CNO - Earnings call 4 2023 | CNO Financial Group, Inc.

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Operator

Hello, and welcome to today's CNO Financial Group Fourth Quarter 2023 Earnings Conference Call. My name is Bailey, and I'll be your moderator for today. [Operator Instructions]. I would now like to pass the conference over to today's host, Adam Auvil to begin. Please begin.

Adam Auvil

you XXXX us Earnings thank Group's CNO and Quarter Fourth Conference afternoon, 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 could 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 February and XX-K it or website on XX.

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

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

Gary Bhojwani

afternoon, strong the Good full and earnings Adam. year. and everyone, joining operating delivered for for performance Thanks, growth thank quarter us. CNO you exceptional in the

earnings an were diversified flow earnings diluted free share operating $X.XX. margins position capital year improvement foundation product all underlying price our lay strong sales year the Stable bolstered premium underscore metrics of delivered of solid sustained performance in continued X%, the results, performance by and sustained We quarters business high. product suite. share and the with generation, strong full growth. both for X divisions, agent new momentum. of results insurance cash Highlights Our health virtually annualized per all-time and net across for strength income our include and profitable up model investment reached Total of full our our

quarters, which on calendar full margins. Sales money for Paul decline. improved and in performance production expanded New both reversed detail and Life fee greater NAP was sales year. investment important component go up our Fee Total recruiting Fee Producing rates portfolio quarter results and of with years X% exceeded were of point XXXX multiple were up launches in revenue grew posting in and we Health approach. our inflection an financial successful initiatives. also and agent nearly for of revenue lines and growth. counts our product as accelerated drove was the X year all yield and agent our income retention X% levels up divisions sales NAP remains posted we into growth. robust by driven sharply, the categories. was diversification in A force XX% in for will an product all strong record our up several product as total

needs. offer us and a to selection broad Our solutions both distributed their products, includes manufactured of to meet enables portfolio which customers

A- share capital and capital affiliate Bermuda a established position include executed remains ended financial year from for and first and our of CNO. our its strong We upgraded a well Our year differentiator reinsurance highlights levels. target share, in rating the strength per our AOCI, transaction shareholders above straight We liquidity Notable Fitch increase. years diluted again $XXX marking million to including We stock dividend, returned raised value our A. the than with buybacks. Book $XX.XX, up excluding quarterly in was year, more $XXX X%. XX an common million to

growth scorecard. our Turning to Slide X and

our and quarter strategic and metrics growth the scorecard continued full on reflect growth priorities. our year focus investment Our the for in

the with model in value serving division momentum our build illustrating market. a on business slides. to Slide attractiveness year, Consumer approach and our We division X. in the the on XXXX. I'll each expect discuss and next to of this strong Beginning We delivered X production

Our the critical and up in of and XXXX. remains strength agent XX% Total sales up mile for unique the delivery record sales NAP established care service production sold for XX% Fields capability was Total to X% sales NAP. led consecutive Health last long-term Long-term marry NAP X%, X% new with Direct-to-consumer complete differentiator. was force up in-person the of full year. was direct-to-consumer results up who and Plus X%. connection a fundamental key distribution. of up with full agent a life by on year, from years NAP reflecting were up in life virtual our was our X field was the growth X% our agent life growth Care product. balanced

mentioned to less. benefit is periods years X for X As to part of have of strategy we plants care. offer that years product or our X cover this to last market policies middle XX% of the the sell essential costs quarter, of

provide care. balanced, policies approach product to care long-term funding a Our affordable

are the our Total pleased to protection portfolio growing of We were this is Medicare Medicare sold over policies Medicare to were market. embrace prior these diversification and of we our with performance provide. also see and balance plans business pleased the We our how portfolio. serve central year. they The and up consumers we're X% that how

products every bear of carriers strong that by and Supplement MA XX%.Our which manufacture we period XX%, local third-party and Advantage Part and enrollment cross increase we sales. for with build our and Advantage In fourth X to fees up number supplement annual Medicare assist. potential XX%. go-to-market Medicare Medicare collect drug no MA-certified they bring approach. sales reminder, service reduces Medicare agents churn NAP and relationships customer knowledge successful personal agents experience the we XX provided revenue agents to We products, expanded risk. was underwriting and by a fee types The up Medicare with another quarter, prescription and offer a completed and D was plans Medicare of we As the

of expected within capabilities. distribution Consistent Annuity the XX% advisory year. were distribution quarters, entrust now assets with to in captive mile $XX our a unique $X.X were our our in for account annuity lends before, mentioned to and Total their nearly remains were of this up stability up I've record model X% our levels. premium represent brokerage previous values annuity combined accounts assets. record reported with and up As agent with clients persistency When we local billion. last full values, agents block X%, the Client and the account our us strength billion collected quarter.

