Solid third quarter results, total new
annualized premiums up 13%
CARMEL,
Ind., Nov. 6, 2023 /PRNewswire/ -- CNO Financial
Group, Inc. (NYSE: CNO) today reported net income of $167.3 million, or $1.46 per diluted share, in 3Q23 compared to
$175.9 million, or $1.52 per diluted share, in 3Q22. Net operating
income (1) was $101.3
million, or $0.88 per diluted
share, in 3Q23 compared to $77.9
million, or $0.67 per diluted
share, in 3Q22. Net income and net operating income
(1) were both favorably impacted in 3Q23 by significant
items totaling $16.9 million, or
$0.14 per diluted share, as
summarized in note 7.
"We are pleased with our financial performance in the quarter,
led by both strong underwriting margins and net investment income
results," said Gary C. Bhojwani,
chief executive officer. "New products, programs to increase the
number and productivity of our agents, and tech-enabled efficiency
initiatives implemented over the last several quarters continue to
drive sustained sales growth and enhanced customer value."
"We posted increases in net operating income and book value per
diluted share, while enhancing our capital position. For the third
consecutive quarter, new money rates exceeded 6%, continuing the
positive trend in our earned yields. Health claims moderated in the
quarter as expected, and variable investment income results
continued to improve."
"CNO is pleased to launch our Bermuda affiliate and we are in the process of
implementing our initial reinsurance transaction. We remain
well-positioned to execute on our strategy to serve middle-income
America and deliver shareholder value."
Third Quarter 2023 Highlights (as compared to the
corresponding period in the prior year where applicable)
- Total Health insurance new annualized premiums ("NAP")
(4) up 14%; total Life insurance NAP up 11%
- Consumer Division NAP up 9% and field producing agent count up
9%
- Worksite Division NAP up 36% and producing agent count up
24%
- Returned $56.9 million to
shareholders
- Book value per share was $16.85;
book value per diluted share, excluding accumulated other
comprehensive loss, (2) was $33.75
- Return on equity ("ROE") of 14.5%; operating ROE, as adjusted,
(6) of 8.5%
Other Announcement
- CNO established its wholly-owned Bermuda reinsurance company and received all
necessary approvals to reinsure approximately $6.2 billion of inforce fixed indexed annuity
statutory reserves, in addition to new fixed indexed annuity
business. Implementation of the initial reinsurance transaction is
in process, with an effective date of October 1, 2023.
Adoption of New Accounting Standard
As previously disclosed, we adopted ASU 2018-12 related to
targeted improvements to the accounting for long-duration insurance
contracts effective January 1, 2023.
We selected the modified retrospective transition method except for
market risk benefits where we were required to use the full
retrospective approach. All prior periods presented herein have
been recast in accordance with the new standard. As a result of the
adoption of the new guidance, shareholders' equity as of
December 31, 2022 increased
$368.0 million and was comprised of:
(i) an increase to retained earnings of $232.2 million; and (ii) a decrease to
accumulated other comprehensive loss of $135.8 million. Net income and net operating
income (1) for the third quarter of 2022 increased
$70.9 million and $21.0 million, respectively. Concurrent with the
adoption of the new guidance, we also updated the method of
determining non-operating earnings for our fixed indexed annuities
to better isolate the volatile non-economic accounting impacts of
that line of business.
FINANCIAL
SUMMARY
Quarter
End
(Amounts in millions,
except per share data)
(Unaudited)
|
|
Net operating income, a
non-GAAP(a) financial measure, is used consistently by
CNO's management to evaluate the operating performance of the
Company and is a measure commonly used in the life insurance
industry. It differs from net income primarily because it
excludes certain non-operating items such as net realized
investment gains (losses) from sales and change in the allowance
for credit losses, changes in fair values of embedded derivatives
and market risk benefits and the liability for a deferred
compensation plan, and certain significant and unusual items
included in net income. Management believes an analysis of
net operating income is important in understanding the
profitability and operating trends of the Company's business.
Net income is the most directly comparable GAAP measure.
|
|
|
Per diluted
share
|
|
|
|
|
|
|
|
|
Quarter
ended
|
|
Quarter
ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
|
2022
|
|
%
change
|
|
2023
|
|
|
2022
|
|
%
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from insurance
products (b)
|
$
0.76
|
|
|
$
0.77
|
|
(1)
|
|
$ 86.8
|
|
|
$ 88.6
|
|
(2)
|
Fee income
|
(0.03)
|
|
|
0.01
|
|
(400)
|
|
(2.9)
|
|
|
1.4
|
|
(307)
|
Investment income not
allocated to product lines (c)
|
0.33
|
|
|
0.23
|
|
43
|
|
38.4
|
|
|
27.1
|
|
42
|
Expenses not allocated
to product lines
|
0.07
|
|
|
(0.14)
|
|
(150)
|
|
7.5
|
|
|
(16.1)
|
|
(147)
|
Operating earnings
before taxes
|
1.13
|
|
|
0.87
|
|
|
|
129.8
|
|
|
101.0
|
|
|
Income tax expense on
operating income
|
(0.25)
|
|
|
(0.20)
|
|
25
|
|
(28.5)
|
|
|
(23.1)
|
|
23
|
Net operating income
(1)
|
0.88
|
|
|
0.67
|
|
31
|
|
101.3
|
|
|
77.9
|
|
30
|
Net realized investment
losses from sales and
change in allowance for credit losses
|
(0.17)
|
|
|
—
|
|
|
|
(20.1)
|
|
|
(0.7)
|
|
|
Net change in market
value of investments
recognized in earnings
|
(0.08)
|
|
|
(0.15)
|
|
|
|
(9.2)
|
|
|
(17.0)
|
|
|
Changes in fair value
of embedded derivative
liabilities and market risk benefits
|
0.95
|
|
|
1.13
|
|
|
|
109.4
|
|
|
130.6
|
|
|
Other
|
0.05
|
|
|
0.12
|
|
|
|
5.7
|
|
|
14.0
|
|
|
Non-operating income
before taxes
|
0.75
|
|
|
1.10
|
|
|
|
85.8
|
|
|
126.9
|
|
|
Income tax expense on
non-operating income
|
(0.17)
|
|
|
(0.25)
|
|
|
|
(19.8)
|
|
|
(28.9)
|
|
|
Net non-operating
income
|
0.58
|
|
|
0.85
|
|
|
|
66.0
|
|
|
98.0
|
|
|
Net
income
|
$
1.46
|
|
|
$
1.52
|
|
|
|
$ 167.3
|
|
|
$
175.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares outstanding
|
114.5
|
|
|
115.9
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
GAAP is defined as
accounting principles generally accepted in the United States of
America.
|
(b)
|
Income from insurance
products is the sum of the insurance margins of the annuity, health
and life segments, less allocated insurance administrative
expenses. It excludes the fee income segment, investment
income not allocated to product lines, expenses not allocated to
product lines and income taxes. Insurance margin is
management's measure of the profitability of its annuity, health
and life segments' performance and consists of insurance policy
income plus allocated investment income less insurance policy
benefits, interest credited, commissions, advertising expense and
amortization of acquisition costs.
