strong product rates growth a products, assets, results money several performing over constraining our new in reversing declining with trend thereby business offset stable expected. underlying historically investment portfolio rates sequential the to growth results. yield-on Gradually last Our new of to in as

this optimistic are yield We inflection point the stabilized portfolio. in signals cautiously

have to enrollment sales product XX% in year-end to us sales. life and the share sales $XX returned and quarter accelerating since investments our million agent annuities, including positioned by Worksite shareholders, and sales this million strong performance shares reduced health squarely third well We the in and enhancements and Strategic and businesses, XXXX. Worksite quarter divisions of focus outstanding remains insurance in productivity. average delivered We on NAP, capture growth $XX Our weighted opportunities. direct-to-consumer We buybacks. consumer

Our capital generation slightly target management. key are ratios capital and above enterprise reflecting at disciplined levels, robust of or the the capacity capital

Our is the per to balance value and changing enables our economic AOCI XX%. strong, excluding We increased share sheet ability navigate by book environment. diluted

growth Turning to in X Slide our scorecard.

depth in I'll resiliency Continued specifics touch Slide strong two Division by on model. with slides. the the the and production of demonstrated Consumer our in X. on quarter division the the next Beginning

with production are our We pleased results.

Health NAP X%, policy benefit they well continues were enhanced from owning exemption year-over-year. distribution. rates, consecutive up sales, channel Adjusting sales and quarter growth. was sales insurance. these for unless to LTC fund efficiencies up for advertising approved prior as our Life as we X% year, both health As care Last State Washington against sponsored to achieve state contribute as of in a Life achieved a to we previous continue year annuities were strong quarters, comparable. flat of in requires and to long-term direct-to-consumer workers to and sales legislation sales that sixth spend an of life Direct-to-consumer and tough the in record This private receive business. the growth the result conversion in

plan Medicare slate Medicare drug Part includes and our a our As Advantage supplement third-party and of manufactured D providers. we approach have to mentioned, prescription large Medicare

our Supplement continued rollout we available nearly the is in plans. This now of quarter, During new competitive and the state. more product Medicare is every

up XX%. Supp Med quarter, previous the to compared is As NAP

operations, shortly. direct Medicare will greater program of or enrollments platform through buy detail our that enables our field customers available this platform. This myHealthPolicy to the carrier through to via I tele-sales in program. a are expand newly pilot plans operationalized number our continue plans cover We Advantage online, agents through through

sales, For reflected Advantage drive revenue NAP. the [Technical Difficulty] quarter, business in fee Medicare fee XX%. which are is not up

that their We annual recently and October initial our retirement began a in needs. instantly have with strong These area. Medicare period, to and X. one to December consumers pilot runs agent introduction, additional assist enrollment a After build through enrollment on life insurance on operationalized which a to this connects responding local agents are help with capitalizing customers suited We agents campaigns their knowledge decisions. new local clients is marketing their that with can and uniquely of XX banker's relationships

home this broad portfolio are tools model accelerated The at workplace. virtual pandemic both Our adoption and omnichannel important and in product in distribution competitive the the market. of strengths

quarters eight marry those premiums were up XX%, of connection service force double-digit year. increases. eight Seven prior growth. our unique agent with last this consecutive This capabilities and the selected established Our quarters the virtual critical sales mile complete of who represents year-over-year delivery. in-person of posted to Annuity compared

future a equity need risk us and in an with When The As interest customers risk the important the represent a value of our product. slightly equity more sales make pure for fixed investments leaving products basis, largely these for suite tend customers. our These products uncertain markets. adjusted of from our perspective. shareholders. rates index retirement to to reliable reminder, mix We annuities a well rising present increased on product the creating the favorable our component products return environment are attractive like capital perform comparing characteristics profitability continue of fixed annuity of combined indifferent adjusted of to an index income and value

in tend thereby year-over-year the a billion their brokerage they're significant annuities be tail quarter the the products and considerable assets also complex X% market, event. $X.X That a to risk lifetime Client annuities when in than most potential Client customers the over annuities values. advisory customers relationships reducing for as we time them as typically are were of evolving with own dynamic percentage stickier of those their us third down address in network. declining less a offer of result entrusting Our needs. equity because enhances to value additional to

we reported and than in inflows billion our Combined for account annuity more clients. with values, assets increases $XX net However, new we our in managed accounts.