contributed consumer We've this quarters, Producing productivity agent X X and to consecutive continues XXXX meaningful ongoing recruiting our illustrate growth momentum in division results very grown position year for for XX%. investments agent to contributed approach up to us referrals, improve build consecutive retention. recruiting sales up quarters count year-over-year year, was investments Our of notable we and we consistently credit well agent and for how and had a a to our the can growth strong Three X% on and growth. in the reported technology efficiency. to strong These our XXXX. operational

First, we product annuity enhanced growth. our life, sales health bolstered lines, and which

increase our insurance of XXXX. XX during Second, X AEP we processed sold XX% myHealthPolicy.com our and through This portal. Advantage out Medicare a technology Medicare Nearly platform. from the represents the policies expanded of were health scale capabilities

our on decision. underwriting an instant approximately accelerated introducing products, life of those received a portion XX% by Lastly, simplified applicants of

Worksite Slide our X Division performance. Next, and

X value year delivered growth. have and significant to finished In grow successful sales in health the sales offerings sales the full Division Our XXXX. significant enrollment. sustained insurance quarters, Life bring exceptional quarter fourth year XX% is a level past were insurance XX% with benefits force insurance This gains strong continued incremental of for for the our our agent momentum and up and X to employees. quarter. employers insurance up that XX% and growth the Worksite worksite and worksite their underscores of generated Initiatives the

year partially and agent Enhanced which double-digit up talent. and productivity year growth XX%, XX% our count, was driven new enablement created and agent to agent sales recruiting by Having while was XX%. time which expansion year, up foundation agent easy. was referral first accelerated XX% consecutive X%. our a and grow to up is of field full year-over-year programs in to productivity, and up testament which Multiple productivity agent growth up career first up strength delivered XX%. these site agents was the and geographic of development, count growth investments onboarding work metrics was up takes product Improving and is was For for the beyond. in It also simultaneously. agent not XXXX measures training these of seventh Producing agent leadership agent onboarding a attract quarter retention, develop in both and

quarter fourth year. And product, which has XX% was early for up positive launched refreshed insurance received critical in in accident June illness updated the product our full Our already reception. was the

for worksites initiative X/X growth expansion approximately generated geographic the year. of Our sales total

We are early result. pleased this with

strategic our we've reminder, As this a identified footprint. and opportunities where program to key targets market grow share markets

We a more channels the will continuing in our services mines. insurance worksite still to We're on out integration cross-sell in that momentum get be sizable our partnerships recognize deepen our enhance opportunities. across also the capabilities that focused technology there offerings. to and with opportunity tech-enabled value to engaging for service our continue am our sales benefits us is third-party client improve to of sales I pleased enrollment fee opportunistic and worksite

I'll in turn our business strategic bullish it over to remain we worksite Paul. XXXX, that, path enter forward. we As with confidence on And our and

Paul McDonough

Thanks, everyone. Gary, good and afternoon,

of down the excluding XX.X%, items and investment expenses. This major quarter actuarial prior the ratio, income impact XX% financial improvement income, which posted the component the I'll on annual Advantage up product with items guidance. excluding to up finished The growth line of earnings, margin, we Slide summarize the in our XX% was We year Expenses significant in highlights year solid net significant quarter lead Fee in relate income expense reflects the with Turning in reduced year-over-year, including review, significant spend. an strong items, operating on despite slide. insurance year-over-year. Med to every sales of were income, in operating and a X. fee and with next full advertising our

share year, per with which significant the compared investment earnings lower variance $X.XX, the trends is year. period, X in and the were in strong second, is #X, company which reflected enhances things: efficiency, during alternative as quarter, and For effective in date. health underlying This with metrics. on the year-end capital claims liquidity income, company, an evident excluding and materially fourth year operating from us driven October to initial the forward. X of positioned We're the company for growth CNO our volatile the of solid the Bermuda $X.XX prior with going items also well between during operating third and half treaty second full expected position results the our Illinois-based quarter The well a moderated capital definition, Re elevated perspective as XX earnings formation and settled our which holding recent second by which by Bermuda November new capital structure