|
(c)
|
Investment income not
allocated to product lines represents net investment income less:
(i) equity returns credited to policyholder account balances; (ii)
the investment income allocated to our product lines; (iii)
interest expense on notes payable, investment borrowings and
financing arrangements; (iv) expenses related to the funding
agreement-backed notes ("FABN") program; and (v) certain expenses
related to benefit plans that are offset by special-purpose
investment income; plus (vi) the impact of annual option
forfeitures related to fixed indexed annuity surrenders.
|
FINANCIAL SUMMARY
(continued)
Management vs. GAAP
Measures
(Dollars in millions,
except per share data)
(Unaudited)
|
|
Shareholders' equity,
excluding accumulated other comprehensive income (loss), and book
value per share, excluding accumulated other comprehensive income
(loss), are non-GAAP measures that are utilized by management to
view the business without the effect of accumulated other
comprehensive income (loss) which is primarily attributable to
fluctuations in interest rates associated with fixed maturities,
available for sale. Management views the business in this
manner because the Company has the ability and generally, the
intent, to hold investments to maturity and meaningful trends can
be more easily identified without the fluctuations. In
addition, shareholders' equity excludes net operating loss
carryforwards in our non-GAAP return on equity measures as such
assets are not discounted and, accordingly, will not provide a
return to shareholders until after it is realized as a reduction to
taxes that would otherwise be paid. Management believes that
excluding this value from the equity component of this measure
enhances the understanding of the effect these non-discounted
assets have on operating returns.
|
|
|
Quarter
ended
|
|
September
30,
|
|
2023
|
|
2022
|
|
|
|
|
Trailing twelve months
return on equity (a)
|
14.5 %
|
|
26.4 %
|
Trailing twelve months
operating return on equity, excluding accumulated other
comprehensive income (loss)
and net operating loss carryforwards (a non-GAAP financial measure)
(6)
|
8.5 %
|
|
11.9 %
|
Trailing twelve months
operating return, excluding significant items, on equity, excluding
accumulated other
comprehensive income (loss) and net operating loss carryforwards (a
non-GAAP financial measure) (6)
|
8.0 %
|
|
11.3 %
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
$ 1,890.1
|
|
$
1,863.4
|
Accumulated other
comprehensive loss
|
1,956.7
|
|
1,837.8
|
|
|
|
|
Shareholders' equity,
excluding accumulated other comprehensive loss
|
3,846.8
|
|
3,701.2
|
Net operating loss
carryforwards
|
(102.6)
|
|
(190.9)
|
Shareholders' equity,
excluding accumulated other comprehensive loss and net operating
loss carryforwards
|
$ 3,744.2
|
|
$
3,510.3
|
|
|
|
|
Book value per diluted
share
|
$
16.58
|
|
$
16.07
|
Accumulated other
comprehensive loss
|
17.17
|
|
15.84
|
|
|
|
|
Book value per diluted
share, excluding accumulated other comprehensive loss (a non-GAAP
financial
measure) (2)
|
$
33.75
|
|
$
31.91
|
|
|
(a)
|
Calculated using
average shareholders' equity for the measurement period.
|
INSURANCE OPERATIONS
Annuity products accounted for 24 percent of the Company's
insurance margin for the quarter and annuity premiums collected
increased 1 percent in 3Q23 compared to 3Q22.
Health products accounted for 51 percent of the Company's
insurance margin for the quarter and 64 percent of insurance policy
income.
Life products accounted for 25 percent of the Company's
insurance margin for the quarter and 35 percent of insurance policy
income.
Sales of health products were up 14 percent and sales of life
products were up 11 percent in 3Q23 compared to 3Q22.
ANNUITY COLLECTED
PREMIUMS
(Dollars in
millions)
(Unaudited)
|
|
|
Quarter ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
%
change
|
Annuity collected
premiums
|
$
372.2
|
|
$
370.0
|
|
1
|
|
INSURANCE POLICY
INCOME
(Dollars in
millions)
(Unaudited)
|
|
|
Quarter ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
%
change
|
Annuity
|
$
7.2
|
|
$
6.3
|
|
14
|
Health
|
397.8
|
|
403.5
|
|
(1)
|
Life
|
221.0
|
|
213.4
|
|
4
|
Total insurance
policy income
|
$
626.0
|
|
$
623.2
|
|
—
|
|
SALES MEASURED AS
NEW ANNUALIZED PREMIUMS FOR
LIFE AND HEALTH
PRODUCTS
(Dollars in
millions)
(Unaudited)
|
|
|
Quarter ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
%
change
|
Health
|
$
48.3
|
|
$
42.2
|
|
14
|
Life
|
50.0
|
|
45.1
|
|
11
|
Total new
annualized premiums (4)
|
$
98.3
|
|
$
87.3
|
|
13
|
INSURANCE
MARGIN
(Amounts in millions,
except per share data)
(Unaudited)
|
|
Insurance margin is
management's measure of profitability of its annuity, health and
life segments' performance and consists of insurance policy income
plus allocated investment income less insurance policy benefits,
interest credited, commissions, advertising expense and
amortization of acquisition costs. Income from insurance products
is the sum of the insurance margins of the annuity, health and life
segments, less allocated insurance administrative expenses.
It excludes the fee income segment, investment income not allocated
to product lines, expenses not allocated to product lines and
income taxes. Management believes this information helps provide a
better understanding of the business and a more meaningful analysis
of our operations. Income from insurance products, a non-GAAP
measure, is a component of net operating income, which is
reconciled to net income in the Financial Summary section
above.
|
|
|
Quarter
ended
|
|
September
30,
2023
|
|
% of
insurance
policy
income
|
|
|
September
30,
2022
|
|
% of
insurance
policy
income
|
|
%
change
|
Margin
|
|
|
|
|
|
|
|
|
|
|
Annuity interest
margin
|
$
57.0
|
|
|
|
|
$
60.1
|
|
|
|
(5)
|
Life insurance
interest margin
|
1.0
|
|
|
|
|
0.5
|
|
|
|
100
|
Total
interest-sensitive margin
|
58.0
|
|
|
|
|
60.6
|
|
|
|
(4)
|
Insurance
margin
|
|
|
|
|
|
|
|
|
|
|
Health
|
123.2
|
|
31
|
|
|
123.3
|
|
31
|
|
—
|
Life
(a)
|
58.8
|
|
27
|
|
|
55.2
|
|
26
|
|
7
|
Total other insurance
margin
|
182.0
|
|
29
|
|
|
178.5
|
|
29
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
Total insurance
margin
|
240.0
|
|
|
|
|
239.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocated
expenses
|
(153.2)
|
|
|
|
|
(150.5)
|
|
|
|
|
Income from
insurance products
|
$
86.8
|
|
|
|
|
$
88.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted
share
|
$
0.76
|
|
|
|
|
$
0.77
|
|
|
|
|
Weighted average
diluted shares
|
114.5
|
|
|
|
|
115.9
|
|
|
|
|
|
|
(a)
|
Net of $22.6 million
and $22.1 million of non-deferred television advertising expense
related to our direct distribution channel in the 2023 and 2022
periods, respectively.
