CNO - Earnings call 3 2023 | CNO Financial Group, Inc.

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Operator

Hello, and welcome to today's CNO Financial Group Third Quarter 2023 Earnings Call. My name is Jordan, and I'll be coordinating your call today. [Operator Instructions] I'm now going to hand over to Adam Auvil to begin. Adam, please go ahead.

Adam Auvil

Good morning, and thank you for joining us on CNO Financial Group's Third Quarter 2023 Earnings Conference Call. remarks Chief Bhojwani, Financial include and Executive will McDonough, Paul Officer. presentation from Chief Gary Officer; Today's

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

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

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

not website are our or XX-Q materially directly forward-looking factors and a statements. actual We contain me post non-GAAP you before a GAAP number to expect be contemplated to should substitutes those our of measures. Today's considered remind on December.Let the for different file be statements Form it cause we subject of on comparable as most that any presentations may forward-looking in make number results that which today than measures, to

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

Gary Bhojwani

up were morning, share Thanks, up financial again delivered $X.XX performance for excuse and a XX%. everyone, Adam. diluted joining -- Good -- solid earnings Operating for you thank us. $X.XX, were per CNO the me quarter.

continued product cash earnings net free remain generation. continued total income, operating premium, lines, were items, new fundamentals business in across position flow robust sound, momentum capital investment significant Excluding growth our XX%. strong balanced and a sales per double-digit strong share up The including of annualized

new Capital reinsurance X%.We divisions. million we and and $XX to to Re.Turning his a balanced us sales, CNO BXC agent care, divisions.Total quarter, Sales collected exceeded up reported and our nearly quarter transaction. meaningfully supplement, were necessary their to the consecutive retention Paul strong, improved XX%. Consumer go annualized applaud Slide and and We the premium our expected. will for in new above established exceptional results was the as scorecard. and levels Producing product delivered sales and second AOCI, and X liquidity consecutive trend detail into per premiums for quarter. insurance across excluding all production are investment life commitment to Worksite Variable both affiliate even long-term growth value approvals X%, received third our initial growth recruiting announce and Medicare in sales. during continuing establish income to counts diluted CNO field helping our claims further related both over Health Book was in rates pleased that and improved our the remarks. returning $XX.XX, all moderated our For second including up work We share, shareholders. was earned target worksite team yield. up after and positive thank Bermuda at annuity quarter money agent Bermuda categories,

was each the important of Our divisions both strong enhancements in positioned Consumer consecutive second delivered discuss and well and have support agent spend. Health up Life quarter I'll year-to-date results, up Worksite growth. opportunistic product us NAP. counts product to sales and advertising in Long-term investments quarter our enrollment reflect double-digit divisions to a our and XX% including NAP with on launch sales Strategic costs overall Plus in up fundamental Health cover sales introductions to capture and approach August. division and NAP years the opportunities. growth of our year-end growing Life was X% results as product is XX% care. XX in with & accelerated division Sales X first BXC offer life with portfolio. Life sales launch next strategy balanced was of across Care states for in sales Slide slides.Beginning up up X%. was This following the X quarter in production that X% sustained care and middle up XX% field continues and the in the essential NAP new Strong up X. X momentum measured market to long-term new BXC plans our Health X%. the product to the the Consumer

different care. for a living policies enroll in in are of balanced, plans we care Presently, plans. long-term rise.Our we and ages our less. or our benefit sponsors. midst and More This was continues benefit periods nearly population periods XX XX consumers plans, through shorter embrace X,XXX we approach consumers long-term sell to runs period, up U.S. new continue need affordable NAP Using are prescription certified XX% policies provide up drug have of solutions last plan Medicare care Medicare October funding of over we than practical our Medicare annual longer, the as year. and long-term enrollment on from sell As can the is Medicare which with the myHealthPolicy.com agents the these Supplement online platform, Advantage to to season, duration years X. have which the XX% began to agents X X% December

