CNO - Earnings call transcript Q1 2024 | CNO Financial Group, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the CNO Financial Group First Quarter 2024 earnings call. [Operator Instructions]

I would now like to hand this conference call over to our host, Adam Auvil, please.

Adam Auvil

Good morning, and thank you for joining us on CNO Financial Group's first quarter 2024 earnings conference call. Today's presentation will include remarks from Gary Bhojwani, Chief Executive Officer; and Paul McDonough, Chief Financial Officer.

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

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

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

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

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

measures. contains as not Today's number measures, non-GAAP be a substitutes which most considered the should GAAP presentation for of comparable directly

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

Gary Bhojwani

of for growth. morning, on XXXX you of record and and thank operating delivered our us. CNO Thanks, Adam. track strong Good performance, another everyone, building joining momentum quarter sustainable

best Our sales, the to first consumer products. results our new operating were and distribution years with metrics the quarter we've in worksite several generated among past respect force and

counts. in benefiting agent seventh force of X%, production sales distribution in producing our new was quarter consecutive posted consecutive divisions. Consumer metrics and Worksite quarter our successful businesses Our growth and annualized from fifth both up Total premium

earnings and share categories. sales We Our per all solid nearly $X.XX. earnings operating delivered product dedicated team of with sustainable growth in posted

net rate portfolio the benefit X% growth for money fifth margin, product The of continued with our on our only sound, partnerships these alternative insurance full remain well after are interest up solid quarter target consecutive consumer continued a per total AOCI, Despite of million and momentum underlying continues to was by as to our fundamentals from favorable alternative investment and results from which pretax million shareholders. yield, returning work strong expansion income a mark-to-market no reflecting quarter. impacts that demonstrated in share, new excellent business and year Capital business rates. in exceeded growing our book capital sales earnings, diluted levels The value and within guidance. operating and force, real of XX%. to Book in our up $XX.XX, the quarter. higher investments. unfavorable the was position sustainable liquidity benefited change Results site, excluding item offset impacts, in above material The estate distribution both the $XX.X $XX was our --

X. Slide to Turning

quarter, to document introduced we XXXX. scorecard. an This change since significant This this first is expanded our growth

the to focus our continue distribution we of in As growth, profitable on and scorecard enhance sustainable production, performance. focuses X refreshed capital. on the our drivers investments key

in quarter. division We on to are your the the nearly book per division more next draw discuss I'll in are want to detail investments share. in up growth metrics with slides, pleased cover remarks. Beginning value in I the capital attention our all especially during will Slide X Paul his Consumer in each X. consistent that

to Consumer the business a strong very posted start Our year.

We execution continue pleased growth. to be solid sales the sustainable and with

new consumers health of force NAP virtual up reception a marry service Health capabilities driver to to differentiator last the Life a positive was our and X%. of and bolstered a key Our delivery. These our products. agent health connection was sales up with XX%, and NAP capabilities growth. mile by unique critical established our remain from complete in-person

Supplement the and XX%. Advantage Medicare sales during results NAP impressive delivered portfolio were was up XX% Medicare quarter. Our Medicare up

Medicare are Advantage is an Supplement not Medicare coverage portfolio diversification As fees products, Medicare provide reminder, options our how middle for important offering we sales of market. and The both and and of customers. in Medicare balance By part a Advantage we reflected income more the NAP. serve

the Medicare for quarter CNO. the peaks are every field distribution customers fourth annual during expertise year-round While to XX,XXX by age enrollment new business day need of period, the agents. a interest United in is With turning our in are and products people service in who most States, Medicare provided first-time in XX nearly Medicare, the

X X proactively coverage. plans direct-to-consumer life affordable NAP was than television uniquely to for of our XX% XX% balanced are reduce was them of periods marketing benefit to to care educated years X up or our have cover have benefit X the make Long-term for and product. slightly launched positioned of clients. We These XX% Life as less. their NAP on of recently a long-term less prior an continued provide choice year to policies in to strength production costs these fundamental periods to approach our spend. years essential plus help quarter year down due decision for funding care more care the and or moderated and

was due challenging Life NAP a sold to flat Agent comparable.

based a strategy built Our decades DXC advertising up marketing our disciplined market and approach advertising market. expenditure scaling opportunistic on or of is maintain an measured price on rooted experience. down in We

election and years. not television advertising fluctuate capitalized during costs As reminder, presidential a typically are

