Earnings call transcript Q2 2023

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Operator

Good morning, and a warm welcome to the CNO Financial Group Second Quarter 2023 Earnings Call. My name is Candy, and I will be your moderator for today's call. [Operator Instructions]

I would now like to hand the conference call over to our host Adam Auvil. Please go ahead.

Adam Auvil

you XXXX us Earnings thank Group's CNO and Quarter Second 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 on to before file post We our Form our August. and XX-Q it or website on

Let the me of today factors, any statements. forward-looking than to statements number are cause may we different actual results remind make you that which be a by subject contemplated to materially forward-looking those

measures, GAAP measures. for not of contain considered be number substitutes comparable Today's presentations the a directly which should most GAAP as

performance Throughout any second to the find second and we quarter will of measures You'll reconciliation quarter changes a XXXX. making in unless measures to GAAP be the XXXX referring presentation, made corresponding will comparisons, the otherwise appendix. between non-GAAP be comparisons specified,

And with the call over turn that, Gary. to I'll

Gary Bhojwani

generation. Thanks, Adam. joining performance We earnings capital and sales double-digit for product the a thank Good multiple and categories, solid flow of Operating share. strong a strengthened were position remain everyone, second quarter. per The sound, including you in $X.XX free delivered fundamentals us. business morning, our production cash across

money rates allocated strong continued new investments to earned quarter Another on on products. of drove improvement the insurance yield

the health impacted in improved quarter. income Elevated Variable claims sequentially. investment results

We Worksite once Total in worksite double-digit sales, agent on insurance sales supplemental this in production life Medicare sales the of the again XX%. supplement, our touch delivered this growth and reported was new results during Consumer will to sales. strong health Both expect We in premium up quarter. the Paul second-half moderate his field annualized the divisions remarks. and and year.

returning and cash $XX even improved of demonstrates above million to target generation remained This after the strong levels shareholders. flow and Capital liquidity enterprise. the

investment AOCI, $XX.XX produce to Our high-quality excluding core portfolio up continues to stable Book income. value, investment per share. was

Life our up Turning and in in advisory to slide Health services broker-dealer assets the growth production strong and and quarter and client were our was nicely. five scorecard.

model Our portfolio to strength, discuss to and provide product next broad division balanced two our business slides. and in continue results. resilience stability the each I'll overall

Beginning Consumer strong, XX%, quarter. strength sales life production were with Life first on distribution Field of to the continuing slide evolving to and X%. six. captive the NAP up product division production health customer demonstrating respond momentum up quickly from and the our Sales up was was X%. needs. the growth Life portfolio was broad agent

but One-third life originated life comparable, Our quarter value illustrates X% channel field of the our through to a from shared overall growth of was DXC sales on this distribution life lead contributed down generation. model. customer in sales DXC strong a This integrated lead.

application as agents. from During market their across quarter, the kitchen to solution an on they simplified we growing product also sit real-time address a gives our instant decision table customers underwriting accelerated underwriting demand. their implemented life This second on the

consumers supplement sales expect underwritten quarter, our from this plans, gravitated this for Medicare continuing growth up was Medicare the XX% positive be driven We roughly up these process. quarters. Health and was new XX% in XX% life trend towards Supplement business by several of to health. supplemental NAP last eligible the strong in as

balancing have supplement experienced Medicare continue the Our perform of customers, as new result. to with more and competitive Medicare a product we sales plans our well

ease. Medicare offering drug for products manufacture D we supplement Medicare a and which prescription in As two plans Medicare of broad we reminder, a Part Advantage types products we third-party collect portfolio. of offer and that our

more provide Medicare consumers. agent Supplemental customers options product respond to up of middle-market care both offering our for growth can our consecutive This benefit immediately of to double-digit health quarter the coverage products, from we were health in to continues Medicare preferences shifts comp. By producing Supplement in the from plans and and growth. choose XX%, Advantage fourth

X% account expected Annuity highest tough Persistency quarter Annuity year-over-year. collected posted significant third values this given premiums remains were line, ever up which is the were the for for product comparable. within the ranges.