Our last agent agent experience positive Field momentum producing tight and to down continue labor improving we agent in is productivity due the was recruiting. the to primarily market X%, over XX months. count

to helping take of Agent signal a As new up quarter, inflection consecutive minimum mentioned recruiting. for of recruiting agent agent environment recruiting at efforts. was results agent. as an the for quarter, macro X% representing softening further in it meet production the the Please our producing to appears we quarter be are that third point does These be level counted remember to last recruiting games. our that time a

Finally, stable remains agent productivity veteran agent was and up retention X%.

agents Our as securities registered agent professionals. prior from count more became year increased X%

Insurance double-digit X division worksite were growth. in performance. quarter. and Slide XX% to our this the Turning quarter is sales This up consecutive of second

COVID experience continue subsided in improved. employees sales has to access as an We and disruption to acceleration

In We rolled are. flexibility to year agents benefits, with experience round marrying technology. initial positive hybrid to another healthcare are communications the employees one-stop platform Through As I we platform Now, the enrollment now force employers the offer last now worksite customer announced we our wherever delivery administration to from our in-person agent shared complete they give strong cases. Optavise and single and how connect benefits sales our and employees out is We virtual their greater quarter, within Optavise. educators connection in fourth with most agents the attendance and service and guidance the saw and our employers of can call, for the this advocates, mile differentiated with This from enrollment of expert a benefit shop conduct a manner. employee recently recently example launch brand, advocacy last worksite we enrollments. benefits services, voluntary of business, our in

As are through critical months our December for worksite business. a October result,

We year-over-year employee employer in to persistency quarter. employer of Optavise several count next enrollments in Now existing seen groups the of XX% and is XX% was these the meaningful increase and stable. our have Producing up customers platform utilization remains sequentially. increases within Retention scheduled agent the strong and expect months over

due counts introduced after field an in agent year-over-year. effective we program are modeled and were division consumer part XXXX year that large late to up referral substantially the First These results agent in program.

with agents stay are by agent us are New and more an successful. longer existing who referred

trends. We development also to and rates positive improved improvements agents. credited of conversion saw new into Recent agents onboarding our agent these for are programs producing new skills

Paul. worksite force in to with businesses momentum our to the agent within productivity the expect turn persist progress over revenue it up that, agent our And The division steadily. fee-based I'll integration and rebuild was of continues. as Fee We to continues X% quarter. the favorable

Paul McDonough

everyone. morning, good and Gary, Thanks,

$X.XX to impacts, on which Results net X. earnings product, share margins. lower allocated Turning were per annuity in investment the quarter. offset stable in supplemental to highlights generated and favorable in non-economic address GAAP a period financial life more by reflect accounting results again affected by detail the We the I'll income health largely Slide Annuity in and operating margins of moment.

reflecting investment variable continued items the rates primarily products of was allocated was investment allocated to of were to product, These new As above income and continued not in consecutive results growth the money investment growth quarter by expenses X%, the significant second initiatives. allocated excluding which higher and to offset yield. in and expected, income business reflecting partially net sum lower portfolio products, quarter, the up

change a year up first XXXX. Our XX.X% The points by to year-over-year. diluted XXX the to change income from annualized but the weighted ago on as rate to effective state from Illinois taxes in tax share million years prior We driven outstanding half quarter. average basis of the of XX% flat was discussed contributing in a shares reduction repurchases in $XX last capital period, quarter deployed

September ending return operating XX, equity XX.X%. XX-months the For was on XXXX,

the impacts expense, referenced accounting margins, the was our slide, the index Slide dynamics year total in mortality on in down product million] non-deferred fixed quarter for of Adjusting volatility increase GAAP to compared margin all [$XX market period. the by the products, or period [ph] the Insurance third as on was COVID to stable reflecting the as margin impacts of Turning caused annuity underlying and non-COVID the our the flat favorable advertising prior across continued in X. X% prior business.

margin a claim margin completed from was these annuity million, update those million. experience by adjustment product As expense an result usual, with takes Health the X down X X recently the benefited Adjusting reserves were margin of life in-line as loss health down there puts up recent bringing million, margins for to study. some reserve, and by and items, line. more