We to pattern. XXXX a expect follow similar

are capabilities digital in and web also sales. DXC instrumental generating Our

channels to Life ensure are XX% in and customers. teams quarter from DSC accounts that of now approximately digital for and hard the map these working all channels continue to was more life up sales. XX% web Our reach

were and were up and to changing premiums Our and diverse environments generation in provide the distribution account values and lead up X%. Annuity to capabilities our us X% quarter collected enable balance results. stability to adapt market

for distribution XX% model the up $X.X the assets the As levels record rate with to in with and light build remains last an that relationships provide our interest quarter in Persistency of advisory captive shared agents block. quarter, this I our environment. long-term and current stability a to customers expected brokerage billion. were Client

quarters X%. is of New that reflect an accounts were advisory growth force agent enduring and consecutive brokerage building clients. with relationships up Four

agent with the of was billion their quarter consecutive combined seventh entrust XX%, our assets. force values, than consecutive quarter retention up our our Recruiting fifth more of count $XX clients agent our up was with growth. games. Successful recruiting X%, momentum. When fuel agent annuity and sales account Producing now us of

presence. Our efficiency proprietary agent and drove metrics recruiting results. referral Agent our from that strong also initiatives the online to and increase leveraging retention new programs technology effectiveness benefited recruiting of are

Next, Slide X performance. Division Worksite our in

a health XX% growth. insurance insurance worksite past Division at and Our off also In X of have delivered Worksite least X quarters, start. is the strong to XX%. were up Life sales sales

of for This shared Advancing level the services revenue strategy priority significant sold of first sales and consecutive As a value Producing value employers benefit reflects quarter, was remains annual of sustained and contract offerings in growth. growth the eighth employees. up this X%. agent quarter to insurance their underscores our benefit that were a growth. the quarter our of metric fee last our and Services worksite I up count indicator services beyond. is fee XXXX leading XX%, bring

agent count was year First XX%. up producing

XX% and agent was by experiencing referrals productivity all were driven in We up the XX% levels. up cohorts across healthy retention agent quarter. year-over-year, are Recruiting that seeing solid are

opportunity results of with agent our underscore Our attractiveness Optavise. the

to company are and continue our with productive. productivity. growth to agents longer Ongoing count referral are programs enhancements agent agent us in reminder, to onboarding more our typically recommended a who and personal producing through and proprietary As training the agent support program stay

our education management Recent of to in system tools how investments digital new deliver flexibility learning personalization and improving we other are agents. a and both the

This expand quarter, we continue designed to initiatives value to market and our reach. advance sales worksite accelerate customer several add growth,

offerings by and First, to both product new well be continue achieved employees. employers

the Our which refreshed accident last June quarter. launched insurance up XX% product, was in

the quarter, which was up critical introduced was illness Our X%. fourth in new product,

Second, to XX% of in our total for the targets identified quarter. our grow and strategic share footprint. geographic where expansion program sales market initiative our opportunities growth areas we've This accounted

rolled success. program we're we client to last and worksite program out launched Lastly, new to early cultivate late add help experiencing year, and already agents a clients. The value group acquisition

over to the Paul. I'll New group up with that, quarter. And for clients turn XX% were it

Paul McDonough

good Gary, morning, you, and Thank everyone.

financial the on highlights Slide X. to Turning

quarter, and X.X% return Our in operating X% book the and to continued of This diluted yield a X.X% the to strong in income well above investments, the on growth to margins quarter in trailing reflects net insurance continued contributing investment reflect in in and average back earnings improvement outstanding moment. levels, On in which was share product cash business growth in the I'll allocated capital million weighted and the not come allocated income investment money shares reduction at work reported deployed those above in which Offsetting and yield. investment to as the decrease products put a portfolio significant portfolio remain the net our of free favorable new XX-month we ex trends basis, items. to alternative operating products. levels in liquidity solid $XX as capital includes was we year-over-year. equity generated repurchases period, flow on target a ratios We a

X. claims highlight in some diverse our results indexed Slide in context margins growing. in but our and surrenders experience expectations. with the the spreads, and Insurance target with and pricing puts generally in expense. annuity Traditional but to in current interest from the returns. stable total, of impacted expected of the takes, line benefited life also growth product moderating was general in business levels the Annuity were and Fixed margins quarter, margin reflecting Turning product The with in environment. lower strong line but benefit advertising higher within by margins mix reflected rate

partnerships X money growth positive portfolio's result products the quarter. portfolio, quarter. in $XX quarter X.X% gain. net investments points to yield a mark-to-market reflects business net increase alternative investment certain the on with $XX certainly within million yield This XX. along in year-over-year. for is to And new income Turning total X.XX% a our investment quarter the consecutive pretax The The up in year-over-year. X.XX%, allocated the drove The Total in to X% was portfolio. increase unfavorable estate rate underperformance X%. income in and above on quarter, investment was to million allocated alternative the a net book Slide with increased income XQ of yield accretive investment the against in the of real in average fifth impacts investment basis $XX Even in expectation our the the million