interest have towards experienced shift to environment. higher a due modest the rate Additionally, fixed plans interest we

agents provide our As block. noted stability and this distribution long-term previously, captive customers to the our model build relationships with

Client annuity strong from which account improved up to When combined accounts, net XX% assets. entrust our clients year-over-year than our values, in increased market $X.X inflows their with more the new We assets in in were that advisory quarter the our $XX conditions returns and us billion strengthened with billion. new brokerage a high captured of of customers quarter.

remains Our diverse distribution and differentiator integrated model CNO. a for

complete a growth our sales quarter. of with established very agent in the sales virtual than performance Consumer market We strength and connection we recruiting serve growth, indicator the Agent in-person late agent XXX The since XXXX. Recruiting up remains overall was and quarter our the key division. which our were locally. leading sale of mile in of enabler represents recruiting is XX%, future best marry with last pleased We a the nationally force a communities nationwide. our force who more of

the on Veteran agent in productivity recruiting momentum in up remains to This agent producing the and to expect strong. grow force year. our to X%. Based count, led trend we was second-half agent this of which retention continue growth has the

agent registered for year. increased from X% count Our prior

critical consumers. middle market key is for As economic agents bench financial products. protection we our is securities uncertainty registered of how serve professionals demand our income to persists, with for and both insurance This Expanding remains high. middle especially

division Life quarter worksite seven insurance is XX% pre-pandemic the first up Xth to the Health time. insurance growth. Turning quarter, for worksite consecutive in performance. slide were levels sales our sales and of exceeding sales this This

of sales Achieving production business result this our eighth with quarters the prior significant a growth the record marks reminder, to to return of pandemic posted milestone first As immediately our prior a trajectory for onset growth the worksite of the consecutive in XXXX. quarter division. worksite to

Expanding contributed remains both increase sales a launched We national in brokering grade performance markets. our recently to positively engagement. from several our for quarter. pipeline worksite the to sales new designed pilots and initiative strategic regional sales broker Importantly, broker relationships

pleased of very early also stable employer collected with indicators customers within strong. within health groups are results. positively Key groups persistency business We premiums employer existing the Employee worksite the trend was of and these these safe. Retention the was employer to continue quarter. was our of in our

productivity was up up Among productivity Total producing agent XX%. that agent and our year agent XX% agents, in XX% cohort and were strong. counts producing remained first counts up were

must producing As of agents agent. a level be reach to a certain production reminder, considered a

credited and Our successful for referral agents worksite program gains. driving agent to these productivity onboarding agent meaningful program our are new enhancements

sales. Product both component product refreshment worksite individual in insurance the important representing and first accident off available XX% worksite the in remains start, month accelerating growth. to quarter. nearly In an new solid NAP are to total for a the June, early introduced Sales of we a

integration capabilities last I XXXX the strategic and regional relationships single we in recruiting expanding strategic momentum As optimized grow and second-half alliances squarely agent as our work producing our worksite employer markets and look in brand; Continuing a quarter, beyond. new to through counts. accelerating capabilities under priorities national distribution broker shared agent are of site the of we focused and three growth to on

Paul. over And with that, turn I'll it to

Paul McDonough

morning, good Gary, Thanks, and everyone.

supporting last the assets in slide yield reflect net earned that financial liabilities, in Turning of business, by those period new the driven exceeded money the quarters eight. continued in portfolio several in to expense and have on management. average the the on growth yield continued the driven disciplined improved highlights Operating improvement the insurance rates growth by earnings continued liabilities,

our were in health care favorable claims favorable continue. and variable impacting prepayment income from our in Offsetting margin activity life lower alternative the and and sub LDTI We prior quarter related trends our expect elevated from in bond these the favorable net period investments to year calling impacts margins, portfolio. these dynamics long-term in

in strong all compared both perspective, million share XX, discipline. liquidity to capital which a period, and completed increased holdco as free we cash capital $XX of management continued flow of March RBC repurchases the reflects and From generated

to of driven a in Turning margin product by the quarter, nine. number down slide was Insurance factors. which was

claims we result, in expect It's worth care Even moderate of are the that these assumptions. go-forward Medicare noting of year these the so, based not did even on to a levels, we businesses. to experience. at in long-term any just as our claims second-half indicators and supplement our First, we change mentioned, and claims as leading health elevated pre-COVID not experienced running unfavorable