Turning Slide XX. to

initial effectively annuity these products hedge for the using provide target crediting [ph]. manage predictable mentioned, volatility our in based stable equity market creates [anniversary very Over basis. some one-year profitability risk able time, inherent an to Gary rate adjust let We're like the a economic in on call adjusted spread book. we options, to on a the FIAs to under of As crediting resulting and the Even spread volatility me exposure to our the able GAAP each certain market accounting earnings context. though and ability to on rate date] conditions, we're

volatility introduces of results of rates the in interest significant particularly the believe attempt our However, accomplish volatility economic FIAs wasn't this dynamics to conditions, portion a reflect in GAAP earnings accounting this our volatility We resulting ago of that operating developed GAAP reported periods but obscures years earnings in income. in the the the for noise to objective fluctuate. product. non-operating in the designed for methodology income, We volatility as reported financial

see from very impacts, these for our is margin can adjusting you Slide stable. XX, As annuity

allocated slightly above leading was XX, X% sequential gain the a Turning basis products up reversed to second to of rates as the Slide of money the declining points. yield income trend and X new third in a quarter to investment

FHLB interest the as decline higher investment of addition variable million lower FABN results for in income which expected. partially Our not by Investment income components offset and alternative $XX the spreads. is rates money to X.XX% the program. was and where flow quarter The of the investment allocated returns, favorable new rate products, the quarter reflects fell reflecting through

million comprised rating a new assets XXX of average investments duration of AA- X.X Our of and with years. an

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

in grade reflecting Turning XX. interest our billion, [single an of fixed our quarter-end, the quarter-end Approximately rates. portfolio of quarter, our year-over-year with assets $XX XX% higher over the market quarters. invested last average [ph], up XX% At primarily to A] driven reflecting in several values investment totaled at was maturity quality by down actions declining Slide rating rated

in bias, while year-over-year. where down credit to up XXX is the we we As single higher a result year-over-year, securities are up basis rated quality basis are is points in the BBB well-positioned our XXX A for cycle. of allocation The allocation or points

and Turning to XXX% at quarter-end, from Slide ratio XXX% consolidated RBC XX. target, was our XX. up at At June

holdco $XX minimum our of liquidity Our $XXX and June million, above up target XX. million million XXX from XXX was million at

like XX, financial targeted I'd detail on the ASC the our to Slide long results. provide to XXX bit Turning a impact or on improvement standard duration of more

think First, as no lifetime it when the you over but bears flows, have emerge capital accounting impact modify the by profits know, change repeating, it cash on does required I the all statutory although or regulators, accounting or GAAP profits, will time.

operating now the higher into transition volatile. AOCI We're XX-Q that expect call earnings our filings, that will quarter disclosed XXXX a You and augmenting [ad second on transition date [ph] due on This quarter of GAAP the earnings of and is during we new less impacts our perhaps first more impacts retained of with we earnings XXXX be and and modestly recall may earnings. factors. reported estimated from standard, in to disclosure Under recast directional first importantly time] XXXX. and number

in quarter First, deviations temporary most changes quarter as volatility products the less from experience by offset seeing we are are current to period. in reserve

As is is no products such life recognition you a GAAP than accounting traditional for different reserves event. health know, to where made change is current there unless loss and this

affect will life in our or we transition blocks. traditional remaining reserves. of over from life [ph] and sheet release business will blocks] positive spread of the the PADs impacts those and gradual This be Second, embedded force for health provisions adverse balance expect [in deviations our of

during of DAC earnings the major intangible assets. Fourth, other older cohorts due do will categories. We change Third, from this to transition from or of we amortization all certain and expect lower operating year-end the January three positive made positive not benefiting we recast expect deferred had period. expect impact XXXX results to reserve costs progress And standard retained in impacts impacts post these it around Based care provide the earnings back adoption full-year impacts This similar long-term the to favorable largest quantitative impacts, carry of to first earnings past current the the the materially represents on disclosed acquisition first changes of policies to time increase previously including forward that, Gary. expect results persist with We report X, in conditions, XXXX. significant towards and on experience XXXX recast XXXX and XXXX product impact turn the quarter to we XXXX. I'll periods. to

Gary Bhojwani

Thanks, Paul.

look toward remain return opportunity shareholder and we beyond, growth XXXX and CNO's As compelling.

growing Our and demographic market favorable tailwinds. offers is

the to delivery. deliver our strength to agent have established selling sales virtual with cash technology And we the in-person enable mile our last Our growth. coupled us and service force requisite of flow financial and fund

most extend CNO, important we encourage questions, for our of associates Voting open get day. one a is everyone encouragement it rides. the it Financial reminder on civic in support now to Thank up your Tuesday, our for we to I questions. open next CNO election well. Before you interest November is X call vote. that At of that as up for and Operator, Group. and out let's

Operator

Thank ahead. today [Operator Our from the Stifel. comes line you. of Instructions] Ryan go question Please from Krueger first

Your line now is open.