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

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

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

As according well through higher impacted the to can current context rate well of you our adversely [Indiscernible] chart partnerships is pie of from cap for allocation estate and at partnerships level but partnerships relative so our alternative current cycle occupied note that to by estate They small more also quite stable to $XX Fortune-XXX management. XX reflected on in noncancelable long-term investment-grade terms. It's including properties the XXX% in $XXX The environment. estate alternatives mark-to-market in Slide in proactive investments driven they see the loans on as real of on book in as reflecting commercial and see the our the the the term, CNO these interest to and approximately quarter, property beyond, absolute perform performed in real real each higher distribution are last impacts continue months and the can and X.X% these cash expect estate the produce real investments. And our allocated exposure, notable will and portfolio CMBS flows stable the March pie underwriting and commercial market-driven perform XX, we the cash in underlying broadly slide. Away to of the the an estate to in value conservative the the you long expectations, continue leases, of commenting slide, next partnerships. over table include important annual and on million quarterly XX, for million continued mortgage the chart, columns alternative underlying appraisal and was to companies. results to by distributions are at rates tenants, real from assets both the the

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

Turning to Slide XX.

under was Holdco $XXX ratio Our XX%. remains strong. was capital consolidated quarter XXX%. our million liquidity leverage position risk-based just At and end, capital is

Slide XX our to Turning and XXXX guidance.

that affirmation $X.XX We This range of all expectation to year. assumption the items. in line This in alternative X% our for consistent rate of year, assumptions. ranges investments between guidance and excluding an are more earnings for the significant for $X.XX with year, guidance operating share run the generated of maintaining a the the with return the includes balance long-term XX% per initial includes

to the of fourth came continue expect will quarters a seasonal roughly and weighting. expect first fee second the year-over-year, roughly full in third the but now change to year slight slightly also in balance and the We X/X down income the come earnings be breakeven. that with quarter the will quarter with We

remains our per to year estimate is inside the Given earnings operating end range range. year first quarter comfortably come of the range. point at end But the of more than share EPS the higher the likely for in lower results, full the the of full the

cash the range company $XXX to the We to expect continue million in excess million. holding flow of $XXX to

our stated high last quo. conditions, portfolio. risk no particular, deterioration remarks of material in the assumes in the end As profile of the in and investment quarter, our status In change no range economic

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

Gary Bhojwani

that shareholder Thanks, annual we growth several long-term sixth Paul. we to emphasize shared value compelling CNO we perspective forms. Last the that published have creation. month, shareholders. letter it, is story in a In offers our

commitments say of will then we do We valuable. our execution. a and we what and what unique is say, do back we model with business track we Our record

opportunity. We your support to Group. you and XXXX, look we As we profitable thank focused the remain remainder in return and on CNO of of squarely for shareholder interest growth Financial

to it We will Operator? now questions. open up

Operator

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

Ryan Krueger

give for advertising level with what life the And us was that's year goes election? out how thoughts the costs, spend? of play political question on more in and Can how first some on just advertising. seeing My you you're around external environment the could that influencing as the

Gary Bhojwani

Brian, this happen cycle. for the Gary. see every We Thanks at election question. this is

the the costs We itself bottom up. premiums the So cost advertising to And that starting is similar it's pattern, we're to very play our that going we a track. so that track yield. through. the line come off. We and are get marketing carefully people against of expecting track that believe so advertising And number phone when and calls of in number we costs the and back to on. too There's metrics different our perform high, the those metrics,

we've recall, election that you'll As in past done cycles.