in typical negative experience, Second, on more was on the favorable traditional workdown claims impact there that change we our payments year course third, had based our to no period variance The of driver is the of under in a The benefits in the the the policy the business in for This liabilities to reduction claim last $XX positive future liability XQ also due of of calculated were larger our year, the of in the backlog life than claim margin XQ period. -- long-term approximately change varies an in business annuities the There's 'XX, of LDTI. expectations. And million primary view in the which more to on any our other in lines. current 'XX. our is have margin product was of mortality in favorable run prior the XQ our compared rate annuities in settlement. reflective

on quarter the points year our X.XX%, in quarter this fourth slide in the Turning from sequential net XX of first quarter, was fifth prior yield. the excess This increased of and quarter allocated year-over-year X.XX% The This rates quarter marks the money raised and to new the up X.XX% flat of which in quarter year-over-year basis is investments, three yield average second the basis period consecutive the money the of XX. up improvement points in with in in largely versus sequentially. improvement in X.XX% to new year.

The increase products call quarter, in a allocated in from the assets products. to growth supporting driven net Investment from not by fell and growth the investments with and decline and contributed in net prepayment them, in activity. insurance income to income alternative liabilities along investment to allocated income X.X% a in yield

income by expectation of that of our and in volatile, sources year investments, particularly which below These XQ alternative rate above this was definition, from are last year. run of in expectation income XQ long-term

of just AA- an rating duration an million Our new approximately seven and average assets in of investments quarter under years. with the $XXX comprised average of

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

of or A our on rated of XX XX. up allocation points. the several In investment-grade Turning XX% quarters. portfolio. our Approximately and up-in-quality disclosures our points, months, at XXX Last is the last basis class fixed end basis allocation well. quarter to single portfolio rating commercial the down XXX over to rated to maturity we This estate high-yield with perform actions past average reflecting securities an is was BBB real basis the slide continues allocation asset down XXX shared higher quarter, points. The is A, additional

We again, XX on investments in XX slides and metrics of included the these presentation. have,

and Turning XX $XXX relative in to and A improved resulted which consolidated of and million to in improved slide portion relates non-admitted a quarter RBC comfortably with ended capital a in XX. We this the our $XXX XXX% Holdco to targets of ratio liquidity capital position and quarter. above in of Both total XXX% million. both the March reduction of program, year a of corresponding million. adjusted increase $XX assets leaseback the sale

adjusting claims an in our earnings-related lower Sup to of no XX. per operating slide in is earnings share to full-year on $X.XX XQ, to our range first-half, care forecast other guidance. in alts $X.XX. There a the Turning elevated Based are Med to the we long-term change XXXX

of our to our still range So XX.X% in range ratio be rate XX.X% to and the effective expect expense XX.X%. full-year of XX.X% in we to tax the

leverage we With and respect Holdco XXX% million capital, XX% liquidity minimum consolidated target ratio target to of RBC XX%. of affirm to and $XXX of our our

revising are with the to change million end flow to no of $XXX our full-year of low We of $XX range. high a cash range Holdco $XXX the the the to expected excess by million end to million, range the raising so

completed the continue through regulatory a treaty Bermuda of to and reinsurance provide formation been update the we planned year, our process that work third company once an quarter has Regarding process, and of in been this captive initiated. has we'll approval the

And with it that, Gary. back I'll turn to

Gary Bhojwani

most annual which on are responsibility business and published Last six month, commitments. areas the our highlighted we social our recent that fourth corporate Paul. focus report, relevant to progress our Thanks,

our of core one the before, shared It's day. I people. As is helping business every

corporate For is responsibility that operations. our in embedded reason, day-to-day

Our as to is success directly our company customers of the a associates, tied well-being and agents, communities.

our about download commitments. to more learn you report to invite program I our and

website. find on it can You our

XXXX, our of second-half the priorities. to and I look am the we pleased we've strategic strong against As continued production sales progress by made our

robust. the the cash you position, Financial company CNO liquidity company support of for interest -- of power Group. thank capital remain your in flow generating and and Our We

Operator? open now it will We up for questions.