X. Slide to Turning

impact, Our by lines. product mostly supplemental review $XX.X in driven health morbidity a and offsetting the our impacts annual resulted updates million across in actuarial persistency remaining favorable with smaller assumption business favorable

impact we're quarter actuarial and strong income as that basis, calling In million on $X separate across impacted value MedSup total item FIAs reported from Health favorably beginning takes It's this the quarter. the was unlocking review diverse million ex noting unfavorably impacted that $X On and by with mentioned, presenting the annual million respectively. puts highlighting in Sub of products, out posted addition another As worth to some assumption million, to by this our items. quarter mix. the insurance margin the the product the $X and significant were results, particular, quarter new and the in a go-forward and with fourth $XX.X significant and in patterns related slide creates margin product

to production, to in the the rate high and net was quarter quarter, fourth in primarily X from period XX. liabilities allocated the the Turning investments X.XX%, in growth to for quarter of contributed income basis not third by X% consecutive along X.XX% was the watermark set an X% new money to Investment in from prior increased and X.XX% this The year. points in year. the yield for the and income products average quarter, the allocated This new Slide the investments. in of X% The in money X.XX% year-over-year. them above the and up with increase income up is year driving on quarter quarter the XX% allocated strong for driven in The growth products year. alternative in improvement yield net assets up insurance supporting investment rates

and an assets of in average rating of Our million duration of $XXX the comprised years. average approximately new with investments quarter A- an X.X

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

an our investment-grade the fixed XX% down commercial several to securities higher underwriting of continued the Turning rated over XX. is was our real is at or investments perform A, years. quality allocation quarter well, up basis allocation mortgage end BBB loan past the rating Approximately allocation XX Slide reflecting actions up A with respect XXX the to the rated XXX basis maturity points. reflecting portfolio and high-yield months, points to of is estate, In management. our last basis points, to With commercial conservative down and CMBS and average and proactive XX

again on Slides included some have We of presentation. XX metrics XX the summary and

liquidity new target. up ended the points minimum Slide cash of of to impact a year the capital $XXX metrics guidance, $XXX with our capital comfortably million, and slightly $XXX reflect We expectations. RBC excess holding our relative Holdco in Again, liquidity our generated above the million. and threshold our XXX% the ratio XXX%, flow the was our for in We XX structure. our below of Bermuda the with these Turning levels efficiency year, XX. quarter holdco was consolidated above reinsurance target company to RBC captive but to line million of for excess

Turning guidance. to Slide XX and our XXXX

expect balance of a not year. be Fee that X% to year-over-year generate Significant with X/X second net in roughly of the slightly XX.X%, change We earnings down in the more with ratio end a to improvement similar at $X.XX first and then high $X.XX for sorry, a from on improvement from product items. XXXX, and of per modest XX% XX.X% trend of expense third product, fourth and of coming long-term investment expected the XXXX, an in quarters to the This insurance year rate the which income full between excluding the and -- and in breakeven expectation range XX%. XX.X% to share which full the to tax alternative significant of earnings margin, following year, the through run and return slight assumption and in the XX%. the between roughly XXXX effective in quarterly an an in starting grading coming no the our be quarter represents with down assumes the improvement year and first quarter the reflects line midpoint quarter allocated investments in increase XX rate operating income

deteriorate maintain in excess asset we the in there change cash status to credit the of to the The assets, organic pattern flow the flow accelerate adverse with a capital Certainly, and prompting conditions organic economic would investment more decisions the of our free growth, decisions and/or near and/or will growth those in take risk that quo, we in term. is investment growth, related that quo in of $XXX pace $XXX of expect and to low holding particular, we conditions maintain high range consume of departure accelerate million. to from status million the company end We the in current end value economic term, take on we more portfolio range where migration. migration of and the The expectation assumes enhancing the the organic more risk range in portfolio. current no an mix based our creation the but our portfolio, be to assumes in long investment particular, cash credit

ratio I'll back continue XX%. insurance of Holdco with companies, Finally, XXX% a over of XX% of in $XXX million manage And we leverage will to between target turn liquidity consolidated minimum U.S.-based to it to and that, Gary. RBC our and

Gary Bhojwani

Paul. Thanks,

growth the and priorities. proud perform how executed of to team our in the continued against are business CNO year, we well strategic Our

has enter engine growing. on and We force XXXX positioned Our our our strong sales well operating agent performance. build is to momentum,

Group. confident capital and CNO growth power Our opportunity. thank Financial the position, in interest We of support our our and return flow company liquidity your the you remain remain generating cash We and profitable of robust. shareholder in for

now Operator? will We it for open questions. up

Operator

question Ryan line Stifel. Instructions] the of from [Operator Krueger from Our first comes today

Ryan Krueger

was the My ROE. on first question

think curious one some or of of of you in the recently. can to improve time? think, where are ROE? So opportunities repositioning in And range, mentioning what notables the go guess, the were trending just you them, maybe of ex I it's I'm key portfolio. of I been perhaps that what kind terms investment some accelerating X% the And over growth

Paul McDonough

Sure. it's Ryan, Paul.