Ryan Krueger

ratio RBC bit. what came you on looks morning. that? the any to Hey, Could more color give down thanks. your within capital It like required Good a led

Paul McDonough

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

basis. capital took capital some on a right-sizes use portfolio year the freed which by to in investments with the we investment actions So, that date quarter, our basically of up

them grade We RBC quarter, quality by investment of were up Capital we Just first that and the the the make investments bonds, investment activity more our X and in bias. below increases the X FABN efficient grade [ph] ahead capital] quarter, well primarily the pace our in between with program. to driven some and reinvesting of capital typical our in half it [health third investment the in by In year, some consistent Rialto investment restructured bonds to sold context provide of points. a in our

Ryan Krueger

I most capital to about buybacks, build you uses are forward now up are other that at levels, dividends like buyback more? And thinking back Would Thanks. expect forward? to guess free cash flow or That's then how activity bit your you deploy going into generated targeted ratios going helpful. you your capital and little would ratios a

Paul McDonough

Sure.

some not So, the I'd fourth the target, the on in quarter, say but through changing XXX building we'll air of plus side target conservatism. that

have we we in credit fashion the capital the use the where in grow but run given see business. Just are same in cycle, a settle to of excess as context historically, then the of we the and of rate opportunities into

Gary Bhojwani

Ryan, I'd comments the the given caution supplement happening agree little about XQ to cycle. Paul's with in credit a just I what's in him like here bit. requisite

our definitely consume we're thought It’s several aligned I at to last that. will shareholders, same want we to we opportunities COVID on brought that that do just want I not to capital So, changed. grow including the the the that please we're the on like though going analysts the bring has capital. deployment presented and growth And seek that assure us, meaning were to to of all we've look process our like trajectory and a to to and analysis things share remind years, as growth over and are reestablish before good we'd very buyback. everybody remember do growing we does

there and to the make grow, buy that folks the seek focus over to more brought are are we quarters we'll There take and sure So, bring growth. same on more that capital where last discipline as years. remember quarters want several where does I to stock we continue we'll just we'll

Ryan Krueger

it. Appreciate Thanks.

Operator

ahead. Bergman comes of the line from Daniel [Technical go Jefferies. Please Thank Difficulty] you. today from The next question

Daniel Bergman

to morning. I see wanted hopefully pre-COVID give compared you updated have recent you're life what levels you life an you update I guess for if pandemic see can Good on insurance thoughts just of wanted first persistency eases? guys. the demand as on, kind if products had saw to and the And any seeing relatedly kind how of to in the levels? persistency, quarter Hi,

Gary Bhojwani

under This particularly agent demand now the one I'll of pretty direct-to-consumer this insurance with and insurance, expect it Gary. been produced Daniel. start businesses. post-COVID. acting quite still demand. pleased consumers and healthy COVID far, demand got of life a over Paul. that up, forward I'll is our there, think I certainly our as the We've looking seeing that some businesses. It's we're need we've in little then so bit insurance, Hi, life really understand that quite on leading with got several to it would our been to slow to to quarters Maybe and things belt in actually our hand for growth like People building down steady and it was accordingly. our up product We focused we're but life are pleased

course, so the it's able think we to far been but Of pleased up. and good slow, with been some put rates we've growth will we're do demand

maybe persistency, hand I'll on over of color it terms In you to to Paul that. some give

Paul McDonough

Yes, good Dan. morning,

recent a there, stable here through reasonable variance. persistency of little quite the the been within most and certainly through around bounces and has period, a really of kind So, range but pandemic the bit

seen pandemic sort persist, think product levels. in at that that been We've a our thesis that own a the the of indication any of during life would I lot bought of there's was not the not experience. in industry historical

Daniel Bergman

an growth maybe can seeing appetite on That's [indiscernible] guess see update back further that gears really you're wanted I And agreement I in little, what funding it. in switching market. Thanks. then a to give if Got for you your helpful. just

would like program helpful? of Just any strong demand are investor and looks FHLB quarter. it in on, be kind investment this And results also pretty again update relatedly competition

that So, recent whether earnings any would update in is sustainable very there? helpful? And step-up be