Agents enduring uniquely in a making with key They insurance differentiator the to build relationships reducing sales local assisting help knowledge additional enrollment start.Our decisions. local to strong their retirement suited with planning are and churn. needs. are customers and that We a while bring off these agents is

is a of the capabilities and to last local market nationally Our strength. to vital and complete the agent valued a unique mile sale

also and new portion we technology-enabled simplified the customer this products. accelerated tools enhance platform to Prescription illustrate myHealthPolicy.com insurance to our Two Over human gain we implemented now health improve our all on to our and operational Advantage We of year, In and a are technology. need the Drug XX% how interaction capabilities. also preparation through efficiencies life initiatives Medicare expand we're scale invested with Medicare underwriting for technology value. our Plans supplement using in submitted recognize AEP, portal.Earlier of

account decision. were year-over-year up applicants Annuity This collected XX% an received X% were values quarter, approximately X%. premiums of up instant those and

model As our to remains stability proprietary continue with within to noted quarter distribution net strong X% brokerage levels.Client inflows. long-term up and agents and and assets us year-over-year up Total our build the this expected to billion. in persistency provide and customers relationships with accounts previously, XX% were in entrust the that $X.X were clients block advisory

our that remain Mike's quarters, good strength retention practices, to results. producing closely and Slide to in X%.Next, This successor performance. forward of posted and recently evolution year. the ongoing the our Worksite is Insurance President we on and Chief insurance and CNO's of matched Life leadership our space We and third third quarter internal of would the a like agent sales investments this and were and our CNO. stage division Worksite efforts the XX%, XX%, bench early can the X Chief our these up insurance record overall Recruiting under these CNO's of management Karen also our reflects Worksite to be of and Jeremy are commitment Actuary. sales up our will has in knowledge achieve Optimize. named congratulate grow, I and count the best Byers, We next the Actuary, coming our performance will Health In news deep DeToro. leadership. continued Division a X Jeremy business. quarter I'd team: XX%. announced X Worksite above for consecutive transition.Turning next exceeded our pleased We of benefits business to bullish our lead continues first very past which Karen's I Through members Karen division. success Karen at as represents with and growth, over well to as who Mike agent we recruiting deep All XXXX. sales to quarter. this congratulate testament agent XX% growth the employee Karen, business, quarter to our a of our levels. Mike Williams, the X moves Karen's in of months since a ensure currently like Worksite We to seamless increase will of Byers pre-pandemic and retiring talent succeed DeToro, are was Mike fifth up our look work X to quarter business

pre-pandemic As a sales pandemic, record reminder, of the first levels onset X with growth. exceeded prior Last to immediately of business insurance worksite the the time XXXX. for sales our insurance posted quarters quarter, our consecutive since worksite

XX% producing This our gains first agent and quarter, on agent X%. those counts by was counts up cohort was XX%. were agents, producing year up agent expanded that double up Among up and we digits.Total productivity productivity XX% were

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

agent our referral quarter, program worksite agent that employees. gains.In are for new onboarding these initiatives growth to successful program Our our meaningful several and accelerating the accredited focused we adding productivity programs advanced and partnership agent to value on employers third and enhancements and driving

our training agents experiencing footprint.Late Two opportunities clinical a to share enrollment we program helping initiative partnerships recently expansion nationwide tech-enabled and partnerships, virtual Through new support on received partnerships identify bring decision benefits our to options positive platforms geographic we've early also key in reception. administration to accounts. Both technology a technology will to focused enhanced and these initiatives is sales current grow success Our initial cultivate Worksite advocacy advocacy where the and strategic services. markets and we new launched and identified care offerings. enhanced our services added quarter, in benefit market third-party the our the

employers critical product June Worksite is $X accident NAP. to than sales well in is more insurance we new and for our a to benefits support clients. the well-prepared with team our season serve in time Year-end enrollment Additionally, topping perform that business.Our introduced million in continued

national alliances strategic turn in and As brand, squarely Paul. our I'll capabilities agent continuing relationships integration distribution capabilities our through last priorities: I and under momentum producing it markets Optimize with employer that, Worksite accelerating the of are recruiting over agent we Worksite to new on growth X counts.And and shared expanding regional strategic to broker in focused the quarter, grow

Paul McDonough

Thanks, and good morning, Gary, everyone.

