Group 1 - CNO Financial Group, Inc. will host an investor briefing focused on its Consumer Division on September 10, 2025 [1][2] - The event will feature presentations from the Consumer Division management team and will include a Q&A session with CEO Gary C. Bhojwani and Consumer Division President Scott Goldberg [2] - Participants can register for the event via the company's website and a replay will be available afterward [3][4] Group 2 - CNO Financial Group provides life and health insurance, annuities, financial services, and workforce benefits solutions, serving middle-income America [5] - The company manages 3.2 million policies and has total assets amounting to $37.3 billion [5] - CNO employs 3,400 associates and works with 4,900 exclusive agents and over 6,000 independent partner agents [5]

PART I - FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS.](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) This section presents the unaudited consolidated financial statements of CNO Financial Group, Inc. and its subsidiaries, including the balance sheet, statements of operations, comprehensive income, shareholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, investments, liabilities, and other financial aspects for the periods ended June 30, 2025, and December 31, 2024 [Consolidated Balance Sheet](index=3&type=section&id=Consolidated%20Balance%20Sheet) The consolidated balance sheet shows a slight decrease in total assets and liabilities, while shareholders' equity saw a marginal increase from December 31, 2024, to June 30, 2025. Notable changes include an increase in fixed maturities and mortgage loans, alongside a significant decrease in unrestricted cash and cash equivalents Consolidated Balance Sheet Highlights (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Total assets | $37,329.1 | $37,849.3 | $(520.2) | | Total liabilities | $34,806.4 | $35,334.1 | $(527.7) | | Total shareholders' equity | $2,522.7 | $2,515.2 | $7.5 | | Fixed maturities, available for sale | $23,047.0 | $22,730.1 | $316.9 | | Mortgage loans | $2,834.3 | $2,506.3 | $328.0 | | Cash and cash equivalents - unrestricted | $766.0 | $1,656.7 | $(890.7) | | Notes payable – direct corporate obligations | $1,334.7 | $1,833.5 | $(498.8) | [Consolidated Statement of Operations](index=5&type=section&id=Consolidated%20Statement%20of%20Operations) The company experienced a decrease in net income and diluted EPS for both the three and six months ended June 30, 2025, compared to the prior year. Total revenues increased in the three-month period but decreased over six months, while total benefits and expenses rose in both periods Consolidated Statement of Operations Highlights (Dollars in millions, except per share data) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total revenues | $1,151.5 | $1,066.2 | $2,155.6 | $2,222.7 | | Total benefits and expenses | $1,033.5 | $915.6 | $2,009.8 | $1,925.9 | | Net income | $91.8 | $116.3 | $113.3 | $228.6 | | Diluted EPS | $0.91 | $1.06 | $1.11 | $2.08 | [Consolidated Statement of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income decreased for both the three and six months ended June 30, 2025, compared to the prior year. However, the six-month period saw a significant positive shift in unrealized gains (losses) on investments, moving from a substantial loss in 2024 to a gain in 2025 Consolidated Statement of Comprehensive Income (Loss) Highlights (Dollars in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $91.8 | $116.3 | $113.3 | $228.6 | | Unrealized gains (losses) on investments | $(11.4) | $(217.1) | $218.0 | $(331.7) | | Comprehensive income | $78.2 | $132.3 | $232.0 | $341.1 | [Consolidated Statement of Shareholders' Equity](index=8&type=section&id=Consolidated%20Statement%20of%20Shareholders'%20Equity) Shareholders' equity slightly increased from December 31, 2024, to June 30, 2025, primarily driven by retained earnings and a reduction in accumulated other comprehensive loss, despite significant common stock repurchases and dividend payments Consolidated Statement of Shareholders' Equity Highlights (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Total shareholders' equity | $2,522.7 | $2,515.2 | $7.5 | | Retained earnings | $2,333.0 | $2,253.1 | $79.9 | | Accumulated other comprehensive loss | $(1,252.7) | $(1,371.4) | $118.7 | | Common stock repurchased (6 months) | $(199.9) | $(100.0) (6 months 2024) | $(99.9) | | Dividends on common stock (6 months) | $(33.4) | $(33.9) (6 months 2024) | $0.5 | [Consolidated Statement of Cash Flows](index=9&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Operating cash flows increased significantly for the six months ended June 30, 2025, compared to the prior year. However, financing activities shifted from a net cash provider to a significant user, leading to a substantial net decrease in cash and cash equivalents Consolidated Statement of Cash Flows Highlights (Dollars in millions) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash provided by operating activities | $282.2 | $205.5 | $76.7 | | Net cash used by investing activities | $(660.4) | $(1,169.5) | $509.1 | | Net cash provided (used) by financing activities | $(803.5) | $1,067.1 | $(1,870.6) | | Net increase (decrease) in cash and cash equivalents | $(1,181.7) | $103.1 | $(1,284.8) | | Cash and cash equivalents, end of period | $816.0 | $992.1 | $(176.1) | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and breakdowns of the financial statements, covering the company's business, significant accounting policies, investment portfolio, fair value measurements, insurance liabilities, deferred costs, earnings per share, segment performance, derivatives, reinsurance, income taxes, debt obligations, shareholders' equity, litigation, and investments in variable interest entities [1. BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=1.%20BUSINESS,%20BASIS%20OF%20PRESENTATION,%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) CNO Financial Group, Inc. operates as a holding company for insurance subsidiaries, focusing on health, annuity, and life insurance products for middle-income pre-retiree and retired Americans. The company adopted ASU 2023-07 retrospectively, with no material impact on financial position or results, and anticipates no material impact from recently issued ASUs 2024-03 and 2023-09. Prior period financial statements were revised to correct immaterial errors related to market risk benefits and policyholder account balances - CNO Financial Group, Inc. is a holding company for insurance companies that develop, market, and administer health insurance, annuity, individual life insurance, and other insurance and financial services products[21](index=21&type=chunk) - The company focuses on serving middle-income pre-retiree and retired Americans through exclusive agents, independent producers, and direct marketing[22](index=22&type=chunk) - ASU 2023-07 (Segment Reporting) was adopted effective January 1, 2024, retrospectively, with no impact on financial position or results of operations[27](index=27&type=chunk) - Immaterial errors related to market risk benefits, policyholder account balances, and investment classifications were corrected, resulting in revisions to prior period consolidated financial statements[30](index=30&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) [2. INVESTMENTS](index=14&type=section&id=2.%20INVESTMENTS) The company classifies fixed maturity securities as available-for-sale or trading, with a detailed process for assessing credit losses. Gross unrealized losses on fixed maturities decreased, while allowances for credit losses on both fixed maturities and mortgage loans increased. Total investment losses for the six months ended June 30, 2025, were higher than the prior year - Fixed maturity securities are classified as 'available for sale' (fair value, unrealized G/L in shareholders' equity) or 'trading' (fair value, G/L in net investment income or investment gains/losses)[39](index=39&type=chunk)[40](index=40&type=chunk) Fixed Maturities, Available for Sale (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Amortized cost | $25,228.8 | $25,151.0 | $77.8 | | Estimated fair value | $23,047.0 | $22,730.1 | $316.9 | | Gross unrealized losses | $(2,339.8) | $(2,531.1) | $191.3 | | Allowance for credit losses | $(39.1) | $(37.1) | $(2.0) | Mortgage Loans and Allowance for Credit Losses (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Mortgage loans (net) | $2,834.3 | $2,506.3 | $328.0 | | Allowance for credit losses (end of period) | $21.1 | $13.6 | $7.5 | Total Investment Gains (Losses) (Dollars in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total investment gains (losses) | $(18.4) | $(17.2) | $(25.2) | $(9.4) | [3. FAIR VALUE MEASUREMENTS](index=21&type=section&id=3.%20FAIR%20VALUE%20MEASUREMENTS) The company categorizes financial instruments into a three-level fair value hierarchy based on input observability. The majority of assets carried at fair value utilize Level 2 inputs. Level 3 assets and liabilities, which rely on significant unobservable inputs and management assumptions, include certain fixed maturities, equity securities, market risk benefit liabilities, and embedded derivatives related to fixed indexed annuities - Fair value measurements are categorized into a three-level hierarchy: Level 1 (unadjusted quoted prices in active markets), Level 2 (observable inputs for similar assets/liabilities), and Level 3 (unobservable inputs and management assumptions)[73](index=73&type=chunk)[74](index=74&type=chunk) - The vast majority of assets carried at fair value use Level 2 inputs, primarily obtained from independent pricing services[75](index=75&type=chunk) Level 3 Assets and Liabilities at Fair Value (Dollars in millions) | Category | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | **Assets:** | | | | Fixed maturities, available for sale | $454.6 | $155.9 | | Equity securities | $94.4 | $73.4 | | Other invested assets | $2.6 | $95.4 | | **Liabilities:** | | | | Market risk benefit liability | $63.8 | $60.0 | | Embedded derivatives related to fixed indexed annuity products | $1,502.4 | $1,471.6 | - Significant unobservable inputs for Level 3 valuations include discount margins, percentage of recovery expected, EBITDA multiples, surrender rates, utilization rates, projected portfolio yields, and discount rates[105](index=105&type=chunk)[106](index=106&type=chunk)[108](index=108&type=chunk) [4. LIABILITIES FOR INSURANCE PRODUCTS](index=34&type=section&id=4.%20LIABILITIES%20FOR%20INSURANCE%20PRODUCTS) The company's insurance liabilities, including future policy benefits and policyholder account balances, are determined based on various actuarial assumptions. The market risk benefit (MRB) liability for fixed indexed annuities increased slightly. Weighted average interest and crediting rates vary across different product lines, reflecting the diverse nature of the insurance portfolio - The liability for future policy benefits is determined based on numerous assumptions, including mortality, lapse/withdrawal rates, morbidity, and future rate increases, considering both company and industry experience[115](index=115&type=chunk) Key Insurance Liabilities (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Future policy benefits | $11,787.7 | $11,705.5 | $82.2 | | Market risk benefit liability | $63.8 | $60.0 | $3.8 | | Policyholder account balances | $17,609.0 | $17,594.2 | $14.8 | Weighted Average Interest Rates for Future Policy Benefits | Product Line | June 30, 2025 (Current Discount Rate) | June 30, 2024 (Current Discount Rate) | | :-------------------- | :------------------------------------ | :------------------------------------ | | Other annuities | 5.50 % | 5.36 % | | Supplemental health | 5.45 % | 5.58 % | | Medicare supplement | 5.09 % | 5.44 % | | Long-term care | 5.53 % | 5.63 % | | Traditional life | 5.49 % | 5.60 % | Weighted Average Crediting Rates for Policyholder Account Balances | Product Line | June 30, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | Fixed indexed annuities | 2.2 % | 2.0 % | | Fixed interest annuities | 2.9 % | 2.8 % | | Other annuities | 2.7 % | 2.5 % | | Interest sensitive life | 5.3 % | 4.7 % | | Funding agreements | 4.1 % | 2.6 % | | Other | 0.8 % | 0.7 % | [5. DEFERRED ACQUISITION COSTS, PRESENT VALUE OF FUTURE PROFITS AND SALES INDUCEMENTS](index=44&type=section&id=5.