So the But of say ratio. noise in -- guidance, our income guidance to because we some of kind of around no sort would can I the that an year, sort assuming didn't in for that's include we create ROE unplanned ROE and the from the primarily provided nonoperating the X.X%. translates impact nonoperating

characterize that next think opportunities certainly something I that the expand the we would I team a focused current we're years. management that on over So that's rate. of run to couple and the as as have ROE,

Gary Bhojwani

add is I just others, wanted you I would have This our in [indiscernible]. ROE Paul Ryan, myself but targets. management add one too. would senior we to and team, Gary. and I notably the expansion shareholders, remind other our thing

based comp so is incentive Our certain ROE and on. on targets hitting

So indicated, there's And this this. we we opportunity believe as to on up. very Paul focused are an drive

Ryan Krueger

all XXXX. maybe -- up how go And we look NII. components play. going just unallocated question on curve. the on guess, a And nonvariable forward that the then, XXXX, the I and variables yield of little the with as It a into hoping color a curve trended There's kind given more may to lot get around throughout I'm of that what

Paul McDonough

to then some high a give Eric you very and color. can level comment I Yes, I'd provide like

Ryan. I'd So by points, #X, X it's guess variable definition. make I

for expectation, in indicated we've my provided related all so that's make X And sort year X.X%, run with an as earlier risk second our not than long-term that around unrealistic of volatile. comments, then expectation. rate going of that Is return call be a to there upside. assumes next we is the months, There's on the not. consistent more probably I in I'd to that the it's the X what which average think the downside plan generate I and it. our it's X%, the is, And guidance course over point Probably months? next expect XX But

Eric, you would add? So it there, I'd leave what

Eric Johnson

just actually NII. the the more thinking add. about components If I unallocated could of I nonvariable was

Paul McDonough

Yes. Ryan, a yes.

Let you of A here. there. me couple on jump in ingredients

as there flow For floating in rates the rates one, higher short-term -- through benefit. a market

that, the higher that So extent well rates to stay works there. longer, stay that short for rates --

targeted our programs margins an extracted asset the earlier we and then Second, taking through those growth boundaries in about Bank ongoing capital mentioned Federal the we Home And we've asset a started credit liability in on higher Loan reallocation greater of little any and there there's really funding more more well on when like well, dollars much within company risk and management agreement Gary that things. basis the just doing as just company. without the

So on pounding -- there's dollars. then you more higher the a effect returns more dollars there's -- have marginally and -- so higher of there

This be not to with paid not in steady benefits I and puts to XXXX. are that. of going agree state. There the time, it's that So things a going is are but those be -- takes over some some

Operator

from the question Suneet today comes of The next Jefferies. line Kamath from

Suneet Kamath

you that RBC to Or RBC operating decline XXXX. sales by XXX, Is the plan an for take some end for expectation out of I with year, just wanted strain? may to million kind the you're the idea for, there to largely I cash guess, of that XXX the that the the start see subsidiary. I of guiding and driven start you'll guess, is

Paul McDonough

Paul. it's Suneet,

we're say wouldn't manage $XXX of million to towards threshold level. as $XXX a million to we guiding sort continue or I So

has plus million, comfortably minimum of for been continue to do couple But appetite that the manage We and we to risk practical side have that do as practice I manage the to plus million. last matter, to our the and agencies of rating of share to side with in $XXX and that. sort million. we'll that years expect actually Our we of a $XXX have we'll of regulators $XXX been continue a

way come but should to to the continue expect opcos should expect down $XXX to And necessarily manage of out down pay the that $XXX million come RBC. not million. that you all So as you dividends the we we'll

Suneet Kamath

Medicare then But And Medicare claims Supplement report the And if we terms they've and guess you That question not kind seeing is increase you're you expecting Supplement persist? are in the the have makes anything the what that here exposure to managed of the up. kind get Advantage know completely of in sense. cause gone of when companies companies just health been Or any to think at all that different. I I time care seeing it different business, that see is would a care and managed claims could we're claims? increase reporting