Operator

Thank our from comes line you, Gary. Instructions] Bass So question of the first Autonomous. of [Operator Erik

Your line open. is now ahead. Please go

Erik Bass

some Med confidence LTC Can are color more on you're a LTC what and leading you the quarter? next And this that what level subclaims the Hi, quarter? thank you claims health provide normal going more give to you. elevated that to drove seeing return indicators

Paul McDonough

Erik, Paul. it's Sure.

So increase the indicators that are driver that August on in to was referring we're number And sitting in leading just here one, the simply the X. an claimants new we're the quarter. fact

have And customer we come then quarter, a as members how family claim trended favorably from policyholders And making inquiring service indicator are and call those some calls calls well. respect so those the future. in as have contemplate claim form of make that's long-term long-term at in center a MedSup. about reliable care fairly trending the both into leading to And of from or a policyholders we've they our to of month seen care, that and with in favorably July plans the first point

Erik Bass

Got quarter similar see helpful. would what mean, in increase guess, flagged, I indicators caused would this activity? leading have surprise I an potential that thought Because have it. would I That's of the kind, you then?

Paul McDonough

Yes.

a on we leading to and question, the it's the have think as I Erik, that when we reliance put it. indicator

our each a filing most and long is one the emphasize long-term information I recent the other care, that current sharing information, our I'd all Erik, and financials we're duration best So we're of estimate. incorporating nature. that quarter, in products and always into we're obviously, guess thing, and are the really

a the long-term And single that too dangerous to They say I think haven't few even quarter. to pre-COVID relative emphasize a I of that elevated performed in the much levels would has it's over bit years. of the will expectations. business second extremely care quarter view our a I where last into this and below little claims read long-term still our bit economics were the over changed. were well

really about the We continue to feel business. good

Erik Bass

goal? in your in any freeing follow inception? realistic $XXX I is take is capital sense. Bermuda there makes to sneak and still I if million just on one It your the And should on could that we to captive, $XXX in the still more. up just up comments want close the on And million of XQ change view that

Gary Bhojwani

is Erik, this Gary. I'll take that one.

is question of in good there's comments no to Bermuda. our the it, like Just that one, being a of I'd in couple We which make and continue that about believe would in for on member Bermuda question a Number There's mind community we be value participating no mind. it. in why to of work our CNO.

there's value and we So that absolutely see shareholders. for our CNO

Bermuda the eager community. to join we're Second,

of that being the process that good that citizens means is Bermuda Authority We being part being to citizens. in value in we community And think think the respect we community. also valuable the specific have be certainly going is and would we've deliberations Monetary and conclusion. we their And comments. good add that we seeing requirements, of refrain a through. We we want expect us which and successful but and we from hope for making met analysis all believe full process, why well the to that, their deliberations, be their you're respectful We third,

which interact of Bermuda continue course at commentary going we with they from until them. we they Authority action make and But we're good complete to deliberations. any opportunity want We've very best sure to to specific their the job that's and have. every refrain enjoyed faith, think We do good more their us continue We give time. in about Monetary the to interactions the the to feel

Erik Bass

Okay, got it. Thank you.

Operator

Thank you.

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

now open. is ahead. line Your go Please

John Barnidge

thank the that they Good persists to My that about in be around Bermuda present first-half rate? any run morning, related no onetime in 'XX? you. maybe question differently, Were there will and of Or year be should expenses. of thinking asked longer expenses the we the balance is

Paul McDonough

were to some would the that, prior in we which run would that's guidance to of in Bermuda are operating work the elevated directly incorporated the there with Bermuda. ongoing will in run say expenses. we're in the breach had our rate relating first-half, question, ratio litigation, Bermuda expense full-year. with isn't there for and rate to expenses associated context, incremental persist of it's to expenses, doing form This in start-up your the terms expect I Certainly, related particularly will the the said be that in to John, response that diminish second-half. sort litigation same we've somewhat not but that company expenses And Paul. Having the to