%20DEFERRED%20ACQUISITION%20COSTS,%20PRESENT%20VALUE%20OF%20FUTURE%20PROFITS%20AND%20SALES%20INDUCEMENTS) Deferred acquisition costs (DAC) and sales inducements increased from December 31, 2024, to June 30, 2025, reflecting new business capitalizations. The present value of future profits (PVFP) slightly decreased over the same period Deferred Acquisition Costs (DAC) (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Deferred acquisition costs (end of period) | $2,121.2 | $2,025.4 | $95.8 | | Capitalizations (6 months) | $212.5 | $187.7 (6 months 2024) | $24.8 | | Amortization expense (6 months) | $(116.7) | $(104.3) (6 months 2024) | $(12.4) | Present Value of Future Profits (PVFP) (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Present value of future profits (end of period) | $152.1 | $161.0 | $(8.9) | | Amortization expense (6 months) | $(8.9) | $(10.3) (6 months 2024) | $1.4 | Sales Inducements (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Sales inducements (end of period) | $155.1 | $133.2 | $21.9 | | Capitalizations (6 months) | $32.3 | $26.7 (6 months 2024) | $5.6 | | Amortization expense (6 months) | $(10.4) | $(7.3) (6 months 2024) | $(3.1) | [6. EARNINGS PER SHARE](index=45&type=section&id=6.%20EARNINGS%20PER%20SHARE) Diluted earnings per share decreased significantly for the six months ended June 30, 2025, compared to the prior year, primarily due to lower net income. The weighted average shares outstanding for diluted EPS also decreased, reflecting the company's share repurchase program Earnings Per Common Share (6 Months Ended June 30) | Metric | 2025 | 2024 | Change | | :----------------------------------- | :--- | :--- | :----- | | Net income (dollars in millions) | $113.3 | $228.6 | $(115.3) | | Weighted average shares outstanding for diluted EPS (in thousands) | 101,728 | 110,052 | $(8,324) | | Diluted EPS | $1.11 | $2.08 | $(0.97) | [7. BUSINESS SEGMENTS](index=46&type=section&id=7.%20BUSINESS%20SEGMENTS) CNO operates through Annuity, Health, Life, Investment, and Fee Income segments, with marketing handled by Consumer and Worksite Divisions. Net operating income slightly decreased for the six months ended June 30, 2025, compared to the prior year, with varied performance across product lines. Annuity and Fee Income margins decreased, while Health and Life margins saw slight increases - The company's operations are viewed as three insurance product line segments (annuity, health, and life) and the investment and fee income segments, with the Chief Executive Officer as the Chief Operating Decision Maker (CODM)[147](index=147&type=chunk) - Products are marketed through the Consumer Division (individual consumers via phone, virtual, online, agents) and the Worksite Division (voluntary benefits in the workplace)[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) Segment Operating Results (6 Months Ended June 30, Dollars in millions) | Metric | 2025 | 2024 | Change | | :----------------------------------- | :--- | :--- | :----- | | Net operating income | $168.6 | $172.1 | $(3.5) | | Total insurance product margin | $501.3 | $504.7 | $(3.4) | | Annuity margin | $109.3 | $128.1 | $(18.8) | | Health margin | $260.2 | $258.9 | $1.3 | | Life margin | $131.8 | $117.7 | $14.1 | | Fee income margin | $0.0 | $12.1 | $(12.1) | | Investment income not allocated to product lines | $71.8 | $57.1 | $14.7 | Segment Balance Sheet Information (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Total assets | $37,329.1 | $37,849.3 | $(520.2) | | Total liabilities | $34,806.4 | $35,334.1 | $(527.7) | [8. DERIVATIVES](index=50&type=section&id=8.%20DERIVATIVES) The company uses freestanding and embedded derivatives, primarily fixed indexed call options and embedded derivatives related to fixed indexed annuities, which are held at fair value. The notional amount of these options increased, while the net pre-tax impact from derivatives shifted to a significant loss for the six months ended June 30, 2025. Counterparty risk is managed through diversification with highly-rated entities - The company's fixed indexed annuity products include embedded derivatives, which are recorded at estimated fair value and typically hedged with purchased call options[165](index=165&type=chunk) Derivative Instruments (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Fixed indexed call options (assets) | $210.4 | $279.0 | $(68.6) | | Embedded derivatives related to fixed indexed annuities (liabilities) | $1,502.4 | $1,471.6 | $30.8 | | Notional amount of options | $4,300.0 | $4,200.0 | $100.0 | Net Pre-Tax Impact from Derivative Instruments (Dollars in millions) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :----------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net pre-tax impact | $(35.1) | $101.1 | $(136.2) | - Counterparty risk is limited by diversifying among several counterparties, all rated 'A' or higher by S&P[169](index=169&type=chunk) [9. REINSURANCE](index=52&type=section&id=9.%20REINSURANCE) Both ceded premiums and reinsurance recoveries decreased for the six months ended June 30, 2025, compared to the prior year. Reinsurance premiums assumed also saw a slight decrease Reinsurance Activity (6 Months Ended June 30, Dollars in millions) | Metric | 2025 | 2024 | Change | | :----------------------------------- | :--- | :--- | :----- | | Ceded premiums and other costs | $84.3 | $92.6 | $(8.3) | | Reinsurance recoveries | $178.6 | $195.6 | $(17.0) | | Reinsurance premiums assumed | $7.3 | $7.9 | $(0.6) | [10. INCOME TAXES](index=52&type=section&id=10.%20INCOME%20TAXES) Total income tax expense and the effective tax rate decreased for the six months ended June 30, 2025. Net deferred tax assets slightly decreased, while state net operating loss (NOL) carryforwards significantly increased due to a tax method change. The company is assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBBA) Income Tax Expense and Effective Tax Rate (6 Months Ended June 30, Dollars in millions) | Metric | 2025 | 2024 | Change | | :----------------------------------- | :--- | :--- | :----- | | Total income tax expense | $32.5 | $68.2 | $(35.7) | | Effective tax rate | 22.3 % | 23.0 % | (0.7) % | Deferred Tax Assets and NOLs (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Net deferred tax assets | $725.0 | $786.6 | $(61.6) | | Total federal NOLs | $1,090.6 | $1,084.0 | $6.6 | | State NOLs | $42.1 | $4.4 | $37.7 | - The company recharacterized **$800 million of capitalized indirect costs** to a net operating loss carryforward with no expiration date, following IRS approval of a tax method change[176](index=176&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, and the company is currently assessing its impact on consolidated financial statements[186](index=186&type=chunk) [11. NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS](index=55&type=section&id=11.%20NOTES%20PAYABLE%20-%20DIRECT%20CORPORATE%20OBLIGATIONS) Direct corporate obligations decreased significantly from December 31, 2024, to June 30, 2025, primarily due to the repayment of Senior Notes due May 2025. The company also entered into a new $250 million Credit Agreement with a maturity date of May 8, 2030 Direct Corporate Obligations (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Direct corporate obligations | $1,334.7 | $1,833.5 | $(498.8) | | 5.250% Senior Notes due May 2025 | $0.0 | $500.0 | $(500.0) | - The company repaid its Senior Notes due May 2025 using proceeds from the issuance of Senior Notes due June 2034[188](index=188&type=chunk) - A new **$250 million Credit Agreement** was entered into on May 8, 2025, maturing on May 8, 2030, with no amounts outstanding as of June 30, 2025[189](index=189&type=chunk) [12. INVESTMENT BORROWINGS](index=55&type=section&id=12.%20INVESTMENT%20BORROWINGS) The company's insurance subsidiaries utilize collateralized borrowings from the Federal Home Loan Bank (FHLB), totaling $2.4 billion as of June 30, 2025. These borrowings are used to purchase matched variable rate fixed maturity securities, and interest expense on these borrowings decreased for the six months ended June 30, 2025, due to lower variable interest rates - Three of the company's insurance subsidiaries are members of the FHLB, allowing them to borrow on a collateralized basis[190](index=190&type=chunk) - As of June 30, 2025, collateralized borrowings from the FHLB totaled **$2.4 billion**, backed by investments with an estimated fair value of **$3.3 billion**[190](index=190&type=chunk) Interest Expense on FHLB Borrowings (6 Months Ended June 30, Dollars in millions) | Metric | 2025 | 2024 | Change | | :----------------------------------- | :--- | :--- | :----- | | Interest expense | $53.7 | $62.8 | $(9.1) | [13. SHAREHOLDERS' EQUITY](index=57&type=section&id=13.%20SHAREHOLDERS'%20EQUITY) The company repurchased 5.1 million shares for $199.9 million during the first six months of 2025, with $540.4 million remaining repurchase authority. Dividends declared totaled $33.4 million, with the quarterly common stock dividend increasing to $0.17 per share. Accumulated other comprehensive loss decreased, reflecting improved net unrealized losses on investments - During the first six months of 2025, the company repurchased **5.1 million shares** of common stock for **$199.9 million**[194](index=194&type=chunk) - As of June 30, 2025, the company had remaining repurchase authority of **$540.4 million**[194](index=194&type=chunk) - Dividends declared on common stock totaled **$33.4 million** for the first six months of 2025, with the quarterly dividend increasing to **$0.17 per share**[195](index=195&type=chunk) Accumulated Other Comprehensive Loss (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Accumulated other comprehensive loss | $(1,252.7) | $(1,371.4) | $118.7 | | Net unrealized losses on investments | $(836.1) | $(1,281.6) | $445.5 | [14. LITIGATION AND OTHER LEGAL PROCEEDINGS](index=57&type=section&id=14.%20LITIGATION%20AND%20OTHER%20LEGAL%20PROCEEDINGS) The company is involved in various legal actions, including purported class actions, with claims for substantial damages. While the ultimate liability is difficult to predict, management does not believe it will have a material adverse effect on the company's financial condition. Key ongoing cases include the Platinum Partners Value Arbitrage Fund L.P. suit (trial April 2026) and Burnett v. Conseco Life Ins. Co. (jury verdict for class representatives, alter ego trial August 2025). Regulatory investigations are also ongoing - The company is involved in various legal actions, some filed as purported class actions, with claims for compensatory and punitive damages[196](index=196&type=chunk) - Management believes it is not probable that the ultimate liability from pending or threatened legal actions will have a material adverse effect on the company's consolidated financial condition, operating results, or cash flows[196](index=196&type=chunk) - In the Burnett v. Conseco Life Ins. Co. case, a jury returned a verdict of approximately **$0.2 million** collectively for two class representatives, with an alter ego liability bench trial scheduled for August 12, 2025[199](index=199&type=chunk) - The company is subject to various examinations, inquiries, and information requests from state, federal, and other authorities related to regulatory investigations[201](index=201&type=chunk) [15. CONSOLIDATED STATEMENT OF CASH FLOWS](index=59&type=section&id=15.