Before the the like comment Re quarter, on initial to treaty. to formed CNO turning Bermuda remarks reinsurance and my I'd on newly Bermuda affiliate, our

Under the approvals our received indexed fixed Casualty effective of annuity necessary in October the FIA reserves new treaty, the ceding billion we business X, approximately company, of addition implementing have from XXXX. all and with in-force are Bermuda in of transaction U.S. are domestic the an statutory We Life company. to $X.X Bankers date process and to

up is was Bermuda closely on of up X. Slide XX% and We higher joined mind income as We one, the this expectations. by the then with and XX% side, this which the year-over-year range annual policies community increase time. And the the broadly Advantage proud income invested future. the this in insurance ASC forward for revenue significant platform the quarters.Expenses business.Turning and been the better reported quarter share per favorable build issued, income a have driven declined seasonal, reasons. X of position the side Monetary high improved in financial in operating Number a margins Results has Advantage item we income the changes XXX for in the generated Authority investment in quarter impact income under Bermuda fourth on fee reflect look we've that highlights were in in little strong insurance it year-over-year but out to results. within assumption first period, as to have the over as variable are working is enrollment in product revenues our our the X% Medicare and fee down Medicare in secondly, to period. $X.XX in worksite accounting quarter, the expenses excluding business, earnings in the despite our of highly resulting Keep to business, and Consumer our as pressured of Fee more quarter diminished

pricing reflect margin the well period On liquidity Fixed In Slide in and the block. had I rebounding our from quarter experienced claims growth margins care was spreads with Claims and across in capital the block manage in expectations product block margins strong in million runoff period. expect that which X. from variability the annuities, some current and returns. reflected health in the quarter of the and lines. capital in annuity front, in the long-term growth products, we repeated product continued in elevated period will MedSup period. current was and spread In we favorable note prior and above would the $XX the share legacy claims Medicare to with in continued block. quarter. benefited moderating expectations, supplemental in our continued experience favorable other to the levels and line targets.Turning line repurchases indexed still consistent with margins particularly current completed health prior with and growth target experience. mortality the are reflect the of experience, be new supplement year not we in somewhat was care business favorable claims COVID-related, the margins Long-term in did the of second Insurance in

Finally, allocated new in income second and allocated consecutive and by benefited rates new from on in the from allocated of rate alternative driven plus Results assets X.XX% and with to second to year-over-year quarter of third allocated driving money rates sixth insurance for net in investment of strong money block.Turning basis improvement of with not class. primarily XX sequentially. production, quarter prior and the X%. yield, year liabilities investments XX. to new yield year. supporting an growth below quarter the income net the growth above quarter, quarter in increased this expectations life in the margins X.XX% in versus the the average contributed in The increased investments X% X XX% from X.XX% them in This income our our Slide nearly steady average in up The to products.Investment consecutive down along quarter, increase excess return in long-term money growth asset the up period remain was consecutive is points the this slightly points products on basis in yield X.XX%, the to quarter the The investments.