I expect I But happen. and that's wait I happen were man, XXXX. is betting see. We'll to think what in here that's a to going again going if

back if down the opportunistically. see step see the on and the off Therefore, we'll going pedal. change we So cost back see we'll up yield gas If going we we or present that themselves, opportunities

Ryan Krueger

color were in little bounced the on just then kind terms margins. It LTC this provide the like more Got more level claims what view any looked it. favorable. -- And at a rough you have things long-term And sense what a quarter? any more of around normalized in on there you you as care, can of then bit of Any point? saw

Paul McDonough

certainly about It fourth favorable we're margin the Paul. our in in think the the more I'd it's experience the for the But how slightly generally wake long-term was new quarter. in large, in of growth captures by in line unlocking that, with and and LTC assumption rate the run there the quarter. were does I the expectations. thinking that claims in business. Ryan, quarter the our care margins say reflect

Operator

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

John Barnidge

the in there generally? Can they Does in or quarter like in surrender first talked mid-higher date? like in looks QX trends trends You annuities. this talk surrender the were something increased It a with one-off, persisting was about is markets that it the outflows. it is were you to seem about 'XX

Gary Bhojwani

ahead John, it. generally general want then to We this others Paul and in jump I to let the provide make if comments, is guidance some I'll of and quarter. -- don't they I'll add Gary.

telling that. generally terms you in XQ up, So of is to we do don't going shape how

general make I However, will some observations.

to say, rate lower. interest than, Given were we environment, higher rates years surrenders a interest run ago couple the when considerably should of expect

Our We're for persistency that. that. models expecting account

of than, ago. So a they will run couple higher years say,

But would I remind in of shareholders we all that some the our our maybe benefit marketplace things that from don't. of competitors some

and one. Number have our as, we procedures policies get place lot say, the First, pool business, regularly. distribution annuities captive produced don't them called individuals number typically as that are net that because that's they by in on where certain on to two, an simply and doesn't asset exclusively call our don't ultra-high our incentive remember of they have a frequently churn network, to have target attracts market worth distribution

products of competition. aren't type high our So regularly facing that level of

players, on most other that we like Third, our surrender has product charges. annuities the have design

particularly years, roughly XX, charges even in a the first the disincentive consumer for really But XX to there's typical there's XX, the surrender where the years. is at years, first level So in several typically significant surrender. few

add for in to will degree the the we So some players surrenders expect than anything the comments? other be you recent those industry or but experience. Jeremy, we of higher reasons, pressure expect to would same to Paul not that suffer our like my past, to

Paul McDonough

than been months expectations the before are reasonably were Gary, surrenders of certainly rate rate context they've our within I'd current the the began, stable environment. current and they the this last thing cycle that few -- in higher only the add today but is in

John Barnidge

is quarter run my achieved view ratable? the of the you question, do level earnings first follow-up in And annuity

Paul McDonough

are was higher surrenders of that sort surrendering it's that impacted spreads. had impact and by the some a of tertiary the is the John, margin Paul. certainly policies mean, I

our within bounces yes, and return but within from to account pricing bit, ratable quarter-to-quarter, run the question, the volatility whether your moderated, have grow. and still levels. target around spreads say, So to quarter a current the It I'd continue values is

over growth then of growth the the that stabilized run, would expect business. So you spreads long should as of the we sort along with expect

Gary Bhojwani

John, there's portfolio. a one only going -- one diverse benefit In to run is add we is given probably any to annual this hot, Remember that. going There's Gary. to consolidated product cool. remind to I everybody can from is going I'd quarter, pretty reaffirmed one product There's that perform. some the how think we give run our as we we've portfolio that's movement. will you to just strongest be perspective would and testament guidance, that the

Operator

The next the comes Autonomous. Wes line of from of Carmichael question

Unknown Analyst

last it's So thinking realize compliance the the the impacts current you week, help but Labor. to impacts we an of published any around with got a fiduciary document, in increase or recruiting costs, Department maybe final from pretty with big any I And your rules rule? associated can us sales

Gary Bhojwani

question. the Wes, is Thanks for this Gary.

So it and is you're it recent. rather a right, rule, is voluminous rather

we're adverse result the kind as of and any start that. me a developments Let with particular expecting that conclusion or you tell of not notable at CNO,

want we of and member Now an on sit the is ACLI, I CNO that a put said, to [indiscernible]. the board.

your On and as share to terms a the to impact of some ACLI that. opposed why we views. the CNO, to specific the out those of we rule, case the cogent industry I to think, expect don't laid has, question significant in But pretty is

Unknown Analyst

to the wanted real quarter. I in mark-to-market the to come back And estate just

going that to like pointed I continue being quarter mark first your to of really see or is you if annual mark of some get you I'd portfolio next on get the by in guess perspective any we additional be think the balance could we what the year. driven not I to volatility most appraisals. of significant through think year until to that there's maybe if to