Eric Johnson

Johnson, institutional products. had meeting outcomes some Eric Yes, so track] Yes. good to both happy think we've This [ph] that. I time a give those same is cases, able far all while and of liquid even been and good risk be as at our management the In [talk return with I'll around meet both you well. from perspective our quality, objectives. maintaining targets to highly we've of asset exceed allocation,

it. with we're very So, happy

are we Now, of One, having capital are aspects. required that, there support the said activities. to two those mindful

something best of terms in use [careful that's keep capital. [ph] on so, we And of the a and eye] best, highest

solid Although, there. I making very returns we're as said,

The the to to not just NII. We're sense to the that as we of can right has dollar just it the year, something. second different achieved. sure market, good to agreements, is we'd We're I'm attracts keeping eyes not Federal [indiscernible] back the produce grow get level a with allocation. reassess [indiscernible] good best curve up and got scaling be continue going a some, to if today, a the a point early open to the without that certainly right. grow not results doing of In time that achieve only have could windows incremental at has where next is look bargain for regards end opportunities Home do open It would a we to and that be good partners today's program In although of asset the we it risk. [indiscernible] single yield the it return. perhaps but – of funding that issuer The into do hits can taking very be an going investment for could Loan that in undue them in point different with we're and Bank, you our on

to disciplined So, you we're but us that may as bigger, for opportunities a a little it, year, be but get think there next giant not would into get about quantum. pretty I

Daniel Bergman

That's it. Thank really helpful. Got you.

Eric Johnson

You're welcome.

Operator

Mark Please of ahead. from line the go from comes today Dwelle question next The you. Thank RBC.

is line open. now Your

Mark Dwelle

XXX questions. to the how quarter? and a amount Could obvious in help I of A the to in-flows from the wanted able outflows. reconcile little company at on to morning. more of good start XXX maybe in holding bit was you couple quarter move increase the was I you just Yeah, track liquidity, than looking

Paul McDonough

Mark. It’s Good Sure. Paul. morning,

pieces earnings identified included major cash that's are in the the flow the presentation. in slide So,

of that's and payables One related the XX but quarter. a and the to items the And does this a those pattern Holdco relative that than normal bounce OpCo. other usual. timing And little bit and quarter the in is it's outsized receivables mostly between to it's certainly larger million around, of the

might perhaps So, capital should versus suggest the there change more have been bit the a it together. that that taking things position at OpCo those our but wouldn't Holdco, two

Mark Dwelle

Got it.

Okay. All but there, a broader the some kind maybe agency talked had. a question what of, That of competitors ultimately and provide what improve on CNO kind are drive the to doing was few force right. with numbers how improvements of headcount of years productivity has? you're more bit doing it – and update Then, a been and [indiscernible], its to agency maybe just that little up the it to differentiates you you're about I to for productivity what only – relative detailed the comments, build there. you in the there's the try the opening Can initiative

Gary Bhojwani

Gary. a this crack I'll Mark, Yes. at is take that question.

first the all, for So, question. thanks of

factors. of it, the on the versus was off headcount We the being agents. If between back life always key and we need identified agency. top a to retention of the you insurance be lifeblood but the the growing productivity course look we that balance really really grow identified our need we those of force agents ago, of focusing felt initiated to any line we as years the several program We agency growing at to

the And recruiting not so brutal in of when be XX,XXX there as still our folks long point was an later, forward And standing. a a hundred example, of that's those we a many clock, year. fast As three churn. if you as years amount history roughly just would a were

decided XXX recruiting them and So, model of have to XX,XXX shift standing. a being years standing, three instead to of a we still were we’d of them instead say later of XXX X,XXX a we agents where roughly year,

as of given a in So, numbers of XXX the still that, X,XXX what pretty but aiming the XXX tough out And those improvement nature won't yield, been XX,XXX. terms of precise. a business, aren't close out material opposed for. pretty of to model we've I the to they're but emphasize

the top the how we folks those So, rethink to really going the to first and were funnel, retain. line, goal many was of

selection of had Now better to more robust successful program, in to at instead of going we we program a on better focus a bringing we're a training and to X,XXX to program. sure be process identify Number make ensure Because if things. training we that, better got we've number got do had them. one, XX,XXX, a a to to

we to them And then Now, advisers can something training and various eventually and start policies support support. progress example. simple selling life we financial to net insurance them get we or career out them got where with and they got sub give in that to a path makes sense, simple becoming securities as an

ahead went increase securities number our that and became of a this professionals. agents nice quarter saw a in You