%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) This note provides a reconciliation of net income to net cash from operating activities, showing an increase in net cash provided by operating activities for the six months ended June 30, 2025, compared to the prior year Reconciliation of Net Income to Net Cash from Operating Activities (6 Months Ended June 30, Dollars in millions) | Metric | 2025 | 2024 | Change | | :----------------------------------- | :--- | :--- | :----- | | Net income | $113.3 | $228.6 | $(115.3) | | Amortization and depreciation | $156.6 | $141.9 | $14.7 | | Insurance liabilities | $265.7 | $222.4 | $43.3 | | Net cash from operating activities | $282.2 | $205.5 | $76.7 | [16. INVESTMENTS IN VARIABLE INTEREST ENTITIES](index=60&type=section&id=16.%20INVESTMENTS%20IN%20VARIABLE%20INTEREST%20ENTITIES) The company consolidates certain collateralized loan trusts (VIEs) where it is the primary beneficiary. Investments held by these VIEs decreased, as did related borrowings. The investment portfolios primarily consist of below-investment grade commercial bank loans. The VIEs recognized net investment losses for the six months ended June 30, 2025, and the company also holds passive investments in other structured securities issued by VIEs where it is not the primary beneficiary - The company consolidates certain collateralized loan trusts (VIEs) where it is the primary beneficiary, with assets held by these trusts legally isolated from the company[205](index=205&type=chunk)[206](index=206&type=chunk) VIE Assets and Liabilities (Dollars in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------- | :------------ | :---------------- | :----- | | Investments held by VIEs | $376.9 | $433.8 | $(56.9) | | Borrowings related to VIEs | $352.8 | $497.6 | $(144.8) | - The investment portfolios held by the VIEs are primarily comprised of commercial bank loans to corporate obligors, almost entirely rated below-investment grade[209](index=209&type=chunk) VIE Net Investment Losses (6 Months Ended June 30, Dollars in millions) | Metric | 2025 | 2024 | Change | | :----------------------------------- | :--- | :--- | :----- | | Net investment losses | $(4.4) | $(5.7) | $1.3 | - The company held **$477.2 million** in passive investments in structured securities issued by VIEs where it is not the primary beneficiary, with unfunded commitments totaling **$728.8 million** as of June 30, 2025[218](index=218&type=chunk)[219](index=219&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS.](index=62&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20CONSOLIDATED%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) This section provides management's perspective on the company's financial condition and operating results, highlighting key performance indicators, segment-specific trends, and the 2025 outlook. It also details liquidity, capital resources, investment strategies, and the impact of variable interest entities, along with cautionary statements regarding forward-looking information [CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS](index=63&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section advises readers that the report contains forward-looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. These risks include general economic conditions, market fluctuations, investment results, litigation outcomes, regulatory changes, and the impact of new technologies like AI - Forward-looking statements are identified by terms such as 'anticipate,' 'believe,' 'plan,' 'expect,' and similar words, and are subject to risks and uncertainties[221](index=221&type=chunk) - Key risks include general economic, market, and political conditions, interest rate volatility, future investment results, litigation outcomes, regulatory changes, and the impact of AI technologies[221](index=221&type=chunk)[222](index=222&type=chunk) [OVERVIEW](index=65&type=section&id=OVERVIEW) CNO Financial Group is a holding company focused on health, annuity, and life insurance products for middle-income pre-retiree and retired Americans, distributed through Consumer and Worksite Divisions. Operations are segmented into Annuity, Health, Life, Investment, and Fee Income, with profitability assessed using insurance product margin and other metrics. The company acknowledges ongoing financial and economic uncertainties impacting market conditions - CNO Financial Group serves middle-income pre-retiree and retired Americans with health, annuity, and life insurance products[226](index=226&type=chunk) - The company's operations are segmented into Annuity, Health, Life, Investment, and Fee Income, with performance assessed by insurance product margin and other metrics[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) - Products are marketed through the Consumer Division (individual consumers) and the Worksite Division (voluntary benefits in the workplace)[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) [GOVERNMENTAL REGULATION](index=68&type=section&id=GOVERNMENTAL%20REGULATION) This section refers to the company's 2024 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, for information on insurance and other governmental regulatory matters - Information on governmental regulation is incorporated by reference from the 2024 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for Q1 2025[240](index=240&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=68&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section refers to the company's 2024 Annual Report on Form 10-K for information on critical accounting estimates used in preparing consolidated financial statements - Information on critical accounting estimates is incorporated by reference from the 2024 Annual Report on Form 10-K[241](index=241&type=chunk) [RESULTS OF OPERATIONS](index=69&type=section&id=RESULTS%20OF%20OPERATIONS) Operating results for the six months ended June 30, 2025, show a slight decrease in net operating income compared to the prior year. Annuity and Fee Income margins declined, while Health and Life margins improved. Investment income not allocated to product lines increased, and non-operating income shifted to a loss, primarily due to fair value changes in embedded derivatives and market risk benefits [General](index=70&type=section&id=General) CNO is a holding company for insurance firms, segmenting operations by product lines (annuity, health, life) and distributing through Consumer and Worksite Divisions. Profitability is measured by insurance product margin, which includes policy income, allocated investment income, and various expenses - CNO's operations are segmented by insurance product lines (annuity, health, life) and distributed through Consumer and Worksite Divisions[244](index=244&type=chunk) - Insurance product margin is the key profitability measure for product lines, encompassing insurance policy income, allocated investment income, and various expenses[245](index=245&type=chunk) [Summary of Operating Results](index=70&type=section&id=Summary%20of%20Operating%20Results) Net operating income slightly decreased for the first six months of 2025 compared to 2024, while operating return on equity (ROE) is on target for a 50 basis point improvement. Total insurance product margin saw a minor decrease, and total net investment income increased, driven by higher yields Net Operating Income (Dollars in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net operating income | $87.5 | $114.6 | $168.6 | $172.1 | - Operating ROE is on target for an approximate **50 basis point improvement** from the 2024 run rate ratio of **10 percent**[248](index=248&type=chunk) Total Insurance Product Margin (Dollars in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total insurance product margin | $252.4 | $275.1 | $501.3 | $504.7 | - Total net investment income increased **8 percent to $601.5 million** in the first six months of 2025, reflecting higher yields (in excess of **6 percent** over the past 10 quarters)[250](index=250&type=chunk)[251](index=251&type=chunk) Net Fee Income (Dollars in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net fee income | $0.8 | $0.8 | $0.0 | $12.1 | [Margin from Annuity Products](index=72&type=section&id=Margin%20from%20Annuity%20Products) Annuity margin decreased for both the three and six months ended June 30, 2025, primarily due to favorable market risk benefit (MRB) movement in the prior year, partially offset by block growth. Fixed indexed annuities saw increased spread income from block growth, while other annuities experienced a significant margin decrease due to higher annuitant mortality in the prior year Annuity Margin (Dollars in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Margin from fixed indexed annuities | $45.4 | $49.9 | $89.9 | $93.3 | | Margin from fixed interest annuities | $8.0 | $8.7 | $16.1 | $16.3 | | Margin from other annuities | $1.4 | $17.5 | $3.3 | $18.5 | | Total annuity margin | $54.8 | $76.1 | $109.3 | $128.1 | - The decrease in fixed indexed annuity margins is primarily due to favorable MRB movement in Q2 2024, partially offset by block growth and increased spread income[257](index=257&type=chunk) - Margin from other annuities significantly decreased due to annuitant mortality on five large policies in a closed block of payout annuities in Q2 2024, which reduced insurance policy benefits[260](index=260&type=chunk) [Margin from Health Products](index=74&type=section&id=Margin%20from%20Health%20Products) Supplemental health margin increased due to business growth, maintaining a stable margin-to-income ratio. Medicare supplement margin decreased due to modestly unfavorable claims in 2025 compared to favorable experience in 2024. Long-term care margin increased, driven by growth in short-duration products and the company's decision to retain 100% of new long-term care business Health Margin (Dollars in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Margin from supplemental health | $68.6 | $65.1 | $134.2 | $130.5 | | Margin from Medicare supplement | $28.2 | $35.5 | $56.3 | $62.0 | | Margin from long-term care | $37.2 | $35.3 | $69.7 | $66.4 | | Total health margin | $134.0 | $135.9 | $260.2 | $258.9 | - Supplemental health margin increased, reflecting growth in the business, with a stable margin/insurance policy income ratio of **36-37%**[262](index=262&type=chunk) - Medicare supplement margin decreased due to modestly unfavorable claims in Q2 2025 compared to favorable claim experience in Q2 2024[264](index=264&type=chunk) - Long-term care margin increased due to growth from sales of short-duration products and the company retaining **100% of new long-term care business** since October 1, 2024[266](index=266&type=chunk) [Margin from Life Products](index=76&type=section&id=Margin%20from%20Life%20Products) Interest-sensitive life margin slightly decreased due to higher insurance policy benefits. Traditional life margin increased, benefiting from a model refinement in Q1 2025 and lower advertising expenses. The company actively manages marketing expenditures based on economic factors Life Margin (Dollars in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Margin from interest-sensitive life | $21.9 | $23.9 | $46.0 | $46.4 | | Margin from traditional life | $41.7 | $39.2 | $85.8 | $71.3 | | Total life margin | $63.6 | $63.1 | $131.8 | $117.7 | - Interest-sensitive life margin decreased due to higher insurance policy benefits[268](index=268&type=chunk) - Traditional life margin increased, including a **$6.8 million model refinement** in Q1 2025 and lower advertising expense[271](index=271&type=chunk)[272](index=272&type=chunk) - Advertising expense decreased to **$39.9 million** for the first six months of 2025, down from **$45.5 million** in the comparable period in 2024, reflecting disciplined marketing expenditures[273](index=273&type=chunk) [Collected Premiums From Annuity and Interest-Sensitive Life