Paul McDonough

I'd is color. to this invite you Paul. provide Wes, Eric. some

Eric Johnson

certainly Paul, through to the And -- time beginning somewhere rates straight The tough and XX% way ongoing you a probably increased think of the reset on Yes. if last is it end line. recovery can and statistics, ball the credit it's The of game went as office the here office the think XX% values you thinking about game. Sure. think neighborhood, a a may will it, about than degree. that if closer the and be a take where you cap ongoing, year is ball not we year the down a cycle, the year the is ongoing you was proxy one -- about market some and to of believe between valuation

million if takes rates. that And material basis affect look you That's change meaning the at to in in cap valuation. XXX a point move in maybe of strong $XX cap move valuation worth probably really rates it

flow with are long-term that financing kind with you're assets long stable fixed here trade. You're that occupancy, rate refinanced with dealing a cash of meaning XXX% NOI a leverage with long-term short

see the year, a of a so And the kind going depending the point-to-point of lot whole end at I during think on revaluation. not you're volatility year the to of and

That's what you produce.

XXXX, not we're favorable development development. going some to but and or think I some additional XXXX unfavorable -- during be replicate there could

these it, quarter, $XX about $XX -- before revaluation think maybe the in million were properties it in this the you before of back and million gave on million, up If $XX during XXXX. aggregate, period 'XX like first

outlier you So the itself. suggests that won't probably is just and probably that XXXX replicate to

Operator

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

Scott Heleniak

strong trends growth The Advantage had you Medicare there. supplement, Medicare

if Obviously, You agent demographics there, wondering the whether it's just way. productivity. have your a But while. market could drivers you working for are talk the share, about

there a the great. competitive on you out about And That areas just product can you're talk and bit? little lines. If be in what can seeing those landscape then those that add anything in you would

Gary Bhojwani

Scott, very success the We've this with pleased been for Thanks question. you're we've quarters Gary. Yes, the several very, is seen now. for right.

as you people one, XX,XXX for demographics out, there definitely think us. working a point of about number day a are things for retiring. I working are the Number

we single our insurance every at the in business. at buy for strong. not or to all very Medicare looks the Medicare retiree in least virtually supplement, looks, be every demand one but Advantage thing So to it, closest of have products Virtually, it's continues course,

us. one helping that's that's So thing

of CNO, done. unique that a things we've handful there's More to

We represent that we're every invested we've Advantage. technology just our and particularly jurisdiction, a and that I in seeing now in the The good. the of Medicare major is substantially online that. for feedback platform think we're about all getting pretty with virtually carriers platform, got success quite First, we've

want that Third, That's we with think for I technology sets face-to-face one can it. that really us that marry offering thing agents consumers those apart.

I the the a in X of look we've If and back technology over fatal last years, opinion, number come entrants the a with seen flaw is in to into lowest space my to that purely that X models to those they can buy ability really the that only table appeal provide. on to want offering, have provide people who kitchen don't we They the price. service

fantastic Remember, So I helped a think have us. of this. And helping doing here and Medicare agents our on with there, manufacture our that's Supplement for a I unique work understand percent They odd that's the Medicare out they're repricing have probably so credit knocking deserve done Medicare distribute started some to we finally policy. Advantage. really something should people we doors XX that's supplement and see, on. -- final thing undertook and And we job. the

coincide and a at that regulatory undertook that, leading some back that being we looking repricing think So historically been was put more had to Advantage I pressures on happened it. supplement Medicare of that Medicare to consumers with

together. come of things all have these So

of Some are industry. across them the

really are of nice tailwind. of come these unique think us things all but a together to I give Some them CNO, to have

really to our we to question, us is course, think your want think remember critical in the unique makes what this I this but of I wasn't remind life about of thing model, when the everybody the business where insurers, among And customers long-term annuities regard the have Medicare the you. care those what the life we or or or way of then talk get build we to household, as oftentimes step, relationship first insurance about door into you we

you to deeper So are Medicare much grow a those Medicare the and and sure that us let and supplement, customers foundation make to with keep relationships ability those supplement on Advantage really built us. broader will, if

as well, think we'll we're do point I doing of importantly, things thoughts to and why those to I all well. why So continue would more to

Scott Heleniak

or -- execution share, Okay. kind in so any market That's it of And mean just front reasons can talked about gaining like but Or helpful. there you sounds that it the just really is on competitive you new talked I then point is area? about. to? the anything you're and anything the you changes

Gary Bhojwani

give execution they're out Yes. the I to mean and that I'd credit every there day. our agents to doing like the

been I there think alluded have of this know distributors. the pressures. to a go I think there's pressure about market little on particularly anytime regulatory Medicare away trends. don't some I that Advantage been soon. to is It's some bit. I

every with these that is day. a their do some on I pressure. comment taking close but I'm they're say way great to the not at government policies think that look that I'll of how just impacted that's and going we continue practices people and businesses, executing created right right some it's to the things the

Scott Heleniak

enough. That's Yes. fair

just on persistency And then the question, too, a Okay. levels.

a they expectation any by you stable? you consistent the over give of year bit in you're trend, sense little past of give little that's on there how that, bit more detail segment? with just are or talk kind can mentioned Can the You just of been a to about trending script. more your Is

Paul McDonough

and So Sub for Scott, you're persistency that asking advantage? about Med trends

Scott Heleniak

Yes.