and to really we path. had on the the selection, work So, the retention, career

really being in show to that has All I've the of to pleased that been and productivity able leads productivity. with for COVID it difficult more so and of organization sales annuity drive carried period really to example much every able an gains time, with as to through when productivity a our gains us field that recruit so growing continue been on. became quarter to frankly we're

market XX that really that difference, or And can to labor we're I things. Last want softening point agents. at So, seeing comment should term. that time big that defined] producing disciplined line things combination producing way. agent once make top but to now to I again an bit, a make, [GAAP we all and I I over everybody a lead And responsible our point to not that the a [agents can't together. remind point come finally opportunity to it's to thing. grow XX growth one want we're it's count] [ph] is is [ph] small did a a in in to of

criteria We and Mark, to gets were our where for time that to kind of agent agents. to what takes have criteria agents for? And included count. agent we opposed be producing a set recruited in of the you focus producing just call recruited production meet overviews an we is it that those on really as looking

Mark Dwelle

this mean, was No, last of I pieces really of hear, I and different game and plan that's together have what the summary good been a over put helpful. said, kind whole as what you've of the delivered. to there few just years

for you drop and thank the I'll out of that queue. So,

Operator

next from Erik The Please Autonomous. question line ahead. of the Bass Thank you. today from go comes

is Your open. now line

Erik Bass

Do to be due is thank durable or Health In the policyholder longer? utilization. changes you that benefits pandemic could to Hi, believe this continue see the more primarily from low you. you persists in business, still behavior that there

Paul McDonough

could Good there is and we This this longer imagined. have has one think why morning, longer than originally would expected Paul. be might persisted reasons than Erik. have Certainly, I

haven't formed any conclusions really that. We about

state. We reviewing we ultimately we’ll is annual of context year, conclude, next ahead forward. I of of the review our that don't to the say last beginning actual really we we manage where assumptions. course the want in that from how gone have in of get as pandemic implications stop the everything identifying we'll going I'd thing some influence of But endemic for outside are more our COVID will experiences, that. an The accept business to collective impacts, pre-COVID claims are today, of XXXX with current then we pandemic expectations then having where think rather a be of I I'd the

Erik Bass

the we flows sequential pretty seeing have the the you to flat, the the market from basis? deck, at of extra looking you're page rates, expect then Got trend, a guess number kind now of higher start sort maybe you. should growing that the and in on on appreciate impacts. normalizing put annuities, makes interest the benefit that That normalized that I for it. earnings sense. Thank that year-over-year, been And given

Paul McDonough

we've I product, I the grow. growth the think margin with should had mean expectation. reasonable a that's all that in certainly

Over an expect growth, to there several the quarters, a and reasonable really keeping some last and think that's point some has you're I trend that of on seeing, lid see compression but sort upward been it's at yes, what spread there. margin you'd

Erik Bass

that new basically stopped your yield you're investing given Got it. portfolio spread Is compression money that yield? now above

Paul McDonough

you if was And there over looking generally that to some a time. will eroded spread We're spread. managing backwards, excess target

trend. begin So that expect again, that looking think I forward see to upward you'd reasonable it's an to

Erik Bass

Got it. Thank you.

Operator

today comes go The ahead. you. Barnidge John Thank from of next Please from the Sandler. line question Piper

is line now Your open.

John Barnidge

to indicators compensation very per the positive talk to drive Can in Thank much. agent much. new speed dimension how fast Thank referral referral you you Wanted regional around the and you please program referral recruits? approach and have about comments maybe very of changed then you agent. local size? more And and produced

Gary Bhojwani

John. Karen. is This Hi,

can Sorry. okay? hear you John, me

John Barnidge

you hear can I Yes. now.

Gary Bhojwani

Yeah.

Yeah. Okay.