Products](index=77&type=section&id=Collected%20Premiums%20From%20Annuity%20and%20Interest-Sensitive%20Life%20Products) Collected premiums from annuity and interest-sensitive life products increased by 14.1% for the first six months of 2025 compared to the prior year, primarily driven by higher premium collections from fixed indexed annuity products Collected Premiums (Dollars in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Annuities | $520.5 | $439.1 | $962.5 | $832.4 | | Interest-sensitive life | $63.6 | $61.3 | $126.5 | $121.8 | | Total collected premiums | $584.1 | $500.4 | $1,089.0 | $954.2 | - Total collected premiums from annuity and interest-sensitive life products increased by **14.1%** for the first six months of 2025, primarily due to higher premium collections from fixed indexed annuity products[274](index=274&type=chunk) [Investment Income Not Allocated to Product Lines](index=78&type=section&id=Investment%20Income%20Not%20Allocated%20to%20Product%20Lines) Investment income not allocated to product lines increased for the first six months of 2025 compared to the prior year, primarily due to a loss on alternative investments in Q1 2024. However, it decreased in the second quarter of 2025 due to lower option forfeitures, tighter FHLB spreads, and higher interest expense Investment Income Not Allocated to Product Lines (Dollars in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Investment income not allocated to product lines | $33.8 | $44.8 | $71.8 | $57.1 | - The increase in investment income not allocated to products for the first six months of 2025 was primarily due to a loss on alternative investments in Q1 2024[276](index=276&type=chunk) - The decrease in Q2 2025 was attributed to lower option forfeitures, tighter FHLB program spreads, and higher interest expense on increased average debt outstanding[276](index=276&type=chunk) [Net Non-Operating Income (Loss)](index=79&type=section&id=Net%20Non-Operating%20Income%20(Loss)) Net non-operating income shifted to a significant loss for the first six months of 2025, compared to a gain in the prior year. This change was primarily driven by a substantial decrease in the fair value of embedded derivative liabilities and market risk benefits, influenced by declining interest rates Net Non-Operating Income (Loss) Before Taxes (Dollars in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net non-operating income (loss) before taxes | $5.7 | $2.0 | $(71.1) | $73.4 | | Changes in fair value of embedded derivative liabilities and market risk benefits | $25.2 | $16.8 | $(44.4) | $80.8 | - The significant shift to a net non-operating loss in the first six months of 2025 was primarily due to changes in the fair value of embedded derivative liabilities and market risk benefits, influenced by declining interest rates[281](index=281&type=chunk) - Other non-operating items included **$3.2 million of expense** related to the TechMod project and a **$2.0 million reduction** in the allowance for credit losses on reinsurance[282](index=282&type=chunk) [2025 OUTLOOK](index=79&type=section&id=2025%20OUTLOOK) The company reaffirms its 2025 guidance, expecting operating EPS between $3.70 and $3.90, with an improved expense ratio of 19.0% to 19.2%. It anticipates increased net investment income not allocated to product lines and $200 million to $250 million in excess cash flow to the holding company. The company targets a consolidated RBC ratio of 375% and a debt-to-total capital ratio of 25% to 28%, alongside a 50 basis point improvement in operating ROE. The three-year TechMod technology modernization project, costing approximately $170 million, will have most expenses excluded from operating earnings - Operating earnings per diluted share are expected to be in the range of **$3.70 to $3.90**[284](index=284&type=chunk) - The expected expense ratio has been lowered to a range of **19.0% to 19.2%**, reflecting better operating leverage[283](index=283&type=chunk) - Excess cash flow to the holding company is projected to be in the range of **$200 million to $250 million**[285](index=285&type=chunk) - Key financial targets include a consolidated RBC ratio of **375%** for U.S. insurance subsidiaries and a target debt to total capital (excluding AOCI) in the range of **25% to 28%**[285](index=285&type=chunk) - The company expects to improve run rate operating ROE by **50 basis points** in 2025, from a **10% run rate** in 2024[286](index=286&type=chunk) - The TechMod project, a three-year technology modernization initiative costing approximately **$170 million** (**$45 million in 2025**), will have most expenses excluded from operating earnings[287](index=287&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=80&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's capital structure shows a reduction in corporate debt and an increase in shareholders' equity. Liquidity for insurance operations is supported by cash flows and FHLB borrowings, while holding company liquidity is above target. Financial strength ratings for insurance subsidiaries remain stable, and the company actively manages capital deployment, including share repurchases and increased dividends [Liquidity for Insurance Operations](index=81&type=section&id=Liquidity%20for%20Insurance%20Operations) Insurance operations maintain liquidity through premium collections, investment income, and FHLB borrowings, which totaled $2.4 billion as of June 30, 2025. The company also utilizes a Funding Agreement Backed Note (FABN) program. Regulatory restrictions apply to dividend payments from insurance subsidiaries, and the consolidated statutory RBC ratio was 378% at June 30, 2025, exceeding the target of 375% - Insurance companies receive adequate cash flows from premium collections and investment income to meet obligations[290](index=290&type=chunk) - Collateralized borrowings from the FHLB totaled **$2.4 billion** at June 30, 2025, used to purchase matched variable rate fixed maturity securities[291](index=291&type=chunk) - The aggregate principal amount of funding agreements outstanding under the FABN program was **$2.6 billion** at June 30, 2025[292](index=292&type=chunk) - The estimated consolidated statutory RBC ratio of U.S. based insurance subsidiaries was **378%** at June 30, 2025, exceeding the target of **375%**[295](index=295&type=chunk) [Financial Strength Ratings of our Insurance Subsidiaries](index=82&type=section&id=Financial%20Strength%20Ratings%20of%20our%20Insurance%20Subsidiaries) The company's primary insurance subsidiaries maintain stable financial strength ratings from major agencies: S&P (A-), Moody's (A3), AM Best (A), and Fitch (A). These ratings reflect the agencies' opinions on the ability to meet policyholder obligations, with stable outlooks across the board - S&P affirmed **'A-' financial strength ratings** for primary insurance subsidiaries on June 24, 2025, with a stable outlook[299](index=299&type=chunk) - Moody's affirmed **'A3' financial strength ratings** for primary insurance subsidiaries on June 18, 2025, with a stable outlook[300](index=300&type=chunk) - AM Best affirmed **'A' financial strength ratings** for primary insurance subsidiaries on February 26, 2025, with a stable outlook[301](index=301&type=chunk) - Fitch affirmed **'A' financial strength ratings** for primary insurance subsidiaries on October 29, 2024, with a stable outlook[302](index=302&type=chunk) [Liquidity of the Holding Companies](index=83&type=section&id=Liquidity%20of%20the%20Holding%20Companies) CNO and CDOC, as holding companies, rely on operating subsidiaries for cash. Unrestricted cash and cash equivalents at the holding company level were $187.1 million, exceeding the $150 million minimum target. Dividends from U.S. insurance subsidiaries totaled $82.0 million in the first six months of 2025. The company generated approximately $48 million in free cash flow, which is deployed into investments, common stock dividends, and share repurchases. Debt ratings for the holding company remain stable - CNO and CDOC depend on operating subsidiaries for cash to meet debt obligations and administrative expenses[304](index=304&type=chunk) - Unrestricted cash and cash equivalents for holding companies were **$187.1 million** at June 30, 2025, above the **$150 million minimum target**[305](index=305&type=chunk) - U.S. based insurance subsidiaries paid **$82.0 million in dividends** to CDOC in the first six months of 2025, subject to state insurance department regulations[306](index=306&type=chunk) - The company generated approximately **$48 million of free cash flow** in the first six months of 2025, used for investments, common stock dividends, and share repurchases[312](index=312&type=chunk) - CNO's issuer credit and senior unsecured debt ratings are stable: S&P (**BBB-**), Moody's (**Baa3**), AM Best (**bbb**), and Fitch (**BBB**)[315](index=315&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk) [INVESTMENTS](index=86&type=section&id=INVESTMENTS) The investment portfolio primarily consists of fixed maturity securities, with a significant portion rated investment grade. Gross unrealized losses on fixed maturities totaled $2.3 billion at June 30, 2025. The company holds a smaller portion in below-investment grade securities and a substantial amount in structured securities, which have unique yield characteristics and payment variability. Realized losses on sales of fixed maturity securities were primarily due to unforeseen sector or issuer-specific events [Fixed Maturity Securities, Available for Sale](index=86&type=section&id=Fixed%20Maturity%20Securities,%20Available%20for%20Sale) At June 30, 2025, the company's fixed maturity securities available for sale had an amortized cost of $25.2 billion and an estimated fair value of $23.0 billion. The portfolio is predominantly investment grade (96.3% by NAIC designation), with gross unrealized losses totaling $2.3 billion Fixed Maturities, Available for Sale (Dollars in millions) | Metric | Amortized cost | Estimated fair value | Gross unrealized losses | | :----------------------------------- | :------------- | :------------------- | :---------------------- | | Total fixed maturities, available for sale | $25,228.8 | $23,047.0 | $(2,339.8) | | Investment grade (NAIC 1 and 2) | $24,315.3 | $22,208.7 | | | Below-investment grade (NAIC 3-6) | $913.5 | $838.3 | | - **96.3%** of the fixed maturity portfolio (by estimated fair value) is rated investment grade (NAIC 1 and 2) as of June 30, 2025[324](index=324&type=chunk) [Below-Investment Grade Securities](index=88&type=section&id=Below-Investment%20Grade%20Securities) As of June 30, 2025, below-investment grade fixed maturity securities constituted 5.0% of the total fixed maturity portfolio by amortized cost, or 3.6% by NAIC credit quality ratings. These securities carry higher default and loss severity risks, which the company mitigates through credit analysis and diversification - Below-investment grade fixed maturity securities, available for sale, had an amortized cost of **$1,257.3 million (5.0% of the portfolio)** or **$913.5 million (3.6% by NAIC rating)** at June 30, 2025[326](index=326&type=chunk) - These securities generally have a significantly greater probability of default and higher severity of loss, which the company attempts to mitigate through careful credit analysis, strict investment policy guidelines, and diversification[327](index=327&type=chunk) [Structured Securities](index=89&type=section&id=Structured%20Securities) Structured securities, including asset-backed, mortgage-backed, and collateralized loan obligations, represented 31.4% of all fixed maturity securities by fair value at June 30, 2025. These investments are subject to variability in principal and interest payments due to factors like prepayment rates, default rates, and structural considerations - Structured securities had an estimated fair value of **$7.2 billion** at June 30, 2025, representing **31.4%** of all fixed maturity securities[328](index=328&type=chunk)[329](index=329&type=chunk) - These securities are subject to variability in the amount and timing of principal and interest payments, influenced by prepayment rates, default rates, loss severities, and security-specific structural considerations[328](index=328&type=chunk) [Net Realized and Unrealized Investment Losses](index=89&type=section&id=Net%20Realized%20and%20Unrealized%20Investment%20Losses) For the six months ended June 30, 2025, the company recognized $24.6 million in gross realized losses from sales of fixed maturity securities, primarily corporate securities. These sales were often driven by unforeseen sector or issuer-specific events. The company also reported fixed maturities with unrealized losses, continuously in a loss position exceeding 20% of cost basis, totaling $62.9 million in amortized cost - Gross realized losses on sales of fixed maturity securities, available for sale, totaled **$24.6 million** for the six months ended June 30, 2025, primarily from corporate securities[331](index=331&type=chunk) - Securities are generally sold at a loss due to unforeseen sector or issuer-specific events, shifts in perceived credit quality, or strategic asset repositioning[331](index=331&type=chunk)[337](index=337&type=chunk) Investments Sold at a Loss (6 Months Ended June 30, 2025, Dollars in millions) | Period in Unrealized Loss | Number of Issuers | Amortized cost | Fair value | | :----------------------------------- | :---------------- | :------------- | :--------- | | Less than 6 months prior to sale | 3 | $24.4 | $18.3 | | 6 months to less than 12 months prior to sale | 2 | $4.3 | $3.5 | | Greater than 12 months prior to sale | 4 | $7.5 | $3.3 | | Total | | $36.2 | $25.1 | Below-Investment Grade Securities with Unrealized Losses > 20% of Cost Basis (June 30, 2025, Dollars in millions) | Period in Unrealized Loss | Number of Issuers | Cost basis | Unrealized loss | Estimated fair value | | :----------------------------------- | :---------------- | :--------- | :-------------- | :------------------- | | 6 months to less than 12 months | 1 | $18.1 | $(4.0) | $14.1 | | Greater than 12 months | 4 | $44.8 | $(14.4) | $30.4 | | Total | | $62.9 | $(18.4) | $44.5 | [INVESTMENTS IN VARIABLE INTEREST ENTITIES](index=91&type=section&id=INVESTMENTS%20IN%20VARIABLE%20INTEREST%20ENTITIES) The company consolidates certain collateralized loan trusts (VIEs) and provides supplemental information on their revenues, expenses, and investment portfolios. For the six months ended June 30, 2025, VIEs reported a loss before income taxes, primarily due to net investment losses. The investment portfolios consist mainly of below-investment grade commercial bank loans, and the company also holds passive investments in other structured securities issued by VIEs where it is not the primary beneficiary VIE Revenues and Expenses (6 Months Ended June 30, Dollars in millions) | Metric | 2025 | 2024 | Change | | :----------------------------------- | :--- | :--- | :----- | | Total revenues | $17.2 | $27.5 | $(10.3) | | Total expenses | $16.0 | $22.6 | $(6.6) | | Income (loss) before income taxes | $(3.2) | $(0.8) | $(2.4) | | Net investment losses | $(4.4) | $(5.7) | $1.3 | - The investment portfolios held by the VIEs are primarily comprised of below-investment grade commercial bank loans[209](index=209&type=chunk) Investments Held by VIEs (June 30, 2025, Dollars in millions) | Metric | Amortized cost | Estimated fair value | | :----------------------------------- | :------------- | :------------------- | | Total investments held by VIEs | $380.9 | $376.9 | - The company also makes passive investments in structured securities issued by VIEs for which it is not the primary beneficiary, with maximum exposure to loss limited to the cost basis in the investment[218](index=218&type=chunk) [NEW ACCOUNTING STANDARDS](index=95&type=section&id=NEW%20ACCOUNTING%20STANDARDS) This section refers to Note 1 of the Consolidated Financial Statements for a discussion of recently adopted and issued accounting standards, including ASU 2023-07 (Segment Reporting), ASU 2024-03 (Income Statement—Expense Disaggregation), and ASU 2023-09 (Income Taxes) - Recently adopted and issued accounting standards are discussed in Note 1 to the Consolidated Financial Statements[343](index=343&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=95&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section states that there have been no material changes in the company's market risks or their management during the first six months of 2025, referring to the Annual Report on Form 10-K for the year ended December 31, 2024, for further details - There have been no material changes in the company's market risks or their management during the first six months of 2025[344](index=344&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=95&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, under the supervision of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025. There were no material changes in internal control over financial reporting during the three months ended June 30, 2025 - CNO's disclosure controls and procedures were effective as of June 30, 2025[345](index=345&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[346](index=346&type=chunk) PART II - OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS.](index=96&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) This section incorporates by reference the detailed discussion of legal proceedings from the footnotes to the consolidated financial statements in Part I, Item 1 of this Form 10-Q - Information on legal proceedings is incorporated by reference from Note 14 to the consolidated financial statements[349](index=349&type=chunk) [ITEM 1A. RISK FACTORS.](index=96&type=section&id=ITEM%201A.%20RISK%20FACTORS.) This section refers to the 'Risk Factors' discussion in the company's Annual Report on Form 10-K for the year ended December 31, 2024, stating that there have been no material changes to the previously disclosed risk factors - Information on risk factors is incorporated by reference from the 2024 Annual Report on Form 10-K, with no material changes reported[350](index=350&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.](index=96&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) The company repurchased 2,625,796 shares of common stock for an average price of $38.11 per share during the three months ended June 30, 2025. As of June 30, 2025, $540.4 million remained authorized for repurchase under publicly announced plans Issuer Purchases of Equity Securities (3 Months Ended June 30, 2025) | Period (in 2025) | Total number of shares purchased | Average price paid per share | Maximum number of shares that may yet be purchased (dollars in millions) | | :----------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------- | | April 1 through April 30 | 883,616 | $38.35 | $606.5 | | May 1 through May 31 | 888,348 | $38.16 | $572.6 | | June 1 through June 30 | 853,832 | $37.81 | $540.4 | | Total | 2,625,796 | $38.11 | $540.4 | - The Board of Directors authorized an additional **$500.0 million** for common stock repurchases in February 2025[352](index=352&type=chunk) [ITEM 5. OTHER INFORMATION.](index=97&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) Certain officers of the company adopted Rule 10b5-1 trading arrangements during the three months ended June 30, 2025, for the sale of common stock. No directors or other Section 16 officers adopted, terminated, or modified such arrangements during this period Rule 10b5-1 Trading Arrangements Adopted by Officers (3 Months Ended June 30, 2025) | Name and title of officer | Date of trading arrangement | Duration of trading arrangement | Aggregate shares of common stock to be sold | | :------------------------ | :-------------------------- | :------------------------------ | :------------------------------------------ | | Karen J. DeToro, President, Worksite Division | May 6, 2025 | July 31, 2026 | 25,657 | | Jeanne L. Linnenbringer, Chief Operations Officer | May 5, 2025 | July 31, 2026 | 14,739 | | Rocco F. Tarasi, Chief Marketing Officer | June 9, 2025 | June 10, 2026 | 9,283 | | Matthew J. Zimpfer, General Counsel | June 9, 2025 | August 12, 2026 | 88,340 | - No directors or other Section 16 officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[356](index=356&type=chunk) [ITEM 6. EXHIBITS.](index=98&type=section&id=ITEM%206.%20EXHIBITS.) This section lists all exhibits filed with the Form 10-Q, including amended certificates of incorporation, a restatement agreement, the long-term incentive plan, and certifications from the CEO and CFO, along with XBRL taxonomy documents - Exhibits include amended and restated certificates of incorporation, a sixth amendment and restatement agreement, the amended and restated long-term incentive plan, and certifications pursuant to the Sarbanes-Oxley Act[358](index=358&type=chunk) [SIGNATURE](index=99&type=section&id=SIGNATURE) The report is duly signed on behalf of CNO Financial Group, Inc. by Joel T. Koehneman, Senior Vice President and Chief Accounting Officer, as of August 6, 2025 - The report is signed by Joel T. Koehneman, Senior Vice President and Chief Accounting Officer, on August 6, 2025[363](index=363&type=chunk)

Group 1 - CNO Financial Group, Inc. declared a quarterly cash dividend of $0.17 per share on common shares [1] - The dividend is payable on September 24, 2025, to shareholders of record as of September 10, 2025 [1] Group 2 - CNO Financial Group provides life and health insurance, annuities, financial services, and workforce benefits solutions [2] - The company serves middle-income America with 3.2 million policies and total assets of $37.3 billion [2] - CNO has a workforce of 3,400 associates, 4,900 exclusive agents, and over 6,000 independent partner agents [2]

Core Viewpoint - CNO Financial Group, Inc. (CNO) experienced a 2% decline in shares following the release of its second-quarter 2025 results, primarily due to increased total expenses and net investment losses, although strong annuity collected premiums and rising new annualized premiums provided some offset [1][10]. Financial Performance - CNO reported adjusted earnings per share (EPS) of 87 cents, exceeding the Zacks Consensus Estimate by 2.4%, but reflecting a 17% decrease year over year [2][10]. - Operating revenues reached $1.2 billion, marking an 8% year-over-year increase and surpassing the consensus estimate by 19.3% [2]. - Total insurance policy income rose 1.5% year over year to $651.3 million, falling short of the Zacks Consensus Estimate of $653 million [3]. Investment and Premiums - Net investment losses were recorded at $21.8 million, slightly better than the previous year's loss of $21.9 million [4]. - Annuity collected premiums increased by 19% year over year to $520.5 million, while health collected premiums rose 2.3% to $409.5 million [5][10]. - Total collected premiums advanced 8.7% year over year to $1.2 billion [5]. Expense and Financial Ratios - Total benefits and expenses surged 12.9% year over year to $1 billion, driven by higher insurance policy benefits and operating costs [6][10]. - The debt-to-capital ratio improved by 760 basis points to 34.6% at the end of the second quarter [7]. - Book value per common share increased by 4.7% to $25.92, with operating return on equity improving by 120 basis points to 11.2% [8]. Shareholder Returns - CNO returned $100 million to shareholders through share buybacks and $16.7 million in dividends during the second quarter, with a remaining repurchase capacity of $540.4 million [11]. Future Guidance - CNO anticipates operating EPS in the range of $3.70-$3.90 for 2025 and expects excess cash flow between $200-$250 million [12]. - The company projects an expense ratio of 19-19.2%, an improvement from the previous estimate [12].