Paul McDonough

do Just to that's Yes. want clarify, Jeremy, to. that. your question. you to you want Jeremy, on comment

Unknown Executive

bit home Yes, they've been that. to expectations, i write on there. in about a nothing little maybe on stable. subook higher what pretty they med They've really is the line generally were than This to Jeremy. been but that, can with valu comment previous Generally,

Gary Bhojwani

us. with excuse client annuity, our across that other that. our fundamentally annuities book our their have place that as And of -- when they one Most persistency clients add bill perspective products investment, changes just have products annuity in expenses the should could are regard the bill. multiple conventional an the more me, on I the those holds expenses. as clients be. consumer more relationship relationship. insurance across monthly portfolio. if us us entrusts from When or those pays expense it buy as into life think stay us, They the regarded of particular, product an changes more annual about us a Scott, the that X and better of a are to of with likely our consumer The Medicare products wisdom an Because with us, the that so remember, with with their

expect our as And the annuities has number has have would that. book of us with see grown so annuity clients grown as we we to

I doing Now has one that on really worksite do we've our comments CNO, makes of been but to out also the business business, thing which our the up course, of very majority persistency. other the well, employee focusing consumer we've want point persistency employers by seen we're highly strong consumers been through employer, and both products the are there. very and the The very that particularly valued on providing to

comments and As focus appreciated. products and for as plug-in the doing there work, on we want a get get folks a fantastic are we're seeing consumer, job, I much to our really those

Operator

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

Suneet Kamath

about mid- of get terms XXs guess EPS low drivers for pretty sort guidance, the expecting what's kind balance to to backing is that But range? back. come of if I in think step-up first in I year your the decent I it Paul, like that implied. out will of alts looks closer a you're quarter, get XXs, that there you something to other to of you that big expect any high the

Paul McDonough

a Suneet, below expectations. always yes, I clearly Alts in certainly, say there's I'd to the favorable first quarter, and our bit And expectations. was takes. margin mean was puts

range. a to mentioned, And I as of the point it line the as earlier that comfortably $X.XX rate assuming my there's year. as $X.XX the estimate that the run XX% lower that sat the EPS for X% comes at I long-term original in and be in of between we inside EPS alts before, in more know, we're the I higher the you that and context QX, in of chance context, And year in will than with certainly end of mentioned here mentioned of for balance when that is As February. comments, in range

Suneet Kamath

about? any the recovering? big -- Got that if so to it. But I it is we of see anything there's want other most should be alts other just pieces thinking

Paul McDonough

that margin with actual expectations. as takes, over is trend puts noting continues out, and of side and I going I But results important total certainly assumption. the assume although some again, reasonable worth year. to there's play that's always think of mean I our think and that it's was the in to range expectation the be generally of kind in the balance to our to plus line was extent expectations, It that of an it's

Suneet Kamath

guess Okay. maybe Gary. bigger picture a for I Makes And sense. then question

I management the force the the topical issue field has of of very market. think in become eyes like

you think your independent a contractor XXXX, bit just how So as risk I'm overall little distribution talk contractors. or the employees organization? independent just manage about wondering, about within you Can especially we model

Gary Bhojwani

Sure. I Thank attention. you for getting the question. that topic is recognize And this

our a want that shareholders assure the So thing program. is all first robust have of we I to very compliance

and level so want compliance, our and activities agent license. our And that of X insurance of We ways of agents. Remember X above roughly X the monitoring there's oversight agents out different that an whole hold to so scrutiny of securities a I have forth, when people license, on securities also and also you experiences. a remind what beyond or of different a have

that's the think first I to thing point So out.