Paul McDonough

are you've on seeing they as are But pressure some Well, very different, out. pointed claims. we

Med to our I think you've I would seen as near the to reprice seen the MedSup that riders business the results, same But with opportunity own extent anywhere some not in Advantage. from have the that of we you've emphasize annually.

returns adjust not the the profitable we a by the but the And business to again, something target MedSup that so new generate able real returns. cost, introduced, from that pressure, say we our as the the we're running you've approval, for product are seen this that is now because as to off. to product think to And say, been consistent year that's on get and I'd with we're continue on it's there's subject to MedSup price in regulatory based it's then old And other what pressure now, I thing that the notwithstanding experience. that extent typically, is little we thing adjusting asking I'd loss last over close results, the a

us headwind a that of product. year-over-year in of a margin for So in that creates comparisons terms little bit

Operator

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

John Barnidge

Great.

for the your talk completion other leveraging for the actions you of for Bermuda that With possibly transaction platform, about the profile? can liability first

Paul McDonough

that, it's we'll it suspect process explore now Sure. ultimately incentive of this John, to identify leverage ways do We it's the certainly platform, to further. this Paul. to in we've specific that That specific currently exploring opportunities share created an we're at but time. to is there's nothing that something

John Barnidge

to sensitivity get we the extent NII floaters? then of can And talk about you Great. the rate to cuts,

Paul McDonough

We don't to a but I'll ask of have comment. rate, Eric, ton floating you

Eric Johnson

unallocated amount securities I of the variable a earlier, on amount rate passes marginal is we side As rate side taking income. of is comment, margin NII. against that we're to a liabilities that floating But described sensitivity such Paul's what the not a liability and own great there are the matched floating on through that out asset

So there will be probably liabilities of assets against a marginal impact. But of duration I'd index say are the floating the paired similar XX%, hold and if not rate more, basis. we

Operator

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

Wilma Jackson Burdis

Or first first coming? quarters for the see pricing an ability that approval, kind How but like drug. or the has to do you see Alzheimer's guess you like event the talking about to few care repricing? pressure MedSup in when which post CNO on have other Leqembi handle pass is your new I'm prior events line. of a health I reprice medication Could you

Paul McDonough

in a Leqembi now. I have So guess, we've from on of anticipated tracking impact been It so claims we an [indiscernible] sort for while and 'XX. like, feels

contemplated that that increase the filed. rate So in was we

it's So that of pressure we rate can an costs to with loss increases. put respond something I think example on that

able I much as think of it next years. and it the over So some, it's in manage pressure but be we'll evolving will we've think it I terms anticipated how evolves to put few

Wilma Jackson Burdis

on year. XXXX? guys of good color you were bit pretty on numbers this recruiting could mean How are environment a that this then little seeing And year?I shift coming recruiting the in just give you

Gary Bhojwani

Will, for Yes. Gary. question. is Thanks the this

let everything were we very with expect So with obviously short the recruiting environment, continue. we're me seeing, that start we Based to the and on pleased answer.

few points And so I'd make. there's a

that to and says First see this. you people career of try willing conventional commission-only-based all, rise, change wisdom a more out like to position starts try unemployment historically, when specifically

a can't as a But flywheel. a the of could to career things. to bit had X to we've analogy we've make such labor point dozen point to I productivity. dozen X path I little what's like different Collins a or really and performance, I it's happened both market increase going see we're bit, half attractive little think and and done this why things the a even simultaneously recruiting to or Jim tightens So that. that more

pick, if doing that's focused on. us, ask we're real both, productivity. that's and actually to what the trick. emphasize For the I you would But trick And me is very

As enablement, as as our dozens these become literally we out we advisers, new agents sales clear path we've we've career the for different number as a build financial things, done products, made to this bettered of we've small continue made believe this to I things, we're leads everything of And able see results. should be attractive we XXXX increasingly that opportunity. to small, in good seeing us to think an

in very as of drive to growth agent feel about to but gets and both gets rates, course, good population Now harder bigger, it our type productivity we of the divisions. match this percentage opportunity continue to both recruiting

Operator

no this waiting There at time. questions additional are

back closing call any Adam Auvil remarks. the over pass to like for I'd to So

Adam Auvil

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

Operator

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

now may disconnect. You

CNO Financial (CNO) 7 Feb 242023 Q4 Earnings call transcript