Financial Data and Key Metrics Changes - CNO Financial Group reported operating earnings per diluted share of $0.87, benefiting from favorable insurance product margins and solid investment results [7][22] - Book value per diluted share, excluding AOCI, increased by 6% to $38.5 [8] - The company returned $117 million to shareholders in the quarter and $234 million year-to-date [8][22] - Operating return on equity was 11.8% to 12.1% on a trailing twelve-month basis, with a target of around 10.5% for the full year 2025 [23][29] Business Line Data and Key Metrics Changes - The Consumer division achieved record total new annualized premiums of $120 million, up 17%, with double-digit growth in both divisions [7][10] - Annuity collected premiums surpassed $500 million for the first time in a single quarter, driven by 19% growth [11] - Life and Health NAP posted double-digit growth of 17%, with total life insurance up 20% and direct-to-consumer life insurance sales up 29% [13][14] - Worksite life and health NAP increased by 16%, with life insurance sales up 54% [17][18] Market Data and Key Metrics Changes - Client assets in brokerage and advisory rose by 27% to $4.6 billion, with new accounts up 13% [12] - The market value of invested assets grew by 5% in the quarter, with 96% of the fixed maturity portfolio rated investment grade [28] Company Strategy and Development Direction - CNO aims to serve the growing needs of the middle-income market with diverse products and distribution channels [31] - The company is focused on improving return on equity and delivering consistent, repeatable results [31][32] - Investments in technology are enhancing customer experience and operational efficiency [17][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained profitable growth and the ability to navigate the evolving economic environment [31][32] - The company anticipates continued strong sales momentum and improved profitability in the second half of the year [31] Other Important Information - CNO reaffirmed its 2025 guidance, lowering the upper bound of the expense ratio range to 19.2% from 19.4% [29] - The company is engaged in discussions with regulators regarding opportunities with its Bermuda operation [97][98] Q&A Session Summary Question: Can you provide more color on the momentum from the web digital piece of direct-to-consumer sales? - Management noted strong growth in direct-to-consumer sales, particularly from web and digital channels, which were up 39% year-over-year [36][37] Question: Can you discuss the expense experience in the quarter and the change in guidance? - Management indicated that expenses were generally in line with expectations, with a better expense ratio reflecting improved operating leverage [52] Question: What is the claims experience for long-term care? - Management reported a continuation of favorable claims experience, with expectations for LTC claims to trend closer to pre-COVID levels [54] Question: How diversified is the mix of carriers for Medicare Advantage? - Management confirmed a diversified mix of about 20 carriers, with no concentration risk, and expressed confidence in the demand for both Medicare Supplement and Medicare Advantage products [66][68] Question: What is the outlook for annuity sales and spreads? - Management indicated that while strong sales are expected to continue, comparable conditions may become tougher, and spreads have remained stable [70][73]

Financial Data and Key Metrics Changes - CNO Financial Group reported operating earnings per diluted share of $0.87, benefiting from favorable insurance product margins and solid investment results [6][22] - Total new annualized premiums reached a record $120 million, up 17% year-over-year, marking the twelfth consecutive quarter of strong sales momentum [6][5] - Book value per diluted share, excluding AOCI, increased by 6% to $38.5 [7] Business Line Data and Key Metrics Changes - The Consumer division experienced double-digit growth across nearly all product lines, with annuity collected premiums surpassing $500 million, driven by 19% growth [10][9] - Life and Health NAP posted a 17% increase, with total life insurance up 20% and direct-to-consumer life insurance sales up 29% [12][13] - Worksite life and health NAP grew by 16%, with life insurance sales up 54% [16][17] Market Data and Key Metrics Changes - Client assets in brokerage and advisory increased by 27% to $4.6 billion, with new accounts up 13% [11] - The market value of invested assets grew by 5%, with 96% of the fixed maturity portfolio rated investment grade [27] Company Strategy and Development Direction - CNO remains focused on serving the middle-income market with diverse products and distribution, aiming for sustained profitable growth [30] - The company is investing in technology to enhance customer experience and operational efficiency, including a new customer relationship management platform [18][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a return on equity of around 10.5% for 2025 and a target of 11.5% by 2027 [23][30] - The company is well-positioned to navigate the evolving economic environment and improve profitability [30] Other Important Information - CNO returned $117 million to shareholders in the quarter and $234 million year-to-date [7] - The company reaffirmed its 2025 guidance, lowering the upper bound of the expense ratio range to 19.2% from 19.4% [29] Q&A Session Summary Question: Can you provide more color on the momentum from the web digital piece of direct-to-consumer sales? - Management noted strong growth in direct-to-consumer sales, particularly from web and digital channels, which were up 39% year-over-year [34][36] Question: What are the current trends in Medicare Supplement margins? - Management highlighted that Medicare Supplement margins have held up well, with a modest increase in claims experience [38][44] Question: Can you discuss the expense experience in the quarter? - Management indicated that expenses were in line with expectations, with a better expense ratio reflecting improved operating leverage [49][50] Question: How is the competition in the annuity space evolving? - Management acknowledged increased competition in the annuity market but emphasized that CNO targets a different client base, focusing on middle-income consumers [60][61] Question: What is the status of the Bermuda operation? - Management expressed satisfaction with the development of the Bermuda operation and ongoing discussions with regulators [95][96]

Financial Performance - The company's total new annualized premiums (NAP) increased by 17% compared to 2Q24[12] - Annuity collected premiums rose by 19% year-over-year, reaching record levels[12] - Client assets in brokerage and advisory services grew by 27% compared to 2Q24[12] - The operating return on equity (ROE), excluding significant items, was 112%[12] - Book value per diluted share excluding AOCI increased by 6% to $3805[12] Division Updates - Consumer Division annuity collected premiums increased by 19%[15] - Consumer Division client assets in brokerage and advisory increased by 27%[15] - Consumer Division life and health NAP increased by 17%[15] - Worksite Division life and health NAP increased by 16%[16] Investment and Capital - The average yield on allocated investments increased to 492% compared to 481% in 2Q24[36] - The new money rate was 642%[36]

Core Viewpoint - CNO Financial Group reported strong second quarter results for 2025, with revenue and non-GAAP earnings per share exceeding analyst expectations, despite declines in net income compared to the previous year [1][5][7] Financial Performance - GAAP revenue reached $1,151.5 million, significantly higher than the estimated $747.81 million, marking an 8.0% increase year-over-year from $1,066.2 million in Q2 2024 [2][5] - Non-GAAP earnings per share were $0.87, slightly above the expected $0.86, but down 17.1% from $1.05 in Q2 2024 [2][7] - GAAP net income decreased by 21.1% compared to Q2 2024, while non-GAAP net operating income also fell [7][8] Business Overview - CNO Financial Group focuses on providing life and health insurance products primarily to middle-income Americans, operating through its Consumer and Worksite Divisions [3] - The company utilizes a mix of exclusive and independent agents along with direct marketing to distribute its products [3] Key Success Factors - The effectiveness of the agent and distribution strategy, prudent investment management, and product innovation are critical for the company's success [4] - The company is focusing on agent recruitment, sales growth, and the implementation of digital processes [4] Premium Growth - New annualized premiums increased by 17%, driven by a 22% rise in new life insurance premiums and an 11% increase in new health insurance premiums compared to Q2 2024 [6] - Both Consumer and Worksite divisions reported double-digit gains in new annualized premiums, with a notable increase in digital sales channels [6] Investment and Capital Management - Book value per share rose to $25.92, up 13.7% from $22.80 a year earlier, supported by a share buyback of 2.6 million shares totaling $100.0 million [9] - The company's statutory risk-based capital (RBC) ratio was 378%, indicating strong financial stability [9] Product Innovation - The company continues to innovate with new products, including indexed annuities with lifetime income guarantees and enhanced worksite offerings [10] - Technological advancements, such as accelerated underwriting for simplified life insurance, have contributed to operational improvements [10] Outlook - Management reaffirmed its fiscal 2025 outlook, aiming to improve operating return on equity by 150 basis points through 2027 [12] - The company anticipates further profitability growth through balanced business expansion and disciplined expense management [12]