|
|
Total allocated
expenses were $153.2 million, up 2 percent from 3Q22.
|
ANNUITY RESULTS BY
PRODUCT TYPE
(Dollars in
millions)
(Unaudited)
|
|
Annuity
margin
|
|
Quarter
ended
|
|
September
30,
|
|
2023
|
|
2022
|
Fixed indexed
annuities
|
$
47.2
|
|
$
48.9
|
Fixed interest
annuities
|
8.4
|
|
8.2
|
Other
annuities
|
1.4
|
|
3.0
|
Total
|
$
57.0
|
|
$
60.1
|
|
Annuity collected
premiums
|
|
Quarter
ended
|
|
September
30,
|
|
2023
|
|
2022
|
Annuity collected
premiums
|
$
372.2
|
|
$
370.0
|
|
Average net
insurance liabilities (5)
|
|
Quarter
ended
|
|
September
30,
|
|
2023
|
|
2022
|
Fixed indexed
annuities
|
$
9,381.0
|
|
$
8,902.9
|
Fixed interest
annuities
|
1,603.0
|
|
1,675.9
|
Other
annuities
|
455.6
|
|
478.8
|
Total
|
$ 11,439.6
|
|
$ 11,057.6
|
|
Margin/average net
insurance liabilities (a)
|
|
Quarter
ended
|
|
September
30,
|
|
2023
|
|
2022
|
Fixed indexed
annuities
|
2.01 %
|
|
2.20 %
|
Fixed interest
annuities
|
2.10 %
|
|
1.96 %
|
Other
annuities
|
1.23 %
|
|
2.51 %
|
Total
|
1.99 %
|
|
2.17 %
|
(a)
|
Defined as annualized
quarterly annuity margin divided by average net insurance
liabilities (5).
|
HEALTH INSURANCE
RESULTS BY PRODUCT TYPE
(Dollars in
millions)
(Unaudited)
|
|
Health
margin
|
|
Quarter
ended
|
|
September
30,
|
|
2023
|
|
2022
|
|
|
|
Amount
|
|
% of
insurance
policy
income
|
|
Amount
|
|
% of
insurance
policy
income
|
|
%
change
|
Supplemental health
and other health
|
$
62.8
|
|
35
|
|
$
58.5
|
|
34
|
|
7
|
Medicare
supplement
|
37.2
|
|
24
|
|
38.7
|
|
24
|
|
(4)
|
Long-term
care
|
23.2
|
|
35
|
|
26.1
|
|
39
|
|
(11)
|
Total
|
$
123.2
|
|
31
|
|
$
123.3
|
|
31
|
|
—
|
Health insurance
policy income
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
|
|
2023
|
|
2022
|
|
%
change
|
Supplemental health
and other health
|
$
177.9
|
|
$
173.5
|
|
3
|
Medicare
supplement
|
154.2
|
|
163.6
|
|
(6)
|
Long-term
care
|
65.7
|
|
66.4
|
|
(1)
|
Total
|
$
397.8
|
|
$
403.5
|
|
(1)
|
Health NAP
(4)
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
|
|
2023
|
|
2022
|
|
%
change
|
Supplemental health
and other health
|
$
30.7
|
|
$
28.2
|
|
9
|
Medicare
supplement
|
8.7
|
|
8.0
|
|
9
|
Long-term
care
|
8.9
|
|
6.0
|
|
48
|
Total
|
$
48.3
|
|
$
42.2
|
|
14
|
LIFE INSURANCE
RESULTS BY PRODUCT TYPE
(Dollars in
millions)
(Unaudited)
|
|
Life
margin
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
|
|
2023
|
|
2022
|
|
|
|
Amount
|
|
% of
insurance
policy
income
|
|
Amount
|
|
% of
insurance
policy
income
|
|
%
change
|
Life insurance
interest margin
|
$
1.0
|
|
|
|
$
0.5
|
|
|
|
100
|
Life insurance
margin:
|
|
|
|
|
|
|
|
|
|
Traditional
life
|
36.9
|
|
21
|
|
38.1
|
|
22
|
|
(3)
|
Interest sensitive
life
|
21.9
|
|
49
|
|
17.1
|
|
39
|
|
28
|
Subtotal
|
58.8
|
|
27
|
|
55.2
|
|
26
|
|
7
|
Total
margin
|
$
59.8
|
|
|
|
$
55.7
|
|
|
|
7
|
Life insurance
policy income
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
|
|
2023
|
|
2022
|
|
%
change
|
Traditional
life
|
$
175.9
|
|
$
169.9
|
|
4
|
Interest sensitive
life
|
45.1
|
|
43.5
|
|
4
|
Total
|
$
221.0
|
|
$
213.4
|
|
4
|
Life NAP
(4)
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
|
|
2023
|
|
2022
|
|
%
change
|
Traditional
life
|
$
41.9
|
|
$
38.2
|
|
10
|
Interest sensitive
life
|
8.1
|
|
6.9
|
|
17
|
Total
|
$
50.0
|
|
$
45.1
|
|
11
|
Average net
insurance liabilities (5) and interest margin
|
|
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
|
|
2023
|
|
2022
|
|
%
change
|
Interest sensitive
life products
|
$
1,039.6
|
|
$
1,019.2
|
|
2
|
Interest
margin/average net insurance liabilities (5)
|
0.38 %
|
|
0.20 %
|
|
90
|
QUARTERLY AVERAGE
EXCLUSIVE PRODUCING AGENTS
|
|
|
Average Exclusive
Producing Agent Count
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
%
|
|
2023
|
|
2022
|
|
change
|
Consumer
|
|
|
|
|
|
Field agents (a)
(c)
|
4,267
|
|
3,913
|
|
9
|
Registered agents (b)
(c)
|
701
|
|
688
|
|
2
|
Worksite (a)
(c)
|
321
|
|
258
|
|
24
|
____________________
|
(a)
|
Producing agents
represent the monthly average of exclusive agents that have
submitted at least one policy in the month.
|
(b)
|
Registered agents are
dually licensed as insurance agents and financial representatives
who can buy and sell securities for clients, and/or investment
advisors who can provide ongoing investment advice for
clients.
|
(c)
|
Agent counts represent
the average of the last 3 months.
|
INVESTMENTS
INVESTMENT INCOME
NOT ALLOCATED TO PRODUCT LINES
(Dollars in millions,
except per share data)
|
|
Management uses
investment income not allocated to product lines as the measure to
evaluate the performance of the investment segment. It is
defined as net investment income less: (i) equity returns credited
to policyholder account balances; (ii) the investment income
allocated to our product lines; (iii) interest expense on notes
payable, investment borrowings and financing arrangements; (iv)
expenses related to the FABN program; and (v) certain expenses
related to benefit plans that are offset by special-purpose
investment income; plus (vi) the impact of annual option
forfeitures related to fixed indexed annuity surrenders. We also
view investment income not allocated to product lines per diluted
share as an important and useful measure to evaluate performance of
the investment segment as it takes into consideration our share
repurchase program.