Sorry.

our agent our so to retention on, have in rate. existing that So, terms know first have referred refer We a typically agents incentives some and produce provided agents modest of know. folks in compensation that they quicker to better all, of we typically and

time. pays an of incentive So over program itself for that type

So, line agent the that we have you've existing but expense aggregate done or that really seen compensation for the our hasn't moved. aggregate agents, line

a So, it's not material number.

they hard a on days familiar starts months. them don't We XXX XX the support and In months I we’re industry referred become what, say it rule a takes agent reasonable the thresholds. terms productive, of to kind the getting, X would count really is the so of It's with depend to and going producing for on but between agent meet for is have of and to rule. and how that time are thumb when somewhere fast X to

John Barnidge

to you. field that managers Thank you. other about middle are manage changed Thank Have for to compensation agents that that. that? at And talk [Technical Difficulty] and you Great. manage data? We've harness heard side insurers my all better follow-up some consumer question

Gary Bhojwani

wouldn't critical what started businesses in together. managers. the Remember January our of a that to describe did middle one we was change all as of consumer XXXX things back of to bring I we've that we done

in life calls phone that pursuit Colonial that other for some example might come an are and as to have get of then direct-to-consumer for a off for Penn and that. and agents sale, to product, we respected compensated So, those managers handed

no as material So, describe compensation. in channel, but really a but change new addition in I beyond there's to been wouldn't on this that change, that, capitalize

John Barnidge

very you Thank much.

Operator

ahead. today [Operator line from from Please you. Thank go the The FactSet. Instructions] of question next comes [indiscernible]

is that audio line. getting [ph] now still open. have not line We any registering a we're [Operator Your Unfortunately, question. [Jeremy] from Instructions]

ahead go with your please So, question.

Tom Gallagher

Gallagher HI. hear ISI. Can Evercore me? you from It’s Tom

Paul McDonough

Tom. morning, Good

Gary Bhojwani

can Yes. hear Tom, Tom. you, we

Tom Gallagher

Thanks. Okay.

then little experience? of on favorable on your lower claim elevated you the care? about experience cost continues just was your bit seeing that bit you is, driving Is you claim still on any submissions? costs? And seeing a you're what's question care little it know behind what Just a Is just it long-term scenes trend severity? talk behind favorably. care what the First to Can impacts there? long-term seeing scenes Are you're the

Paul McDonough

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

the claim. coming really margin fewer just on driver. sorry, experience was benefit really So, the what the of your And claimants that's driving to is part the primary I'm That's question? second claims

Tom Gallagher

actually actual Just of whether in cost you're care, cost on elevation seeing per claim? the

Paul McDonough

Yes, Right. sorry.

a bit I see claims. inflationary are anecdotally, beginning to that care describe of… material, see would we beginning Nothing are our a pressure We bit but in to as of long-term little

Gary Bhojwani

on the claimants, Hey first any Paul, but seen your also persistency seen this we've renewals of degradation or to response, part clarify we've correct? is not Gary. the policy, fewer in of One thing the material

Paul McDonough

That is correct.

Tom Gallagher

Okay.

your for just that. a Thanks disclosure. LDTI then Paul, on Okay. question And

it's positive positive amortization whether X% it for that can You then you I the DAC mentioned impact amortization just does and you mean? DAC is and both the than PADs understand, X%, is how change? modest Is sure less a make going to than it's and PAD modest lower want less if dimension forward, the the could than what – overall greater

Paul McDonough

we're far not decline to to that that. do because just want Sure. moderate [ph] I'm to to [dimensionalize] along going

impactful. we've as interpretation. your I'll of persisting sort the XXXX, So, certainly to impacts identified that Of DAC three those leave beyond most that is debt

Tom Gallagher

it. Okay. Appreciate Thanks.

Operator

up, from from Krueger Please Next go a [Operator you. Stifel. Ryan follow-up we Instructions] have question ahead. Thank

line Your now open. is

Ryan Krueger

the one had asked. I thanks. follow-up Hi, of just from questions quick just Tom a

term your In know policies much, care claims guess, do I inflation, what of of you percentage based terms how reimbursement? versus long indemnity are

Paul McDonough

all Yes. almost They're indemnity.

inflation So, care there's that. somewhat mitigated our is impact on by long-term – the of

Ryan Krueger

Okay. Great. to… just I wanted

Paul McDonough

– one one. daily that's an Daily, aggregate

Ryan Krueger

it. Got

that sound having doesn't point. of much impact this like it at an So,, it's

Paul McDonough

That's correct.

Ryan Krueger

right. All you. Thank

Operator

at questions no time. There you. this are registered further Thank

the to So, I'd any hand like go call ahead. for closing back Please over to remarks. Auvil Adam

Adam Auvil

very interest call. this CNO. for your can Operator, you morning much time wrap now for and in your you thanks the Thank

Operator

all Thank participation. you. Thank conference your call. you for concludes This today's

disconnect may your lines. You now

CNO Financial (CNO) 1 Nov 222022 Q3 Earnings call transcript