[Consolidated Balance Sheet](index=3&type=section&id=Consolidated%20balance%20sheet) [Consolidated Balance Sheet Overview](index=3&type=section&id=Consolidated%20Balance%20Sheet%20Overview) CNO Financial Group's balance sheet shows a slight decrease in total assets and liabilities, with stable shareholders' equity and increased book value per common share Consolidated Balance Sheet Key Metrics (Dollars in millions) | Metric | Mar-25 | Jun-25 | Change (Mar-25 to Jun-25) | | :----------------------------------- | :------- | :------- | :-------------------------- | | Total assets | $ 37,429.2 | $ 37,329.1 | ($100.1) | | Total liabilities | $ 34,874.1 | $ 34,806.4 | ($67.7) | | Total shareholders' equity | $ 2,555.1 | $ 2,522.7 | ($32.4) | | Book value per common share | $ 25.58 | $ 25.92 | $0.34 | | Book value per common share, excluding AOCI | $ 37.98 | $ 38.79 | $0.81 | | Book value per diluted share, excluding AOCI | $ 37.27 | $ 38.05 | $0.78 | [Consolidated Statement of Operations](index=5&type=section&id=Consolidated%20statement%20of%20operations) [Consolidated Statement of Operations Overview](index=5&type=section&id=Consolidated%20Statement%20of%20Operations%20Overview) CNO Financial Group's total revenues and net income significantly increased in 2Q25, driven by higher insurance policy and investment income Consolidated Statement of Operations (Dollars in millions) | Metric | 1Q 2025 | 2Q 2025 | Change (1Q to 2Q) | | :----------------------------------- | :-------- | :-------- | :------------------ | | Insurance policy income | $ 650.7 | $ 651.3 | $0.6 | | Net investment income (General account assets) | $ 375.1 | $ 378.3 | $3.2 | | Net investment income (Policyholder portfolios) | $ (63.6) | $ 105.4 | $169.0 | | Total revenues | $ 1,004.1 | $ 1,151.5 | $147.4 | | Total benefits and expenses | $ 976.3 | $ 1,033.5 | $57.2 | | Income before income taxes | $ 27.8 | $ 118.0 | $90.2 | | Net income | $ 21.5 | $ 91.8 | $70.3 | [Financial Summary](index=6&type=section&id=Financial%20summary) [Financial Summary Overview](index=6&type=section&id=Financial%20Summary%20Overview) The financial summary shows increased total insurance product margin and net operating income, with diluted net operating income per share rising to $0.87 Financial Summary Key Metrics (Dollars in millions, except per share data) | Metric | 1Q 2025 | 2Q 2025 | Change (1Q to 2Q) | | :----------------------------------- | :-------- | :-------- | :------------------ | | Total insurance product margin | $ 248.9 | $ 252.4 | $3.5 | | Income from insurance products | $ 87.7 | $ 103.0 | $15.3 | | Operating earnings before taxes | $ 104.6 | $ 112.3 | $7.7 | | Net operating income | $ 81.1 | $ 87.5 | $6.4 | | Net operating income per diluted share | $ 0.79 | $ 0.87 | $0.08 | | Net income per diluted share | $ 0.21 | $ 0.91 | $0.70 | [Insurance Operations Overview](index=7&type=section&id=Insurance%20operations) [Insurance Product Margins by Segment](index=7&type=section&id=Insurance%20Product%20Margins%20by%20Segment) Total insurance product margin increased in 2Q25, primarily driven by Health products, while Annuity margin remained stable and Life margin slightly decreased Insurance Product Margins (Dollars in millions) | Product Line | 1Q 2025 | 2Q 2025 | Change (1Q to 2Q) | | :-------------------------- | :-------- | :-------- | :------------------ | | Annuity margin | $ 54.5 | $ 54.8 | $0.3 | | Health margin | $ 126.2 | $ 134.0 | $7.8 | | Life margin | $ 68.2 | $ 63.6 | ($4.6) | | Total insurance product margin | $ 248.9 | $ 252.4 | $3.5 | | Income from insurance products | $ 87.7 | $ 103.0 | $15.3 | | Net operating income | $ 81.1 | $ 87.5 | $6.4 | [Margin from Insurance Products](index=8&type=section&id=Margin%20from%20insurance%20products) [Margin from Annuity Products](index=8&type=section&id=Margin%20from%20Annuity%20Products) Annuity product margin remained stable in 2Q25, with fixed indexed annuities being the largest contributor despite a slight decrease in margin/average net insurance liabilities Annuity Product Margins (Dollars in millions) | Product Type | 1Q 2025 Margin | 2Q 2025 Margin | 2Q 2025 Margin/Average Net Insurance Liabilities | | :-------------------------- | :------------- | :------------- | :--------------------------------------------- | | Fixed indexed annuities | $ 44.5 | $ 45.4 | 1.72 % | | Fixed interest annuities | $ 8.1 | $ 8.0 | 2.01 % | | Other annuities | $ 1.9 | $ 1.4 | 1.41 % | | Total annuity margin | $ 54.5 | $ 54.8 | 1.75 % | [Margin from Health Products](index=9&type=section&id=Margin%20from%20Health%20Products) Health product margin increased in 2Q25, driven by Long-term care and Supplemental health, with Long-term care showing the highest margin/insurance policy income Health Product Margins (Dollars in millions) | Product Type | 1Q 2025 Margin | 2Q 2025 Margin | 2Q 2025 Margin/Insurance Policy Income | | :-------------------------- | :------------- | :------------- | :------------------------------------- | | Supplemental health | $ 65.6 | $ 68.6 | 37 % | | Medicare supplement | $ 28.1 | $ 28.2 | 18 % | | Long-term care | $ 32.5 | $ 37.2 | 52 % | | Total health margin | $ 126.2 | $ 134.0 | 32 % | [Margin from Life Products](index=10&type=section&id=Margin%20from%20Life%20Products) Life product margin decreased in 2Q25, primarily due to a decline in Interest sensitive life margin, while Traditional life margin remained robust Life Product Margins (Dollars in millions) | Product Type | 1Q 2025 Margin | 2Q 2025 Margin | 2Q 2025 Margin/Insurance Policy Income | | :-------------------------- | :------------- | :------------- | :------------------------------------- | | Interest sensitive life | $ 24.1 | $ 21.9 | 45 % (Underwriting margin) | | Traditional life | $ 44.1 | $ 41.7 | 23 % | | Total life margin | $ 68.2 | $ 63.6 | - | [Collected Premiums and Insurance Policy Income](index=11&type=section&id=Collected%20premiums%20and%20insurance%20policy%20income) [Collected Premiums and Insurance Policy Income Overview](index=11&type=section&id=Collected%20Premiums%20and%20Insurance%20Policy%20Income%20Overview) Total collected premiums and insurance policy income increased in 2Q25, primarily driven by a significant rise in annuity product premiums Collected Premiums and Insurance Policy Income (Dollars in millions) | Metric | 1Q 2025 | 2Q 2025 | Change (1Q to 2Q) | | :----------------------------------- | :-------- | :-------- | :------------------ | | Total annuity collected premiums | $ 442.0 | $ 520.5 | $78.5 | | Total health collected premiums | $ 405.7 | $ 409.5 | $3.8 | | Total life collected premiums | $ 244.4 | $ 245.5 | $1.1 | | Total collected premiums | $ 1,092.1 | $ 1,175.5 | $83.4 | | Total annuity insurance policy income | $ 9.8 | $ 8.5 | ($1.3) | | Total health insurance policy income | $ 412.0 | $ 412.5 | $0.5 | | Total life insurance policy income | $ 228.9 | $ 230.4 | $1.5 | | Total insurance policy income | $ 650.7 | $ 651.4 | $0.7 | [Health and Life New Annualized Premiums ("NAP")](index=12&type=section&id=Health%20and%20life%20new%20annualized%20premiums) [New Annualized Premiums by Division and Product](index=12&type=section&id=New%20Annualized%20Premiums%20by%20Division%20and%20Product) Total New Annualized Premiums (NAP) increased in 2Q25, with growth across both Consumer and Worksite Divisions and significant increases in life products New Annualized Premiums (Dollars in millions) | Metric | 1Q 2025 | 2Q 2025 | Change (1Q to 2Q) | | :----------------------------------- | :-------- | :-------- | :------------------ | | Total Consumer Division health NAP | $ 41.7 | $ 44.3 | $2.6 | | Total Consumer Division life NAP | $ 49.6 | $ 57.6 | $8.0 | | Total Consumer Division health and life NAP | $ 91.3 | $ 101.9 | $10.6 | | Total Worksite Division health and life NAP | $ 14.4 | $ 18.0 | $3.6 | | Total health NAP | $ 52.0 | $ 56.0 | $4.0 | | Total life NAP | $ 53.7 | $ 63.9 | $10.2 | | Total NAP | $ 105.7 | $ 119.9 | $14.2 | [Computation of Weighted Average Shares Outstanding](index=13&type=section&id=Computation%20of%20weighted%20average%20shares%20outstanding) [Weighted Average Shares Outstanding Details](index=13&type=section&id=Weighted%20Average%20Shares%20Outstanding%20Details) Weighted average basic and diluted shares outstanding decreased in 2Q25, primarily due to share repurchases Weighted Average Shares Outstanding (Shares in thousands) | Metric | 1Q 2025 | 2Q 2025 | Change (1Q to 2Q) | | :----------------------------------- | :-------- | :-------- | :------------------ | | Weighted average basic shares outstanding | 100,742.8 | 98,572.2 | (2,170.6) | | Weighted average diluted shares outstanding | 103,069.9 | 100,386.2 | (2,683.7) | | Shares repurchased | (1,106.8) | (1,347.6) | (240.8) | [Annuities - Account Value Rollforwards](index=14&type=section&id=Annuities%20-%20account%20value%20rollforwards) [Annuity Policyholder Account Balances Rollforward](index=14&type=section&id=Annuity%20Policyholder%20Account%20Balances%20Rollforward) Total annuity policyholder account balances increased in 2Q25, driven by new issuances and interest credited, with fixed indexed annuities as the largest component Annuity Policyholder Account Balances (Dollars in millions) | Metric | 1Q 2025 End of Period | 2Q 2025 End of Period | Change (1Q to 2Q) | | :----------------------------------- | :-------------------- | :-------------------- | :------------------ | | Fixed indexed annuities | $ 10,952.1 | $ 11,221.3 | $269.2 | | Fixed interest annuities | $ 1,640.7 | $ 1,634.7 | ($6.0) | | Total annuities | $ 12,592.8 | $ 12,856.0 | $263.2 | | Issuances (funds collected from new business) | $ 434.6 | $ 510.1 | $75.5 | | Interest credited (Total annuities) | $ 109.1 | $ 97.5 | ($11.6) | | Surrenders and withdrawals (Total annuities) | $ (274.7) | $ (262.5) | $12.2 | [Consolidated Statutory Information of U.S. Based Insurance Subsidiaries](index=15&type=section&id=Consolidated%20statutory%20information%20of%20U.S.