see duration years. minus, pleased X average to quarter AA of under average million of However, an improvement.Our with the an new of we $XXX investments comprised are assets this in rating and just approximately

presentation.Turning more of our are new over actions detail Slide was maturity XXX XXX months, is higher A or to down of The XXX A, past investments XX quality last Approximately rating quarter Our high-yield the allocation to the points. years. at summarized reflecting the several In points, Slides securities XX. basis allocation an with and single basis rated the XX rated XX% on and fixed up allocation basis BBB is end the down and is in portfolio investment-grade XX of our average points. up

real emphasize I year our to at assets total the take significant now just full things ex reduction quarters to affiliate.Before to is which The we X of XX a flow the increase class company's intercompany and quarter, in of additional above with holdco colleague these and million quarter to $XXX target. unchanged adjusted operating For We up XX. Chief back our our XX million.In liquidity projected Kline. ratio in on cash portfolio. Gary, continues impact XXX% the of reinsurance it shared recognize announced above includes projected X second like Slide target updated from quarter the in the additional and again RBC Accounting million, expanded from third Holdco resulting consolidated the million, Officer, million estate to Bermuda well. my $XX our X points XX. quarter, midpoint first commercial turning the This the and presentation.Turning excess to investments asset comfortably full new we was I'd $X.XX, $XXX disclosures of sale-leaseback $XXX last a of program treaty moment an John in non-admitted XXX%, of outlook. on and is $XXX to our year We've long-time XXXX, EPS would with Slide perform Slides the our included ended to capital.Turning our corresponding items metrics

not after his have alone the that I long on As end and years. will to previously consequently, adviser last leadership, CNO he John this impact been disclosed, recognizing integrity valued with John And as retires. of close our the a the will He CAO. is year. mentor professional lasting and over many be retiring has us financial at at am expertise this of a partner, in company

We are leader will and an Wildin to welcome Gary. to also in industry it Mickey January.And as to CAO back CNO. delighted in the experienced that, I'll with Mickey John is turn succeed

Gary Bhojwani

Thanks, Paul.

strong and be We quarter fourth pleased steady our The a continue against business. priorities. to period strategic with critical performance the our execution is for our

division, the Consumer Medicare it period. For is enrollment annual the

December. For the Worksite October their division, through from conduct most employee benefits enrollments employers

compelling. shareholder opportunity end to and growth the remain expect We return year strong.CNO's

confident serve for Our profitable balanced lines, sales the and generate solid balance customer value, looking interest to our ability your execute position.Entering middle-income remain thank in our to drive fourth production our and of sheet in support financial flexibility across as Financial We you and growth and America, growth to capital deliver ahead businesses strong CNO our across continues to we are reflected strategy our quarter value. and in on XXXX, and our Group. shareholder enhance product

We questions. up Operator? open for will now it

Operator

Our to Ryan first Stifel begin. from of Instructions] question [Operator Krueger comes

Ryan Krueger

My capital now first year return use you'd cash of? be was capital. $XXX million I free on flow what of question following excess how the guess Can you'd thinking any give and timing by sort sense of for that you increased guidance your excess of to Bermuda expect the that approvals.

Paul McDonough

it's Paul. Ryan, Sure.

Bermuda that will about So the of in that increases And capital holdco. excess the share think deployment excess how increases at of the we reinsurance turn capacity. the has repurchase amount amount sit of changed. not the treaty Certainly, capital

about But hasn't all. changed of sort the think has way. changed landscape at in that So that way deployment we

Ryan Krueger

some as if know help then level Got this flow GAAP to I of expect it. flow cash think help just year? seeding through of there. you something Any Bermuda. percentage think of to you'd or color And maybe beyond free ongoing be business free the there don't us about with a that should trying benefit but us cash to earnings I think those generate along lines, can

Paul McDonough

Sure.

a for free Bermuda there is -- a call on impact on you broadly for quarter I on And business. include business provide give our free new that year we'll but outlook do some are capital FIA the an takes more what outlook the relief will could So benefit we'll when the flow number Bermuda prefer certainly, there for puts XXXX. FIA flow full company. to that many of for new isolation, that be outlook the in the fourth earnings seed to that the I'd so an the cash will provide cash treaty on XXXX and

Operator

Our next RBC. Heleniak of question comes from Scott

Scott Heleniak

wondering seeing an just quarter, update wanted really fourth about couple that's anything in the a just the I ask can weeks quarter of a Or to bit if little of the of We're kind claims on you and fourth some similar and QX? questions in you're at moderation or you changed X quick what health moderation supplement. I'm you saw any there on is versus Are LTC the the trends? give the in seeing Medicare into experience all? business.