|
|
|
Quarter ended
September 30,
|
|
|
|
2023
|
|
2022
|
|
%
change
|
Net investment
income
|
$
291.8
|
|
$
268.1
|
|
9
|
Allocated to product
lines:
|
|
|
|
|
|
Annuity
|
(131.0)
|
|
(121.1)
|
|
8
|
Health
|
(74.2)
|
|
(73.3)
|
|
1
|
Life
|
(36.3)
|
|
(35.4)
|
|
3
|
Equity returns credited
to policyholder account balances
|
54.6
|
|
34.9
|
|
56
|
Amounts allocated to
product lines and credited to policyholder account
balances
|
(186.9)
|
|
(194.9)
|
|
(4)
|
Impact of annual option
forfeitures related to fixed indexed annuity surrenders
|
2.5
|
|
(1.1)
|
|
(327)
|
Amount related to
variable interest entities and other non-operating items
|
(18.7)
|
|
(13.6)
|
|
38
|
Interest expense on
corporate debt
|
(15.7)
|
|
(15.6)
|
|
1
|
Interest expense on
financing arrangements
|
(1.1)
|
|
—
|
|
N/A
|
Interest expense on
investment borrowings from the Federal Home Loan Bank
program
|
(28.3)
|
|
(10.3)
|
|
175
|
Expenses related to
FABN program
|
(7.6)
|
|
(7.5)
|
|
1
|
Less amounts credited
to deferred compensation plans (offsetting investment
income)
|
2.4
|
|
2.0
|
|
20
|
Total
adjustments
|
(66.5)
|
|
(46.1)
|
|
|
Investment income
not allocated to product lines
|
$
38.4
|
|
$
27.1
|
|
42
|
|
|
|
|
|
|
Per diluted
share
|
$
0.33
|
|
$
0.23
|
|
|
INVESTMENT
PORTFOLIO
(Dollars in
millions)
|
|
The composition of the
investment portfolio at September 30, 2023 is as
follows:
|
|
$
|
|
% of
total
|
Fixed maturities,
available for sale, at fair value
|
$ 20,305.2
|
|
82
|
Equity securities at
fair value
|
95.5
|
|
—
|
Mortgage
loans
|
1,971.3
|
|
8
|
Policy loans
|
126.4
|
|
1
|
Trading
securities
|
221.2
|
|
1
|
Investments held by
variable interest entities
|
858.1
|
|
3
|
Other invested
assets
|
1,119.9
|
|
5
|
Total investment
portfolio
|
$ 24,697.6
|
|
100
|
Fixed maturities,
available for sale, at amortized cost by asset class as of
September 30, 2023 are as follows:
|
|
|
Investment
grade
|
|
Below
investment
grade
|
|
Total
|
Corporate
securities
|
$ 12,751.9
|
|
$
560.2
|
|
$ 13,312.1
|
United States Treasury
securities and obligations of the United States government and
agencies
|
194.2
|
|
—
|
|
194.2
|
States and political
subdivisions
|
2,837.9
|
|
10.6
|
|
2,848.5
|
Foreign
governments
|
93.3
|
|
—
|
|
93.3
|
Asset-backed
securities
|
1,388.3
|
|
111.9
|
|
1,500.2
|
Agency residential
mortgage-backed securities
|
627.9
|
|
—
|
|
627.9
|
Non-agency residential
mortgage-backed securities
|
1,171.3
|
|
524.5
|
(a)
|
1,695.8
|
Collateralized loan
obligations
|
1,077.7
|
|
—
|
|
1,077.7
|
Commercial
mortgage-backed securities
|
2,462.5
|
|
87.3
|
|
2,549.8
|
|
|
|
|
|
|
Total
|
$ 22,605.0
|
|
$
1,294.5
|
|
$ 23,899.5
|
____________________
|
(a)
|
Certain structured
securities rated below investment grade by Nationally Recognized
Statistical Rating Organizations may be assigned a NAIC 1 or NAIC 2
designation based on the cost basis of the security relative to
estimated recoverable amounts as determined by the National
Association of Insurance Commissioners (NAIC).
|
|
|
The fair value of CNO's
available for sale fixed maturity portfolio was $20.3 billion
compared with an amortized cost of $23.9 billion. Net
unrealized losses were comprised of gross unrealized gains of $54.7
million and gross unrealized losses of $3,579.6 million. The
allowance for credit losses was $69.4 million at September 30,
2023.
|
|
|
At amortized cost and
fair value, 95 percent and 94 percent, respectively, of fixed
maturities, available for sale, were rated "investment
grade".
|
Non-Operating Items
Net investment losses in 3Q23 were
$20.1 million including the
unfavorable change in the allowance for credit losses of
$2.3 million which was recorded in
earnings. Net investment losses in 3Q22 were $0.7 million including the favorable change in
the allowance for credit losses of $7.5
million which was recorded in earnings.
During 3Q23 and 3Q22, we recognized a decrease in earnings of
$9.2 million and $17.0 million, respectively, due to the net
change in market value of investments recognized in earnings.
During 3Q23 and 3Q22, we recognized an increase in earnings of
$109.4 million and $130.6 million, respectively, resulting from
changes in the estimated fair value of embedded derivative
liabilities and market risk benefits related to our fixed indexed
annuities. Such amounts include the impacts of changes in
market interest rates and equity impacts used to determine the
estimated fair values of the embedded derivatives and market risk
benefits.
In 3Q23 and 3Q22, other non-operating items included an increase
in earnings of $6.8 million and
$12.0 million, respectively, for the
mark-to-market change in the agent deferred compensation plan
liability which was impacted by changes in the underlying actuarial
assumptions used to value the liability. We recognize the
mark-to-market change in the estimated value of this liability
through earnings as assumptions change.
Statutory (based on non-GAAP measures) and GAAP Capital
Information
Our consolidated statutory risk-based capital
ratio was estimated at 392% at September 30,
2023, reflecting estimated 3Q23 statutory operating income
of $37 million (and $113 million in the first nine months of 2023)
and the payment of insurance company dividends (net of capital
contributions) to the holding company of $58.7 million during the first nine months of
2023 (including a capital contribution of $16.0 million in 3Q23).
During 3Q23, we repurchased $40.0
million of common stock under our securities repurchase
program (including $0.8 million of
repurchases settled in 4Q23). We repurchased 1.6 million
common shares at an average cost of $24.28 per share. As of September 30, 2023, we had 112.2 million shares
outstanding and had authority to repurchase up to an additional
$601.8 million of our common
stock. During 3Q23, dividends paid on common stock totaled
$16.9 million.
Unrestricted cash and investments held by our holding company
were $171 million at September 30, 2023, compared to $167 million at December
31, 2022.