%20based%20insurance%20subsidiaries) [Statutory Financials and Capital Ratios](index=15&type=section&id=Statutory%20Financials%20and%20Capital%20Ratios) U.S. insurance subsidiaries reported increased net gain from operations and net income in 2Q25, maintaining a strong Risk-based capital ratio of 378% Consolidated Statutory Information (Dollars in millions) | Metric | 1Q 2025 | 2Q 2025 (a) | Change (1Q to 2Q) | | :----------------------------------- | :-------- | :------------ | :------------------ | | Net gain from operations before interest expense and federal income taxes | $ 29.0 | $ 37.7 | $8.7 | | Net gain from operations before federal income taxes | $ 13.5 | $ 22.0 | $8.5 | | Net income (loss) | $ 12.3 | $ 19.4 | $7.1 | | Capital and surplus | $ 1,422.3 | $ 1,417.8 | ($4.5) | | Risk-based capital ratio | 379 % | 378 % | (1) % | - The amounts for 2Q25 are preliminary, as statutory basis financial statements will be filed around August 14, 2025[32](index=32&type=chunk) [Investment Income](index=16&type=section&id=Investment%20income%20not%20allocated%20to%20product%20lines%20and%20investment%20income%20allocated%20to%20product%20lines) [Investment Income Not Allocated to Product Lines](index=16&type=section&id=Investment%20Income%20Not%20Allocated%20to%20Product%20Lines) Investment income not allocated to product lines decreased in 2Q25, reflecting mixed performance in FHLB and FABN programs and various variable components Investment Income Not Allocated to Product Lines (Dollars in millions) | Metric | 1Q 2025 | 2Q 2025 | Change (1Q to 2Q) | | :----------------------------------- | :-------- | :-------- | :------------------ | | Total investment income not allocated to product lines | $ 38.0 | $ 33.8 | ($4.2) | | Net spread income on FHLB program | $ 9.4 | $ 8.9 | ($0.5) | | Net spread income on FABN program | $ 6.4 | $ 9.2 | $2.8 | | Total excluding variable components | $ 25.8 | $ 22.8 | ($3.0) | | Total variable components | $ 12.2 | $ 11.0 | ($1.2) | [Investment Income Allocated to Product Lines](index=19&type=section&id=Investment%20Income%20Allocated%20to%20Product%20Lines) Total investment income allocated to product lines increased in 2Q25, with annuity products receiving the largest allocation and an average yield of 4.95% Investment Income Allocated to Product Lines (Dollars in millions) | Product Line | 1Q 2025 Allocated Investment Income | 2Q 2025 Allocated Investment Income | 2Q 2025 Average Yield | | :----------------------------------- | :---------------------------------- | :---------------------------------- | :-------------------- | | Annuity | $ 148.0 | $ 155.2 | 4.95 % | | Health | $ 75.1 | $ 75.9 | 4.90 % | | Life | $ 37.6 | $ 37.8 | 4.85 % | | Total allocated investment income | $ 260.7 | $ 268.9 | 4.92 % | | Total average net insurance liabilities | $ 21,400.0 | $ 21,854.2 | - | [Other Investment Data](index=22&type=section&id=Other%20investment%20data) [Key Investment Metrics](index=22&type=section&id=Key%20Investment%20Metrics) Average book value of invested assets and cash slightly decreased in 2Q25, while the new money rate remained stable and book and earned yields showed minor increases Other Investment Data (Dollars in millions, except rates) | Metric | 1Q 2025 | 2Q 2025 | Change (1Q to 2Q) | | :----------------------------------- | :-------- | :-------- | :------------------ | | Average book value of invested assets and cash | $ 30,755.7 | $ 30,732.5 | ($23.2) | | Net investment income from general account investments | $ 375.1 | $ 378.3 | $3.2 | | New money rate | 6.43 % | 6.42 % | (0.01) % | | Book yield | 4.81 % | 4.83 % | 0.02 % | | Earned yield | 4.71 % | 4.73 % | 0.02 % | | Alternative investment income (loss) | $ 12.9 | $ 11.7 | ($1.2) | [Significant Items](index=23&type=section&id=Significant%20items) [1Q25 Significant Items](index=23&type=section&id=1Q25%20Significant%20Items) A favorable out-of-period adjustment in 1Q25 decreased reserves, positively impacting net operating income and diluted EPS 1Q25 Significant Items Impact (Dollars in millions, except per share amounts) | Metric | Actual Results | Significant Items Impact | Excluding Significant Items | | :----------------------------------- | :------------- | :----------------------- | :-------------------------- | | Life margin | $ 68.2 | $ (6.8) (a) | $ 61.4 | | Total insurance product margin | $ 248.9 | $ (6.8) | $ 242.1 | | Operating earnings before taxes | $ 104.6 | $ (6.8) | $ 97.8 | | Net operating income | $ 81.1 | $ (5.3) | $ 75.8 | | Net operating income per diluted share | $ 0.79 | $ (0.05) | $ 0.74 | - The significant item in 1Q25 was a **$6.8 million favorable out-of-period adjustment** that decreased reserves[49](index=49&type=chunk) [4Q24 Significant Items](index=23&type=section&id=4Q24%20Significant%20Items) An unfavorable actuarial review in 4Q24 impacted Health margin, leading to a positive adjustment to net operating income and diluted EPS when excluded 4Q24 Significant Items Impact (Dollars in millions, except per share amounts) | Metric | Actual Results | Significant Items Impact | Excluding Significant Items | | :----------------------------------- | :------------- | :----------------------- | :-------------------------- | | Health margin | $ 130.1 | $ 3.9 (a) | $ 134.0 | | Total insurance product margin | $ 253.1 | $ 3.9 | $ 257.0 | | Operating earnings before taxes | $ 173.9 | $ 3.9 | $ 177.8 | | Net operating income | $ 138.0 | $ 3.1 | $ 141.1 | | Net operating income per diluted share | $ 1.31 | $ 0.03 | $ 1.34 | - The significant item in 4Q24 was a **$3.9 million unfavorable impact** from a comprehensive annual actuarial review[51](index=51&type=chunk) [3Q24 Significant Items](index=24&type=section&id=3Q24%20Significant%20Items) 3Q24 saw a net favorable actuarial review impact and an unfavorable fixed asset impairment, resulting in a negative impact on net operating income and diluted EPS 3Q24 Significant Items Impact (Dollars in millions, except per share amounts) | Metric | Actual Results | Significant Items Impact | Excluding Significant Items | | :----------------------------------- | :------------- | :----------------------- | :-------------------------- | | Annuity margin | $ 91.1 | $ (36.2) (a) | $ 54.9 | | Health margin | $ 127.8 | $ 4.3 (a) | $ 132.1 | | Life margin | $ 63.3 | $ 0.7 (a) | $ 64.0 | | Total insurance product margin | $ 282.2 | $ (31.2) | $ 251.0 | | Operating earnings before taxes | $ 153.5 | $ (28.3) | $ 125.2 | | Net operating income | $ 119.2 | $ (21.9) | $ 97.3 | | Net operating income per diluted share | $ 1.11 | $ (0.19) | $ 0.92 | - The significant items in 3Q24 included a **$31.2 million net favorable impact** from the comprehensive annual actuarial review and a **$2.9 million unfavorable impact** related to a fixed asset impairment[54](index=54&type=chunk) [Notes](index=24&type=section&id=Notes) [Definitions of Key Financial Measures](index=24&type=section&id=Definitions%20of%20Key%20Financial%20Measures) This section defines key financial measures, including non-GAAP metrics, investment allocation methodologies, and statutory accounting practices, for comprehensive report understanding - **Book value per common share, excluding accumulated other comprehensive income (loss)**, is a non-GAAP measure that removes volatility from unrealized investment appreciation/depreciation[56](index=56&type=chunk) - **Insurance product margin** is a management measure of profitability for annuity, health, and life product lines, comprising insurance policy income plus allocated investment income less insurance policy benefits, interest credited, commissions, advertising expense, and amortization of acquisition costs[56](index=56&type=chunk) - **Net operating income** is a non-GAAP measure used to evaluate financial performance, excluding various non-recurring or market-related items such as net realized investment gains or losses, changes in fair value of investments, and embedded derivative liabilities[57](index=57&type=chunk) - Investment income is allocated to product lines based on the book yield of investments backing the block of business, which is applied to the average net insurance liabilities for the block in each period[56](index=56&type=chunk) - The **new money rate** refers to the rate for investments purchased during the period to support insurance products and capital, excluding FHLB, FABN, and variable interest entity investments[57](index=57&type=chunk)

Core Viewpoint - CNO Financial Group reported a decrease in net income for the second quarter of 2025, with net income at $91.8 million or $0.91 per diluted share, down from $116.3 million or $1.06 per diluted share in the same quarter of 2024, primarily due to non-economic accounting impacts from market volatility [1][6][29] Financial Performance - Net operating income for 2Q25 was $87.5 million, or $0.87 per diluted share, compared to $114.6 million, or $1.05 per diluted share in 2Q24, reflecting a 24% decrease [1][3][29] - Total revenues for 2Q25 were $1,151.5 million, up from $1,066.2 million in 2Q24, indicating a year-over-year increase [29] - The company returned $116.7 million to shareholders during the quarter [5] Key Metrics - Book value per share was $25.92, an increase from $24.75 at the end of 2024, while book value per diluted share, excluding accumulated other comprehensive loss, was $38.05, up from $37.35 [20] - Return on equity (ROE) for the trailing four quarters was 11.9%, down from 19.9% in the previous year [22] - Operating ROE for the same period was 11.8%, compared to 11.2% in the prior year [22] Business Growth - Total new annualized premiums (NAP) increased by 17%, with life NAP up 22% and health NAP up 11% [5] - Annuity collected premiums rose by 19%, and client assets in brokerage and advisory increased by 27% [5] Investment Portfolio - As of June 30, 2025, the fair value of CNO's available-for-sale fixed maturity portfolio was $23,047 million, with net unrealized losses of $2,339.8 million [17] - The consolidated statutory risk-based capital ratio of U.S.-based insurance subsidiaries was estimated at 378% [18] Shareholder Actions - During 2Q25, the company repurchased $100 million of common stock, with an average cost of $38.09 per share [19] - Dividends paid on common stock totaled $16.7 million during the quarter [19]