if The recognize model. nature second leadership the out leaders is our are unique to offices, of of of the WX at believe look offices, a rather thing I our force Most that's our field that employees. most slightly different. field those point you of

because the would the cost upside a that's we have we we oversight the and offices, Now cost is argue, model that downside we control of so is, model, don't but so infrastructure. than where fixed to that accountability, the downside greater speak, -- I have and base, greater our a greater own higher

our Now securities it's fantastic again, folks. independently do securities license. at Because of degree have and better leadership that type oversight you pretty this they When hybrid know on license, think And And I are the folks our of players with that most. the WX a significant and to job, indeed this XXX% that significant. than have majority have because is, population liability as that are opposed we've got contracted XXXX field of makes out a want the agents you offices because there level a have probably personal are but call agents we of than the the emphasize I we different to employees. us other ours,

us reduce bring course, of visibility think a of problem, materially together, you when have I the on? think early warning Does does does I it for problem? a increase So things of it all materially not. those the to it impossible that meaning so. make likelihood have, and And we signals so

that these a feel the tempting because going about that have folks place. our are, processes very in CEO think good we programs, a that's to never And have our a we're overseeing fate. very, good not says problem I the But I to we you want where and states. be we're

Operator

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

Wilma Jackson Burdis

over can path How What the to discuss are might take? -- from X% achieve get that you ROE? are some time? of Could current what there? the And CNO steps long we

Paul McDonough

question but won't focused team number, that and asking do executive we'll specific that to we expect surprise I rate XX%. a can and in we focused X.X-ish line that over specific I'm which group, we Wilma, close over on is XX% time. to for XX%, lots it's that And with tell it run are achieve to The something I don't bullets, that going peer more you be of not very We would the at is but aggregate all objective that, entire current you a there of to and ROE, time, there what give that's that take XX% the will number, I'm sort any I we're can Gary Paul. silver sure think say you into things very think are in gap. which on management the our is will

Gary Bhojwani

I can want if I couple add perspectives. jump a just Yes. Wilma, of to in,

we on with know would drive like we at me you Number have to stage. Paul, improve know this Paul, higher. what a our two, So of say hear ROE. would want you XXX% with guidance in we also I to peers. do absolutely from line We I more this ROE provide the not have I But get this ability higher. expect agreement to industry the going is can We we're specific to that line sight we need drive to

And for deliver focus we absolutely expect us. of so to And that's a do. against that. significant point we

Wilma Jackson Burdis

of that on follow-up quick you goal. help a toward a couple the things Just that. Could that could identify

Paul McDonough

we Sure. is at. looking I that's There broad the can and expenses to can can are with that kind would influence some strokes, that do you in things things do book are can a of we'd just in-force that the equation. are business. be behavior. something obviously with things obviously number kinds can pull, are pricing give policyholder There we the lever we we at of we're the impact that you things looking expect that denominator that in pricing. do do we with There can things with There new one,

but that So things that's not a the that's of comprehensive kinds we're looking list, at.

Gary Bhojwani

a like wasn't us we to where get it down. to then offerings of lot engine in sales into product slowed COVID COVID course. get I'd fair It's where felt the and Wilma, need the get they going recruiting launches, our had firing us, be unique our and a to add first. to it that obviously, a sequencing. of new in was impaired on agent terms my really things it was least be. a be to it need screwed we We they again At momentum where our lot of bit get perspective to that of get to need to view, critical of engine up for absolutely to sales firing different to folks, to

I of got think a fair we've momentum bit now.

sequencing needs will, not This our it's consistent Now that think more to conscious we on that's and focus the ROE and our the -- part sustainable And the sustainable more top There just part. realizing choice now we need next. going, making in improve. sales way, getting turn on the line, time are focused and efficient. to now was a that make it firing line was that got first in if machinery on attention we're that you a momentum our we've to It a what top to I it on it's to a getting was efficient.

Wilma Jackson Burdis

distribution? You Globe the talk some deal that but seems not to acquire And in market. XQ, about opportunities probably there's felt the the it you then targets in complete could did like possible distribution

Gary Bhojwani

few. Yes. targets years. We've We've over seen quite at looked the a

head just the carefully. know valuation comments. the Paul As stuff on opportunities. get looked the math. on to the right just open might about definitely But the on that most I side. the guys you think add side, make around others. we've you consider runs acquisitions there able At rather if we -- But Corporate I the couldn't opportunities signal to work we've numbers I my the couldn't small Eric us. last the of worksite I want least we've to I seen, you send would want we're for They acquisition for to at it. know, just over couldn't be I on valuations. pretty years, the X X I looked if done don't that candidates least consumer the side. Paul, at work obviously to over at any X get and Development Eric, I --

Paul McDonough

captures that Gary. it, think I

Operator

The Evercore next of question comes ISI. from Nicholas Lu

Thomas Gallagher

guide, for 'XX correctly. adverse the out for Paul, year I the it's understanding of question Gallagher. are think my or operating reported number $X.XX you as make I'm I is, that backing the using that -- to just in earnings full Tom $X.XX. alternatives the want sure But you're normalized

Paul McDonough

the Tom, we're using $X.XX as reported.