Book value per common share was $16.85 at September 30,
2023 compared to $15.47 at
December 31, 2022. Book value
per diluted share, excluding accumulated other comprehensive income
(loss) (2), was $33.75 at
September 30, 2023, compared to
$31.89 at December 31, 2022.
The debt-to-capital ratio was 37.6 percent and 39.2 percent at
September 30, 2023 and December 31, 2022, respectively. Our
debt-to-total capital ratio, excluding accumulated other
comprehensive income (loss) (3) was 22.9 percent and 23.4 percent
at September 30, 2023 and
December 31, 2022, respectively.
Return on equity for the trailing four quarters ended
September 30, 2023 and 2022, was
14.5% and 26.4%, respectively. Operating return, excluding
significant items, on equity, excluding accumulated other
comprehensive income (loss) and net operating loss carryforwards
(6) for the trailing four quarters ended September 30, 2023 and 2022, was 8.0% and 11.3%,
respectively.
In this news release, CNO includes non-GAAP measures to enhance
investors' understanding of management's view of the
business. The non-GAAP measures are not a substitute for
GAAP, but rather a supplement to increase transparency by providing
a broader perspective. CNO's definitions of non-GAAP measures
may differ from other companies' definitions. More detailed
information including various GAAP and non-GAAP measurements are
located at CNOinc.com in the Investors section under SEC
Filings.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS:
This press release may contain forward-looking statements within
the meaning of federal securities laws. These prospective
statements reflect management's current expectations, but are not
guarantees of future performance. Accordingly, please refer
to CNO's cautionary statement regarding forward-looking statements,
and the business environment in which the Company operates,
contained in the Company's Form 10-K for the year ended
December 31, 2022 and any subsequent
Form 10-Q or Form 10-K on file with the Securities and Exchange
Commission and on the Company's website at CNOinc.com in the
Investors section. CNO specifically disclaims any obligation
to update or revise any forward-looking statement because of new
information, future developments or otherwise.
EARNINGS RELEASE CONFERENCE CALL WEBCAST:
The Company will host a conference call to discuss results on
November 7, 2023 at 11:00 a.m. Eastern Time. During the call,
we will be referring to a presentation that will be available at
the Investors section of the company's website.
To participate by dial-in, please register at
https://www.netroadshow.com/events/login?show=edc4d6ff&confId=57328.
Upon registering, you will be provided with call details and a
registrant ID used to track attendance on the conference call.
Reminders will also be sent to registered participants via
email.
For those investors who prefer to listen to the call online, we
will be broadcasting the call live via webcast. The event can
be accessed through the Investors section of the company's website:
ir.CNOinc.com. Participants should go to the website at least
15 minutes before the event to register and download any necessary
audio software.
ABOUT CNO FINANCIAL GROUP
CNO Financial Group, Inc. (NYSE: CNO) secures the future of
middle-income America. CNO provides life and health
insurance, annuities, financial services, and workforce benefits
solutions through our family of brands, including Bankers Life,
Colonial Penn, Optavise and Washington National. Our
customers work hard to save for the future, and we help protect
their health, income, and retirement needs with 3.2 million
policies and $34 billion in total
assets. Our 3,400 associates, 4,600 exclusive agents and more than
4,000 independent partner agents guide individuals, families, and
businesses through a lifetime of financial decisions. For more
information, visit CNOinc.com.
CNO FINANCIAL GROUP,
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEET
(Dollars in
millions)
(unaudited)
|
|
|
September
30,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Investments:
|
|
|
|
Fixed maturities,
available for sale, at fair value (net of allowance for credit
losses:
September 30, 2023 - $69.4 and December 31, 2022 - $56.0;
amortized cost: September 30,
2023 - $23,899.5 and December 31, 2022 - $23,384.2)
|
$
20,305.2
|
|
$
20,353.4
|
Equity securities at
fair value
|
95.5
|
|
135.3
|
Mortgage loans (net of
allowance for credit losses: September 30, 2023 - $10.9
and
December 31, 2022 - $8.0)
|
1,971.3
|
|
1,411.9
|
Policy
loans
|
126.4
|
|
121.6
|
Trading
securities
|
221.2
|
|
207.9
|
Investments held by
variable interest entities (net of allowance for credit losses:
September 30,
2023 - $2.9 and December 31, 2022 - $5.5; amortized cost:
September 30, 2023 - $880.6 and
December 31, 2022 - $1,134.2)
|
858.1
|
|
1,077.6
|
Other invested
assets
|
1,119.9
|
|
1,034.7
|
Total
investments
|
24,697.6
|
|
24,342.4
|
Cash and cash
equivalents - unrestricted
|
460.8
|
|
575.7
|
Cash and cash
equivalents held by variable interest entities
|
122.0
|
|
69.2
|
Accrued investment
income
|
252.3
|
|
235.6
|
Present value of future
profits
|
186.2
|
|
203.7
|
Deferred acquisition
costs
|
1,897.5
|
|
1,770.9
|
Reinsurance receivables
(net of allowance for credit losses: September 30, 2023 - $3.0
and
December 31, 2022 - $2.0)
|
4,053.2
|
|
4,223.4
|
Market risk benefit
asset
|
89.3
|
|
65.3
|
Income tax assets,
net
|
1,039.8
|
|
1,063.4
|
Assets held in separate
accounts
|
2.9
|
|
2.7
|
Other assets
|
705.8
|
|
580.8
|
Total
assets
|
$
33,507.4
|
|
$
33,133.1
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Liabilities:
|
|
|
|
Liabilities for
insurance products:
|
|
|
|
Policyholder
account balances
|
$
15,481.8
|
|
$
15,234.2
|
Future policy
benefits
|
10,829.9
|
|
11,240.2
|
Market risk
benefit liability
|
3.1
|
|
11.3
|
Liability for
life insurance policy claims
|
60.8
|
|
64.1
|
Unearned and
advanced premiums
|
221.2
|
|
235.0
|
Liabilities
related to separate accounts
|
2.9
|
|
2.7
|
Other
liabilities
|
869.6
|
|
693.9
|
Investment
borrowings
|
2,089.4
|
|
1,639.5
|
Borrowings related to
variable interest entities
|
918.5
|
|
1,104.6
|
Notes payable – direct
corporate obligations
|
1,140.1
|
|
1,138.8
|
Total
liabilities
|
31,617.3
|
|