John Barnidge

very for simplified you much. Thank we new for under conversion penetrated on Any then underwriting that Great. should introduction that, you be is from going Can and be that like product commentary next life. to increased thinking versus market? velocity non-accelerated question maybe on product. will about And talk under XX% my and about, processing have pipeline of the the paper

Gary Bhojwani

also John, decisioning Gary. buyers from better wisdom Thanks likelihood sales is for you perspective. industry this results serves commercial you the quicker this that. a a believe, reduced or of bit or in something a competitive a I have question. is because like We to in mores think usually the that help And and it little

technologies look to to faster. types to the we continue continuing decision forward these to deploy processes and So of make

be. to our course, are can in an the end, ratios we and paper, better way can automated our of we this right? the there's do handle less on then, expense going efficiencies And more The

can more type win-win more automation there's and under a of to our of business if this bring all decision around process. So the we continue way

for that around goal. long, been We've got It long time. time. systems the that's So have a takes definitely

So do time it remain we this, on takes focused but to that.

if So the will. of you on that's kind process,

I product, process certainly a that. a and new don't can know that's we'll but that if call I to do new continue

of opportunity product, grow products that saw results how continues you think there us terms worksite. new with We continue there's to on We've launched in we've continued some We're Medicare Supplement. pleased In the that. got to to very our play. for

to continue So we'll do that.

we would or year, products I do a one if I can that. two be with thrilled new think

And and our sales point as look pleased to have work of from that I But emanating see do committed that interested. navigate that. some have us we to folks to the so we'll should to More pretty do consumers to agents and with you they continuing and just directly that and improving We expect move us join I've -- know you should success done the that. continue we forward. building more to products to recruitment had more processes get remain our when we've want been

So we'll continue do to absolutely. that,

John Barnidge

you. Thank

Operator

you. Thank

of Kruger Our question the next Brian line from Stifel. comes of

Your Please line now is open. ahead. go

Brian Kruger

good the higher in or just morning. incidents any year thanks, Hi, or any this increase did claims by long-term a it incidents quarter? the see commonality commonality was quarter, issue there in you On broad-based new care, whether in be

Paul McDonough

Paul. it's Brian, morning, Good

So that called was the nothing internally. specific went out analysis as we through

it's think I broadly more So based. was it to say fair

Brian Kruger

Thanks. then… And

Gary Bhojwani

us the about Brian, quarter-to-quarter a if up just just Honestly, we comment get looking data that don't to and something kind worked doesn't attention time, interject. quarterly guess, to, We broader tell want be understand extrapolated. I it. more perspective. much. a that It understand when type made to here least emphasize at that try I don't release us I see I just nature of want don't claims at this that much movement. results, and we or takes just on earlier of It I want draw just could more extrapolate that if it. that to there's just concern. importance that a anything we're not much gives claims of on the see Paul We to seeing people long-term of

Brian Kruger

and are fee question does kind of could think, more little typically lower and revenue. us the a and should Can XQ expect just you first quarter then there? seasonality give on there XQ a fourth from the quarter, than income what any but fee And and perspective Understood. you the on we help provide separate I

Paul McDonough

it's Difficulty] [Technical Brian, again. That's Paul product.

So that's really point. the first

MedAdvantage product that of shift The we've second last some that MedSup MediSup of the new mix is to the in from had in introducing away back second-half year. the wake point

So in the another quarter, that was contributor.

Brian Kruger

Thank you.

Operator

you. Thank

the line from Wilma comes James. of question of next Burdis Raymond Our

ahead. open. is Your now line Please go

Wilma Burdis

you writers Hey, guess you morning. question, sell their your there? I first increasing And heading about do XXXX, end think Medicare supplement how third-party pricing up XXXX? pricing products benefit given for into would Advantage good that for Medicare revenue if

Gary Bhojwani

the just level on high would mine. Because I I'll -- fill it if then the Speakers] [Multiple have answer at participate and a we basis, Yes. Paul goes was fee up, a can a benefit. in pricing we

is part clear. that think I

the of what not that I'm of where that's for going question know terms don't sure was your or... is, if In likelihood you I

Paul McDonough

perspective that be would maybe Gary, some I responsive I could think provide Wilma.