Thomas Gallagher

being you. underwriting alternative raising delta. adjustment. that then me, expectations a actually, case, considering Got that And our guess, the $X.XX that's slightly It's you're, above to the to I range,

of so performing QX is far? assess -- when just the what operating that's not, you the you you're standpoint? top assess in the at and seeing businesses when what And what an at like range if the end what's least businesses, true, from or various outperforming So

Paul McDonough

Sure.

expect as think first So our in you'd higher we kind for solving range. context you'd initially Tom, of that one, up points. be I when of probability, make we mentioned X the put lower I I were -- the And in we midpoint. end Number the we'd there's a the quarter, expect that out, guidance

terms in baked better which into And A to of then products I fourth certain wasn't of else run into previously you the thinking. initial that factor unlocking, in the guidance. might part what wake so is your contemplated. than the -- better contemplated encourage quarter of the that dynamic and in fully be rates So

Thomas Gallagher

Anything Paul? you else would to add that,

Paul McDonough

I following that were if No, to logic. just going you ask was

Thomas Gallagher

am, yes. I

earnings on pretty obviously question quarter. I bit similar QX. and drove weakness quarter, stat in in and was Did because statutory? earnings the soft, that think some benefit weaker GAAP normally on you gap stator saw I Just a But the a the were care. how favorable what earnings LTC see the to stat in relative seasonal a They the were in there's long-term

Paul McDonough

Yes.

So QX given to mentioned. a noting X, And worth Number as think care, long-term is first things seasonally lower, long-term growth then the sales I year strength in pretty you Tom. there, there's few respect care. with significant

difference a pretty there. significant there's to stat gap So

So pretax. out high. is other that's to point the all that taxes thing then And are quite the

stat taxes, million be And of taxes had really resulting of level $XX taxes. million we appears to elevated of tax the driving that things $X an there are on million So income and are in stat $XX then what loss. the X pretax

taxable earnings increased tax stat business. market our in to favorable context the increased the income the for equity relative FIA movements than that's stat of more reserves. is And One reserves which that have you the

of holdco NOLs, is second the opcos year. And So the paying use which utilized now the that's that were at a for opco the fully as level U.S. then are big U.S. our XQ last fact driver. of of

are emphasize those I the you So think stat things that the would as about primary results.

Thomas Gallagher

investment question Eric, That's just helpful. the guess on it I a then And for would final be, portfolio.

in results their are come on have return class, that of do would have in that investments peers given real that just that like about would that plan? And year because some MetLife expectations the asset the asked X/X estate. you lowered And expect So asset for you say, I to this pressure your commercial below have year. ongoing I in class alternative

Eric Johnson

digits also. I think digits credit, in our we're was and way, marginally same looking things reasonable of on on kind outcome, in mid-single hands normalized of similar on the total return a result a allocation think produced I funds results the the Tom, the and back mid-single kind more allocation, trending a excuse probably moving in in quarter. real and which I normalized toward private quarters is the PE of estate return that institutional And very quarter, -- stabilizing the the which the think toward quarter as so on offset positive about over mid all the by basis -- side first at the me, infrastructure quarter in trailing a

And and so piece really, to our outside materially alts $XX-ish obviously million negative a it's expectations not this quarter. the produced just That's the one itself going that allocation particular every to of quarter. replicate return on

as So looking I part toward of that the returns. reason normalized to we us. trailing think particularly have the part look we're think I year, the every of toward of ahead year

you as subject markets is inherent actions nothing and Now an know seeing us we uncertainty, we're developing the which that with just the eye. portfolio. and -- in taking have well to But are are sure trends the for

influence completed tail we As know, of we'll year. And example, past later good in the for will J you think million as next end that the PE we [indiscernible] a largely that $XXX we, with have get -- allocation, curve year. this

can results. So I foresee that I it's look think I I forward don't But producing to this talk And the future have that because it earnings where to calls about expects day to. readily.

Operator

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

Adam Auvil

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

Operator

today's this gentlemen, for you joining. Thank and Ladies call. concludes

lines. now your disconnect may You

CNO Financial (CNO) 30 Apr 242024 Q1 Earnings call transcript