31,364.3
|
Commitments and
Contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common stock ($0.01 par
value, 8,000,000,000 shares authorized, shares issued and
outstanding: September 30, 2023 – 112,163,169;
December 31, 2022 – 114,343,070)
|
1.1
|
|
1.1
|
Additional paid-in
capital
|
1,965.3
|
|
2,033.8
|
Accumulated other
comprehensive loss
|
(1,956.7)
|
|
(1,957.3)
|
Retained
earnings
|
1,880.4
|
|
1,691.2
|
Total
shareholders' equity
|
1,890.1
|
|
1,768.8
|
Total
liabilities and shareholders' equity
|
$
33,507.4
|
|
$
33,133.1
|
CNO FINANCIAL GROUP,
INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF OPERATIONS
(Dollars in millions,
except per share data)
(unaudited)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
|
|
|
|
Insurance policy
income
|
$
626.0
|
|
$
623.2
|
|
$
1,879.8
|
|
$
1,873.8
|
Net investment
income:
|
|
|
|
|
|
|
|
General account
assets
|
324.8
|
|
289.0
|
|
925.1
|
|
884.2
|
Policyholder
and other special-purpose portfolios
|
(33.0)
|
|
(20.9)
|
|
109.4
|
|
(184.0)
|
Investment gains
(losses):
|
|
|
|
|
|
|
|
Realized
investment gains (losses)
|
(21.6)
|
|
(8.2)
|
|
(58.0)
|
|
3.6
|
Other
investment losses
|
(7.7)
|
|
(9.5)
|
|
(21.2)
|
|
(102.8)
|
Total investment
losses
|
(29.3)
|
|
(17.7)
|
|
(79.2)
|
|
(99.2)
|
Fee revenue and other
income
|
59.0
|
|
31.7
|
|
141.2
|
|
128.4
|
Total
revenues
|
947.5
|
|
905.3
|
|
2,976.3
|
|
2,603.2
|
Benefits and
expenses:
|
|
|
|
|
|
|
|
Insurance policy
benefits
|
399.1
|
|
396.1
|
|
1,574.7
|
|
1,032.2
|
Liability for future
policy benefits remeasurement loss
|
(0.1)
|
|
(5.0)
|
|
8.8
|
|
2.3
|
Change in fair value
of market risk benefits
|
(33.8)
|
|
(34.9)
|
|
(36.6)
|
|
(117.9)
|
Interest
expense
|
62.6
|
|
37.6
|
|
174.9
|
|
89.2
|
Amortization of
deferred acquisition costs and present value of future
profits
|
57.0
|
|
53.5
|
|
168.5
|
|
158.5
|
Other operating costs
and expenses
|
247.1
|
|
230.1
|
|
775.3
|
|
670.9
|
Total benefits and
expenses
|
731.9
|
|
677.4
|
|
2,665.6
|
|
1,835.2
|
Income before income
taxes
|
215.6
|
|
227.9
|
|
310.7
|
|
768.0
|
Income tax expense on
period income
|
48.3
|
|
52.0
|
|
70.5
|
|
175.4
|
Net income
|
$
167.3
|
|
$
175.9
|
|
$
240.2
|
|
$
592.6
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
112,689,000
|
|
114,354,000
|
|
113,836,000
|
|
116,170,000
|
Net income
|
$
1.48
|
|
$
1.54
|
|
$
2.11
|
|
$
5.10
|
Diluted:
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
114,462,000
|
|
115,928,000
|
|
115,613,000
|
|
118,072,000
|
Net income
|
$
1.46
|
|
$
1.52
|
|
$
2.08
|
|
$
5.02
|
NOTES
|
(1)
|
Management believes
that an analysis of Net income applicable to common stock before:
(i) net realized investment gains or losses from sales, impairments
and the change in allowance for credit losses, net of taxes; (ii)
net change in market value of investments recognized in earnings,
net of taxes; (iii) changes in fair value of embedded derivative
liabilities and market risk benefits related to our fixed indexed
annuities, net of taxes; (iv) fair value changes related to the
agent deferred compensation plan, net of taxes; (v) loss related to
reinsurance transaction, net of taxes; (vi) loss on extinguishment
of debt, net of taxes; (vii) changes in the valuation allowance for
deferred tax assets and other tax items; and (viii) other
non-operating items consisting primarily of earnings attributable
to variable interest entities, net of taxes ("Net operating
income," a non-GAAP financial measure) is important to evaluate the
financial performance of the company, and is a key measure commonly
used in the life insurance industry. Management uses this
measure to evaluate performance because the items excluded from net
operating income can be affected by events that are unrelated to
the company's underlying fundamentals. A reconciliation of
Net operating income to Net income applicable to common stock is
provided in the table on page 2. Additional information
concerning this non-GAAP measure is included in our periodic
filings with the Securities and Exchange Commission that are
available in the "Investors - SEC Filings" section of CNO's
website, CNOinc.com.
|
(2)
|
Book value per diluted
share reflects the potential dilution that could occur if
outstanding stock options were exercised and restricted stock and
performance units were vested. The dilution from options,
restricted shares and performance units is calculated using the
treasury stock method. Under this method, we assume the
proceeds from the exercise of the options (or the unrecognized
compensation expense with respect to restricted stock and
performance units) will be used to purchase shares of our common
stock at the closing market price on the last day of the
period. In addition, the calculation of this non-GAAP measure
differs from the corresponding GAAP measure because accumulated
other comprehensive income (loss) has been excluded from the value
of capital used to determine this measure. Management
believes this non-GAAP measure is useful because it removes the
volatility that arises from changes in the unrealized appreciation
(depreciation) of our investments.
|
(3)
|
The calculation of this
non-GAAP measure differs from the corresponding GAAP measure
because accumulated other comprehensive income (loss) has been
excluded from the value of capital used to determine this
measure. Management believes this non-GAAP measure is useful
because it removes the volatility that arises from changes in the
unrealized appreciation (depreciation) of our
investments.
|
(4)
|
Measured by new
annualized premiums for life and health products, which includes
10% of single premium whole life deposits and 100% of all other
premiums (excluding annuities). Sales of third-party products
are excluded.
|
(5)
|
Net insurance
liabilities for the purpose of allocating investment income to
product lines are equal to: (i) policyholder account balances for
annuity products; (ii) total reserves before the fair value
adjustments reflected in accumulated other comprehensive income
(loss), if applicable, for all other products; less (iii) amounts
related to reinsurance business; (iv) deferred acquisition costs;
(v) the present value of future profits; and (vi) the value of
unexpired options credited to insurance liabilities.