Paul McDonough

it's Scott, Paul.

would seen and indeed a We the second that would half. that quarter, haven't and expectation in the was generally rebound our had thought We We saw a of that in in that, that that in trends. the is suggest a third change continues. the quarter. anything We spike second bit little temporary

Scott Heleniak

just few elaborate geographic if But that. there. mentioned on just with if that for about kind a it that, made talent just attract you you're the can then of the up Okay. a you quarter to recruiting, expansion. you reasons how and And able you had you comments more marry I'm sounds like for good can And wondering

on And agency doing so the you're just side. kind of what

Gary Bhojwani

Gary. of for I'll Scott. you Thanks give question, this couple answers. a is Yes. This

financial is with we've where for true can model what programs, presenting with refine so career as I give thing path so programs and recruiting an things a on supplement into recruiting example, can't things to agent more then insurance short and/or agent start years. X or Medicare insurance we've not implementing selling evolve and done adviser. these honest, different And training X if small we've trained programs, on. a and on that attractive supported they this been our different to things and dozens We've be true a build are We've the an to the answer years, even of continued we've one with experimenting efforts, you or done. and we're many First, age life to over many becoming and been they're working offering that where into tens, support different done

through now, a make economy saw to thing with, that and that's and is right for continued, caveats, I like frankly, ours I for going career softens, more to have pandemic, we that people a other consider us got has us that say So the you the and typically path productivity.The change. what trying guess, some open when the

some So from of we're that. benefiting to extent some

I looking of terms Now on. it's very but in and able we're and there collection for employment factors, together of has remained and things I so out offer of And at think coming all training career are strong, to what path are know what us. the those people economy, nicely in the support

So I'm really talented doing the exceptional. of team. with consumer on growing that recruiting we're the those both well and that Hopefully, sales side, mean the people thrilled helps. them. I done and organization just of the how the as insurance been they've has with Worksite And keeping really the I'm proud on part

Scott Heleniak

makes that the... expansion? new, And that sense. just anything to on the nothing geographic on more Is offer Yes, anything just

Gary Bhojwani

the agent there, that. supports concentrated say, side to -- rural That No, to fair me, more that farming communities, I -- that was I to more was or our captive worksite believe that concentrated historically and comment we're referring an in bit the our we a that in or and continuing business. see new. And historically opportunity was continue that's worksite that been script where excuse expand should there has to grow there's was

pushing business, job. into has a we're worksite we that. So in leadership really team more wonderful there that And the the opportunities definitely done geographies see in again, other

Operator

of Sandler. comes Barnidge next Piper question Our John from

John Barnidge

about guidance. around to ex talk about question there's bridge income we fee in you $X.XX allocated not know lines. fourth the is quarter? maybe think the as volatility income to investment around product earnings I notables My Can and

if you provide some help curious So could there.

Paul McDonough

John, Paul. it's Sure.

I in the lower quarter. things. point one, quarter, as Med that's fourth by Number and to Fee the heavily driven would So mentioned, to seasonally a you income, expenses is Advantage, and growing. a in business in data investing gave that's assuming been then some allocated. improvement continued that not we've Gary that remarks. modest his on points fourth and few weighted sequential NII, are we're And some you

those emphasize So of guidance I from things X try and to QX it's the really to that to would QX for as year. bridge our full you get midpoint the

John Barnidge

the Appreciate. my from How retailers medication. least about for that of parts obesity been GLP-XR, of And business? some life and comments, your follow-up, do insurance health, specifically impact the care there's at think long-term you about