claims So do in was at terms that always We'll of about is around look informs question. year, in pricing, year. of how 'XX, the increases which every we the we rate that think and I do, what the time filed this that MedSup to experience think we

claims, to what This rate to of I some claims. about think directionally, One curve we will this will about have there's this how assumption the it dynamic point nice that's so Medicare know incorporate the this filing for that's It's opportunity. Alzheimer's at and for and kind impact that in Through product fair ‘XX. treatment. But will approval of reference our of year, think, guesswork I annual that four. the additional an is things

Wilma Burdis

you assuming just of don't there? talk some in million uses up seems give a given of million $XXX capital, little maybe $XXX too color you comment like but to want to you much Bermuda could active on -- you're the free of the right bit discussions, on now, And about it

Paul McDonough

Sure.

Historically, put share at that I of the have, is So resulted in try that suspect we'll least always gets on and deployed has some the to margin way. its to portion we best that that use. repurchase to in excess capital way deploy so which it highest

Wilma Burdis

thank you. Okay,

Operator

you. Thank

Heleniak Our of line Scott next Capital. of the from RBC question comes

Your line Please ahead. now is open. go

Scott Heleniak

VII a Yes. of it But Yes, good different health the guidance. quick mostly be reflects had on It the life, morning. lower annuity about expected mentioned settle versus the of Health should the considering down first-half? the we back claim units you else of in know first-half year. different segments, is assumptions. anything half that there should question the the be just year? there more But looking we anything rates I run is should or at in segment versus sounds I that like thinking

Paul McDonough

Sure. Good morning, Paul. Scott, it's

try let actual forecast, updated me in second-half let -- the So first-half on which, provide me some with perspective together EPS to our the result provide guidance.

assuming So expectation refer dynamic in for the quite for biggest couple of which of long-term is we the alts, sure, sort reasonable were from income which second-half, the first-half, more reasons. rate of we're a low in run to think a expectation and is a we'll

performed have which one, spreads Number have generally And our of recently, we know. typically one Volatility for if well that quarter all report consider a equities been credit you portfolio. as tightened. would you all alternative down, well on lag, has bode

In that that and addition, back driven some our in idiosyncratic to recent gave quarters. XXXX exceptionally portfolio, recent relates in some mostly of some and results in XXXX underperformance by performed well of the investments

We areas. further exposure to in have taken reduce some actions those

in second-half. to we perform So the well positioned think well we're

thing. first the So that's

second mentioned The is talked you as and health about. that we've thing claims,

is third our The in Life margin.

quarter typically first The is lower. seasonally

In in continue you the higher the and than also is than our advertising context, year. first-half. this the second-half, better and expect first-half second-half in should the that should that expense to So typically look

on that money rates continues has new would yield across the I net to trended you continue as products. our Fourth, based investment allocated reference the to all to on income should our favorably margin that and benefit the products allocated fact higher expect portfolio and improve will continued that of

expect mentioned that's expect mostly in And I timing you to the trend discipline. then to just we related lower run to second-half. first-half in should some finally, And be And on the elevated lower. to in related based expense continued rate Road that on continue Beach litigation the those to expenses, expense general, then expenses.

those full-year. combination the things our second-half it's that and the So really the of of for inform outlook all

Scott Heleniak

helpful That's really Okay. detail.

a sounds it VI, better on are all. the at feeling I going to number, but see expecting and on versus sequential improvement, the expect assume? you're number QX the QX at So it's commentary, lot reported like would what -- I least your you're on based don't you

Eric Johnson

is This Eric Johnson. Yes.

PE of tougher infrastructure, and estate for always real with done us. which, had said, credit, hedge performer area an quarter that's second Let from We And still Paul first and in longer because positively quarter -- me was very funds the bit in that Yes, from it not jump what what quarter, I in. strong there's up we've private going a be the as it trended has haul. quarter, in been certainly, variation here. over surprisingly a a historically be done was where want quarter-to-quarter the the to well to extremely

some caused off nontraditional. respects, quarters of the yet little by in action yield our the revaluation. throw bit And old -- that and our slope carry book, which very have it's cash It of a dividends. -- last underlying a allocations been the aspects a has has has In means of portfolio healthy it Fed of curve effect the the several sense, by a are asset aspects

that's Paul's a of in having the better innings comments about there. Now probably earlier year late which second-half supports

cash pretty expectations. off off on But actually the time schedule of our the higher dividends portfolio and end and much throwing throwing on

basis several the and about total for all, think saying of basis that but of And CEOs what's the general So very one points been looking think in the not XX said, last ahead. XX, later feel that points serve we us Paul yes, up year-to-date. my is will of last And as yield book And well, kind easiest -- of innings account as the we're forward. I about what's favorite billions. quarters our good I comment, we've

has helpful. that been hope I So

Scott Heleniak

Yes.