|
(6)
|
The following
summarizes the calculations of: (i) operating return on equity,
excluding accumulated other comprehensive income (loss) and net
operating loss carryforwards (a non-GAAP financial measure); (ii)
operating return, excluding significant items, on equity, excluding
accumulated other comprehensive income (loss) and net operating
loss carryforwards (a non-GAAP financial measure); and (iii) return
on equity are as follows (dollars in millions):
|
|
|
|
|
|
Trailing twelve months
ended
|
|
|
|
3Q23
|
|
3Q22
|
Net operating
income
|
$
305.1
|
|
$ 380.6
|
|
|
|
|
|
|
Net operating income,
excluding significant items
|
$
287.7
|
|
$ 360.9
|
|
|
|
|
|
|
Net income
|
$
278.2
|
|
$ 749.8
|
|
|
|
|
|
|
Average common equity,
excluding accumulated other
|
|
|
|
|
comprehensive income
(loss) and net operating loss
|
|
|
|
|
carryforwards (a
non-GAAP financial measure)
|
$ 3,582.8
|
|
$
3,197.4
|
|
|
|
|
|
|
Average common
shareholders' equity
|
$ 1,918.3
|
|
$
2,840.4
|
|
|
|
|
|
|
Operating return on
equity, excluding accumulated other
|
|
|
|
|
comprehensive income
(loss) and net operating loss
|
|
|
|
|
carryforwards (a
non-GAAP financial measure)
|
8.5 %
|
|
11.9 %
|
|
|
|
|
|
|
Operating return,
excluding significant items, on equity, excluding
|
|
|
|
|
accumulated other
comprehensive income (loss) and net
|
|
|
|
|
operating loss
carryforwards (a non-GAAP financial measure)
|
8.0 %
|
|
11.3 %
|
|
|
|
|
|
|
Return on
equity
|
14.5 %
|
|
26.4 %
|
The following
summarizes: (i) net operating income; (ii) significant items; (iii)
net operating income, excluding significant items; and (iv) net
income (loss) (dollars in millions):
|
|
|
|
|
|
|
|
|
|
Net
operating
|
|
|
|
|
|
|
|
|
|
|
Net
operating
|
|
income,
|
|
|
|
|
|
|
|
|
|
|
income,
|
|
excluding
|
|
|
|
Net
|
|
|
|
|
|
|
excluding
|
|
significant
|
|
|
|
income -
|
|
|
Net
operating
|
|
Significant
|
|
significant
|
|
items -
trailing
|
|
Net
|
|
trailing
|
|
|
income
|
|
items
|
|
items (a)
|
|
four
quarters
|
|
income
(loss)
|
|
four
quarters
|
4Q21
|
|
$
103.1
|
|
$
(2.3)
|
(b)
|
$
100.8
|
|
$
410.0
|
|
$
157.2
|
|
$
570.3
|
1Q22
|
|
64.5
|
|
—
|
|
64.5
|
|
373.2
|
|
183.4
|
|
491.7
|
2Q22
|
|
135.1
|
|
(17.4)
|
(c)
|
117.7
|
|
393.4
|
|
233.3
|
|
677.3
|
3Q22
|
|
77.9
|
|
—
|
|
77.9
|
|
360.9
|
|
175.9
|
|
749.8
|
4Q22
|
|
82.9
|
|
(0.5)
|
(d)
|
82.4
|
|
342.5
|
|
38.0
|
|
630.6
|
1Q23
|
|
58.6
|
|
—
|
|
58.6
|
|
336.6
|
|
(0.8)
|
|
446.4
|
2Q23
|
|
62.3
|
|
—
|
|
62.3
|
|
281.2
|
|
73.7
|
|
286.8
|
3Q23
|
|
101.3
|
|
(16.9)
|
(e)
|
84.4
|
|
287.7
|
|
167.3
|
|
278.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See note (7)
for additional information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Comprised of
$3.0 million of net favorable adjustments arising from our review
of actuarial assumptions, net of tax expense of $.7
million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Comprised of
an experience refund of $22.5 million related to a reinsurance
agreement, net of tax expense of $5.1 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Comprised of
$.7 million of net favorable adjustments arising from our review of
actuarial assumptions, net of tax expense of $.2
million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) Comprised of
$21.7 million of legal recoveries, net of expenses and increased
legal accruals, net of tax expense of $4.8 million.
|
A reconciliation of
pre-tax operating earnings (a non-GAAP financial measure) to net
income is as follows (dollars in millions):
|
|
|
|
|
Twelve months
ended
|
|
|
|
3Q23
|
|
3Q22
|
Pre-tax operating
earnings (a non-GAAP financial measure)
|
$
394.4
|
|
$
491.5
|
Income tax
expense
|
(89.3)
|
|
(110.9)
|
Net operating
income
|
305.1
|
|
380.6
|
Non-operating
items:
|
|
|
|
Net realized
investment losses from sales, impairments and change in allowance
for credit
losses
|
(91.3)
|
|
(30.0)
|
Net change in market
value of investments recognized in earnings
|
(24.1)
|
|
(76.3)
|
Changes in fair value
of embedded derivative liabilities and market risk
benefits
|
78.3
|
|
535.3
|
Fair value changes
related to the agent deferred compensation plan
|
7.0
|
|
44.4
|
Other
|
(5.1)
|
|
4.1
|
Non-operating income
(loss) before taxes
|
(35.2)
|
|
477.5
|
Income tax (expense) benefit on non-operating income
(loss)
|
8.3
|
|
(108.3)
|
Net non-operating
income (loss)
|
(26.9)
|
|
369.2
|
Net income
|
$
278.2
|
|
$
749.8
|
|
|
|
|
|
|
A reconciliation of
consolidated capital, excluding accumulated other comprehensive
income (loss) and net operating loss carryforwards (a non-GAAP
financial measure) to common shareholders' equity, is as follows
(dollars in millions):
|
|
|
|
|
1Q21
|
|
2Q21
|
|
3Q21
|
|
4Q21
|
Consolidated capital,
excluding accumulated other comprehensive
|
|
|
|
|
|
|
|
|
income (loss) and net
operating loss carryforwards
|
|
|
|
|
|
|
|
|
(a non-GAAP financial
measure)
|
$
3,003.2
|
|
$
2,989.0
|
|
$
2,993.3
|
|
$
3,067.3
|
Net operating loss
carryforwards
|
323.1
|
|
292.9
|
|
266.9
|
|
243.7
|
Accumulated other
comprehensive income
|
73.1
|
|
306.7
|
|
337.5
|
|
373.7
|
Common shareholders'
equity
|
$
3,399.4
|
|
$
3,588.6
|
|
$
3,597.7
|
|
$
3,684.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q22
|
|
2Q22
|
|
3Q22
|
|
4Q22
|
Consolidated capital,
excluding accumulated other comprehensive
|
|
|
|
|
|
|
|
|
income (loss) and net
operating loss carryforwards
|
|
|
|
|
|
|
|
|
(a non-GAAP financial
measure)
|
$
3,141.7
|
|
$
3,329.0
|
|
$
3,510.3
|
|
$
3,557.1
|
Net operating loss
carryforwards
|
238.2
|
|
214.7
|
|
190.9
|
|
169.0
|
Accumulated other
comprehensive loss
|
(561.5)
|
|
(1,415.8)
|
|
(1,837.8)
|
|
(1,957.3)
|
Common shareholders'
equity
|
$
2,818.4
|
|
$
2,127.9
|
|
$
1,863.4
|
|
$
1,768.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q23
|
|
2Q23
|
|
3Q23
|
|
|
Consolidated capital,
excluding accumulated other comprehensive
|
|
|
|
|
|
|
|
|
income (loss) and net
operating loss carryforwards
|
|
|
|
|
|
|
|
|
(a non-GAAP financial
measure)
|
$
3,543.8
|
|
$
3,603.0
|
|
$
3,744.2
|
|
|
Net operating loss
carryforwards
|
152.4
|
|
126.3
|
|
102.6
|
|
|
Accumulated other
comprehensive loss
|
(1,664.4)
|
|
(1,733.5)
|
|
(1,956.7)
|
|
|
Common shareholders'
equity
|
$
2,031.8
|
|
$
1,995.8
|
|
$
1,890.1
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of
consolidated capital, excluding accumulated other comprehensive
income (loss) and net operating loss carryforwards (a non-GAAP
financial measure) to common shareholders' equity, is as follows
(dollars in millions):
|
|
|
|
|
Trailing four quarter
average
|
|
|
|
3Q23
|
|
3Q22
|
Consolidated capital,
excluding accumulated other comprehensive
|
|
|
|
|
income (loss) and net
operating loss carryforwards
|
|
|
|
|
(a non-GAAP financial
measure)
|
$
3,582.8
|
|
$
3,197.4
|
Net operating loss
carryforwards
|
148.6
|
|
231.4
|
Accumulated other
comprehensive loss
|
(1,813.1)
|
|
(588.4)
|
Common shareholders'
equity
|
$
1,918.3
|
|
$
2,840.4
|
(7)
|
The tables below
summarize the financial impact of significant items on our net
operating income. Management believes that identifying the
impact of these items enhances the understanding of our operating
results (dollars in millions, except per share data).