Gary Bhojwani

have there, I'll that. a specific We in the analysis will don't broad John. impacts you be. looking terms comment can't at what a that I offer make done of we've

more I be we I'll If about forthcoming generically. and that. speak may step So can, then back

helps like that, planning they're anything improves for They have the rule, longer, health general We when longer premiums it they our our thinking like pay live as even it for claims. healthier. retirement life more like is lifespans, it and years. for are annuity business good consumers our a health business. We they're fewer when And As they that in their insurance business. because our it of we about consumers

data understanding American business. At benefits obesity. that conditions. for They general help avoid avoid that. them our them a seen, good that healthier is view is heart positive. a They like We consumer America I've for that anything least is based diabetes. My drugs are or net the help these people So help avoid makes on our healthier the

fewer result those in healthier claims All and a of things life.

been we what to long-term going some medical my aspects, these understanding long time. on So have good don't quite have are. be drugs, But We term, business. I'm for consequences even context on the the it's the long-term not many analysis think diabetes in of expert. albeit the for used is a our

there of many on a So bit is drugs. record of track a these

that's will so good how think And we a thing. it. view Time it's but tell, we

Operator

Suneet [Operator Instructions] next of comes Jefferies. Our from question Kamath

Suneet Kamath

as I which annuities understand. looking model scorecard, being sort But you your as about And we seems the see like XXXX? fourth had developing your sort we move also in pretty I you script attractive a think now, your at about year-over-year. rate distribution flattish think quarter Just collected collected opportunity. some your environment it but annuity different, of comments do into premium premiums of How

Gary Bhojwani

Yes.

first you on in interest with Typically, happening rates me depending of markets. on Let annuities comment results. in consumers' and/or belief saw average terms what annuity the in interest just or volumes what's see fluctuate you'll stock

have So chance we no reducing not a and that see we churn have distribution types feel term emphasize model this we and couple other managed, of to things our beneficial. a I way captive are that better of The we agents bumping of around, want exception. do and because and time, things. the there's of like long nature those are compensated

within of look about actual So point, so when ranges. persistency expected consumers is persistency we're we terms experience on, of feel our on. and at the More we bringing good this to the and all in

we our the feel for really but we down, be here to color up area here. you But that? good see And business any there do we opportunity.Paul, and healthy the concern continue annuity to about add any middle a or be to think that want we'll quarter or aggregate don't that's continue to have So income attractive will to consumers.

Paul McDonough

it No, well. covers I think that

Suneet Kamath

right them you're it should me what expect script the I you be read in stable relatedly, spreads you your and said what talking of expanding sort that that then to And spreads, about think sounded somewhat maybe here, Is we ahead. have to Okay. when based sort said? on stopped of

Paul McDonough

pricing that's the the newer bit, targets spread surrender, enjoyed in narrower still issuances. a mean, somewhat you the emphasize older of I Suneet. of you have fair, it's have And that that our we on some we issuances well although happening runoff year-over-year issuances, some and of spreads I spreads Yes, I But important they're or have what's wider comparison. is within think have contracted some to basically, little as older the targets. return some that think

Suneet Kamath

just Got a unallocated sort just a be question normal? helpful. it. for I Is of just to what expecting Or could just Can on to the If you XQ? VII. sneak more provide you're follow-up in, one John's there it back more would bit anything color on little

Paul McDonough

Sure.

our a quarter, annualized of they component our NII third of quarter, about the the is generated allocated So return And in X.X%. investments. not an alternative

run component X%. improvement. that's FHLB closer difference, of one rate that made significant allocated. particular. in program, of But of it expectation But of that is long-term sort some our up elements the NII to Other sequential So a not for portfolio

So as expect for moment in our we'd QX NII full improvement EPS modest I our not ago, allocated fairly year relative total guidance. a to QX, from a mentioned sequentially to expectation

Operator

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

Adam Auvil

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

Operator

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

may You now disconnect your lines.

CNO Financial (CNO) 7 Nov 232023 Q3 Earnings call transcript