Okay. it. switching Yes, Got little one, a bit. just last

to Just wondering Can of the on some in that -- rates? you can some quarter if that of quarterly this how book seeing side? life were comparing recent trends you could pre-COVID run you share stuff? life the the seeing mortality trends you're more And talk you versus versus about the mortality is

Paul McDonough

assumption mortality is a some the The pre-COVID mortality. products state, little still excess amount endemic to Sure. bit that for in the is which context and that worse than an our it's life creates COVID of that has translated assumption

of basic back hasn't assumption it in that since quarter that's we So year. the revisited changed recently most the fourth last

experience was the bit Our a better to than plus expectations. materially, our of but second in that, long-term the side quarter little not

Scott Heleniak

a lot. thanks Okay, that's helpful,

Operator

you. Thank

Our of next question comes from the line Jefferies. Suneet of Kamath

ahead. Please open. now go is line Your

Suneet Kamath

start I I for margin for low been wanted a where has row. long quarters like have hear did this the health look you it just And kind and of utilization Yes, piece, But does time. over on amongst was to the on the care, to some individuals. period look MedSup lower two talked of about we the companies that been a elevated with have it's at long-term in than note we thanks. that health of -- older age now margin. insurance

back So gets of on that you track. being impacted seeing and companies by HMO the bit, kind that are some about little of a if I to are unpack just what guys wanted what talking

Paul McDonough

Sure.

about. in So MedSup by talked see somewhat yes, activity based so would and that moderating. have the some on elevated likely driven we other quarter, some I that July in companies we of stuff experience, had claims the But --

of explains margin but product through nevertheless, the new of to introduced few we half size sales more the begun second years. decline our the with last declining a last for years, been couple the make around would in that as other The of point year, quarter, is that's turn decline And has the MedSup last over in including result quarter-over-quarter. book I that the late in MedSup than

Suneet Kamath

ratio. guess Okay. it. And Got the on expense then I

I the think in been close XX% to it's running first-half.

you're kind kind of seems And And get I land. than ratio that about it's And will sticking to that expense think closer of just so to are guidance doing the to of get XX.X%, if little for mean want it? to bit XX, 'XX you're things I better bring be it of with that off, then way fall would right you you is the to that Beachwoouff sort where discrete but full-year to the down. a to there your something the like some to guess, second-half. got

Paul McDonough

Yes.

good And for those were correct. there's we expect are expenses. So mentioned, this than to range in about. some run expenses trending feel for in timing forecast about We expense first-half versus our are observations The the ratio drive that second-half were They rate I've they the then the will full-year an outlook. things the a year us favorably. talked just I other ago. on that And the quarter of nevertheless absolutely reasons lower all

Suneet Kamath

Got it. sneak I in. one just if more And could

been on the traveling investment losses, two I past they've Just $XX around think the million for quarters.

a to wondering could that up would Is you're unpack you going losses little quality? in there. if Or on that selling out Just go something just where what's helpful. that what's bit, -- be

Paul McDonough

I of I'd to make a Yes, can over couple it And turn just comments. you. Eric, then

you Republic want But driver bonds. the biggest of beyond Eric, quarter some some was color if First more sold in to that? provide we So loss the realized the