|
|
|
Three months
ended
|
|
|
September 30,
2023
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant
items
|
Insurance product
margin
|
|
|
|
|
|
|
Annuity
margin
|
|
$
57.0
|
|
$
—
|
|
$
57.0
|
Health
margin
|
|
123.2
|
|
—
|
|
123.2
|
Life margin
|
|
59.8
|
|
—
|
|
59.8
|
Total insurance product
margin
|
|
240.0
|
|
—
|
|
240.0
|
Allocated
expenses
|
|
(153.2)
|
|
—
|
|
(153.2)
|
Income from insurance
products
|
|
86.8
|
|
—
|
|
86.8
|
Fee income
|
|
(2.9)
|
|
—
|
|
(2.9)
|
Investment income not
allocated to product lines
|
|
38.4
|
|
—
|
|
38.4
|
Expenses not allocated
to product lines
|
|
7.5
|
|
(21.7)
|
(a)
|
(14.2)
|
Operating earnings
before taxes
|
|
129.8
|
|
(21.7)
|
|
108.1
|
Income tax (expense)
benefit on operating income
|
|
(28.5)
|
|
4.8
|
|
(23.7)
|
Net operating
income
|
|
$
101.3
|
|
$
(16.9)
|
|
$
84.4
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.88
|
|
$
(0.14)
|
|
$
0.74
|
___________
|
(a)
|
Comprised of $21.7
million of legal recoveries, net of expenses and increased legal
accruals.
|
|
|
Three months
ended
|
|
|
December 31,
2022
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant
items
|
Insurance product
margin
|
|
|
|
|
|
|
Annuity
margin
|
|
$
50.8
|
|
$
3.2
|
(a)
|
$
54.0
|
Health
margin
|
|
140.4
|
|
(18.3)
|
(a)
|
122.1
|
Life margin
|
|
43.3
|
|
14.4
|
(a)
|
57.7
|
Total insurance product
margin
|
|
234.5
|
|
(0.7)
|
|
233.8
|
Allocated
expenses
|
|
(149.1)
|
|
—
|
|
(149.1)
|
Income from insurance
products
|
|
85.4
|
|
(0.7)
|
|
84.7
|
Fee income
|
|
9.2
|
|
—
|
|
9.2
|
Investment income not
allocated to product lines
|
|
25.2
|
|
—
|
|
25.2
|
Expenses not allocated
to product lines
|
|
(12.8)
|
|
—
|
|
(12.8)
|
Operating earnings
before taxes
|
|
107.0
|
|
(0.7)
|
|
106.3
|
Income tax (expense)
benefit on operating income
|
|
(24.1)
|
|
0.2
|
|
(23.9)
|
Net operating
income
|
|
$
82.9
|
|
$
(0.5)
|
|
$
82.4
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.71
|
|
$
—
|
|
$
0.71
|
___________
|
(a)
|
Adjustments arising
from our comprehensive annual actuarial review of
assumptions.
|
|
|
Three months
ended
|
|
|
June 30,
2022
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant
items
|
Insurance product
margin
|
|
|
|
|
|
|
Annuity
margin
|
|
$
60.1
|
|
$
—
|
|
$
60.1
|
Health
margin
|
|
125.4
|
|
—
|
|
125.4
|
Life margin
|
|
70.2
|
|
—
|
|
70.2
|
Total insurance product
margin
|
|
255.7
|
|
—
|
|
255.7
|
Allocated
expenses
|
|
(152.2)
|
|
—
|
|
(152.2)
|
Income from insurance
products
|
|
103.5
|
|
—
|
|
103.5
|
Fee income
|
|
3.2
|
|
—
|
|
3.2
|
Investment income not
allocated to product lines
|
|
64.6
|
|
—
|
|
64.6
|
Expenses not allocated
to product lines
|
|
2.9
|
|
(22.5)
|
(a)
|
(19.6)
|
Operating earnings
before taxes
|
|
174.2
|
|
(22.5)
|
|
151.7
|
Income tax (expense)
benefit on operating income
|
|
(39.1)
|
|
5.1
|
|
(34.0)
|
Net operating
income
|
|
$
135.1
|
|
$
(17.4)
|
|
$
117.7
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
1.15
|
|
$
(0.15)
|
|
$
1.00
|
___________
|
(a)
|
Comprised of an
experience refund of $22.5 million related to a reinsurance
agreement.
|
|
|
Three months
ended
|
|
|
December 31,
2021
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant
items
|
Insurance product
margin
|
|
|
|
|
|
|
Annuity
margin
|
|
$
65.6
|
|
$
0.7
|
(a)
|
$
66.3
|
Health
margin
|
|
126.2
|
|
(7.1)
|
(a)
|
119.1
|
Life margin
|
|
53.4
|
|
3.4
|
(a)
|
56.8
|
Total insurance product
margin
|
|
245.2
|
|
(3.0)
|
|
242.2
|
Allocated
expenses
|
|
(143.3)
|
|
—
|
|
(143.3)
|
Income from insurance
products
|
|
101.9
|
|
(3.0)
|
|
98.9
|
Fee income
|
|
2.9
|
|
—
|
|
2.9
|
Investment income not
allocated to product lines
|
|
44.4
|
|
—
|
|
44.4
|
Expenses not allocated
to product lines
|
|
(17.4)
|
|
—
|
|
(17.4)
|
Operating earnings
before taxes
|
|
131.8
|
|
(3.0)
|
|
128.8
|
Income tax (expense)
benefit on operating income
|
|
(28.7)
|
|
0.7
|
|
(28.0)
|
Net operating
income
|
|
$
103.1
|
|
$
(2.3)
|
|
$
100.8
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.83
|
|
$
(0.02)
|
|
$
0.81
|
___________
|
(a)
|
Adjustments arising
from our comprehensive annual actuarial review of
assumptions.
|
View original
content:https://www.prnewswire.com/news-releases/cno-financial-group-reports-third-quarter-2023-results-301978990.html
SOURCE CNO Financial Group, Inc.