Eric Johnson

of be, -- probably mentioned, review about as the Paul the that would that's as three the in -- Republic to factors a the Taking the whole, about XX%, mirror. XX% there's Yes. work. relate would first-half about One year First

be some years quarter, we would quality we in XX% Another up had, up where two, to that investment. relate XX%, the able the four rotate time, particularly to in up during would and payback in the on opportunities quality at kind yield of of period the book in yield same the future where three, and up first loss were

kind quick was at the of of early ongoing during the done just all the part would XX% relate pruning portfolio credits doing kind on you agencies you're of feels the corporates good pretty time year. away pick basically the as to So that say XX%, And then you migrating of very the bowsom. did to out residual, like that return into about, loss easily

one be one one So a opportunistic, about part problem just way part and it. part of of maintenance normal would thinking

Suneet Kamath

you. thank it, Got

Eric Johnson

welcome. You're

Operator

you. Thank

comes line of of Tom from question Evercore. the Gallagher final Our

go Your line is now Please open. ahead.

Tom Gallagher

being below Paul, even the July I being you about it's said favorable what I for think at long-term morning. claims. pre-pandemic But still care hear you levels. Good data looking with elevated, said XQ

state it you'll steady reason think to ratio to product? is, so this reasonable more I my why over likely some isn't to you're guess I with benefit think next revert higher, And several about loss have assume or a if do on level there's Or this you question permanent the the quarters?

Paul McDonough

it's Tom, morning, Paul. Good

because term. think people certainly terms So reasonable something could behaviors I just the of over is settle view of with It's system. just We're people I interact that claims health will have pre-COVID all in sort disagree But some on better think care than changed in actually this. the making guesses. the long how our

view. the the the the long-term than term, third a proves it or look in then see quarter. if And lot will correct quarter near-term suggest not. indicators that's that a second would better So We'll near just

Tom Gallagher

you. improvement Or does claim the And with as as pre-pandemic you using the in standpoint similar the accounting, -- do long-term of you from care that assumptions a is the trends new well? longer-term made Got LDTI changes current contemplate reserving levels?

Paul McDonough

I'm fourth our course the -- Karen HGAAP any assumptions the Maybe answer that? most make quarter. the Does Tom? at in agree sense, we Does understanding your didn't in recent Karen, and under and make under not significant Yes. question? screen you under your assumptions the So normal with question. fourth we quarter in change revisit on that LDTI, here. that I'm looking in DeToro

Tom Gallagher

No. That does. No, yes.

the So long-term really long-term, you haven't changed assumptions.

that call an to the basis. be if be, should to a fair, that we'll extent it, that were Paul? go-forward benefit favorability Is So earnings on there

Paul McDonough

last in the we year quarter of the as to Well, didn't the year. quarter assumptions fourth fourth change compared of significantly this

a March they before XXXX. are different I our of were now little assumptions bit than think

Karen DeToro

quarter evidence to I of that review. date this as fourth normal this believe just those of us process [Technical in to annual any part point, but don't Right. year, do that warranted, we'll our that a the cause we add reviewing would is assumptions have at change Difficulty] that

Tom Gallagher

Right.

one final Thanks one, for could. I if And Okay. that.

-- of before $X.XX quarter to it Was per at stronger weren't guidance, implies you of mean magnitude? earnings $X.XX much look assuming second-half I it that that quarter year. and has was Are the there what half with in line in Or you year guidance Just out when at always of changed? benefit this curiosity, the your when a now the earnings for back the of the the was an before? reversion expectation that assuming put some now you to that initially,

Paul McDonough

second-half Yes. Tom, changed the that's Actually, for a plan question. our materially. has not good

takes share Some the across per but earnings total, in different puts an same and perspective. essentially from things,

largely in of experienced we the the what alts little primarily the are So to first of care in the the second and first-half, in change all bit then and drivers MedSup second the and really, quarter. quarter long-term the a

Tom Gallagher

had. all. Thank that's I you. Okay,

Operator

you. Thank

closing additional Adam As questions call for right conference I'd like there no this turn to to back time at Auvil the over are remarks.

Adam Auvil

and Thank Relations have call. you, your a in today's reach if team further questions. of great any to participating for you thank you Please all Have Operator, Investor out day. rest

Operator

this Ladies today's you Second Financial Thank Call. gentlemen, joining. Earnings Group and Quarter concludes CNO XXXX for

You disconnect may now your lines.

CNO Financial (CNO) 2 Aug 232023 Q2 Earnings call transcript