CNO Financial Group(US:CNO)2025-05-07 20:21Financial Performance - For the three months ended March 31, 2025, the total insurance product margin increased to $248.9 million, up from $229.6 million in the same period of 2024, representing an increase of 8.5%[232] - The annuity margin rose to $54.5 million in Q1 2025, compared to $52.0 million in Q1 2024, reflecting a growth of 4.8%[232] - The health margin increased to $126.2 million in Q1 2025, up from $123.0 million in Q1 2024, marking a growth of 2.6%[232] - The life margin saw a significant increase to $68.2 million in Q1 2025, compared to $54.6 million in Q1 2024, which is a growth of 24.5%[232] - Net operating income for Q1 2025 was $81.1 million, an increase from $57.5 million in Q1 2024, representing a growth of 41.0%[232] - Net income for Q1 2025 decreased to $13.7 million from $112.3 million in Q1 2024, indicating a decline of 87.8%[232] - The diluted net income per share for Q1 2025 was $0.13, down from $1.01 in Q1 2024, reflecting a decrease of 87.9%[232] - Total net investment income rose by 16.0% to $298.7 million in Q1 2025, up from $257.6 million in Q1 2024[249] - Fee revenue decreased to $47.4 million in Q1 2025 from $50.5 million in Q1 2024, leading to a net fee income of $(0.8) million[252] Investment Performance - The company reported net realized investment losses of $13.2 million in Q1 2025, compared to losses of $4.6 million in Q1 2024[232] - Investment income not allocated to product lines increased to $38.0 million in Q1 2025, up from $12.3 million in Q1 2024[232] - Net investment income not allocated to product lines rose to $38.0 million in Q1 2025 from $12.3 million in Q1 2024, primarily due to a loss on alternative investments in the prior year[277] - The company recognized $2.8 million in gross realized losses on sales of $230.3 million of fixed maturity securities during the first three months of 2025[339] - The total gross unrealized losses of fixed maturity securities available for sale amounted to $2,313.6 million as of March 31, 2025[345] Margins and Liabilities - Margin from fixed indexed annuities was $44.5 million in Q1 2025, up from $43.4 million in Q1 2024, driven by business growth and an increase in average net insurance liabilities to $10,085.7 million from $9,636.3 million[256] - Average net insurance liabilities for total annuities reached $12,087.4 million in Q1 2025, compared to $11,664.2 million in Q1 2024, contributing to higher net investment income[256] - Total health margin increased to $126.2 million in Q1 2025 from $123.0 million in Q1 2024, with supplemental health margin at $65.6 million, up from $65.4 million[262] - Medicare supplement margin grew to $28.1 million in Q1 2025 from $26.5 million in Q1 2024, with insurance policy income increasing by 3% to $156.3 million[265] - Long-term care margin increased to $32.5 million in Q1 2025 from $31.1 million in Q1 2024, attributed to business growth and favorable morbidity[267] Operational Efficiency - The expense ratio for Q1 2025 was 19.9%, down from 20.4% in Q1 2024, indicating improved efficiency[251] - Advertising expense decreased to $21.2 million in Q1 2025 from $24.6 million in Q1 2024, reflecting disciplined marketing expenditure management[274] Capital and Liquidity - As of March 31, 2025, the estimated consolidated statutory RBC ratio was 379%, exceeding the targeted 375%[296] - Total capital as of March 31, 2025, was $4,364.7 million, compared to $4,331.9 million at December 31, 2024[288] - CNO Bermuda Re, a wholly owned subsidiary, is subject to Bermuda Monetary Authority regulations and must maintain a statutory economic capital and surplus of at least 150% of its enhanced capital requirement[297] - As of March 31, 2025, CNO and its subsidiaries held $250.3 million in unrestricted cash, exceeding the minimum target of $150 million[309] - In the first three months of 2025, CNO generated $250.3 million in free cash flow and repurchased 2.5 million shares for $99.9 million[317] Ratings and Financial Strength - AM Best affirmed an "A" financial strength rating for CNO's primary insurance subsidiaries, indicating excellent ability to meet obligations[301] - Fitch and S&P affirmed "A" and "A-" ratings respectively for CNO's primary insurance subsidiaries, indicating strong capacity to meet obligations[302][304] - The RBC ratio of Colonial Life Insurance Company was estimated at 325% as of March 31, 2025, allowing for interest payments on surplus debentures without additional approval[311] Future Outlook - The company expects operating earnings per diluted share to be in the range of $3.70 to $3.90 for 2025, with an expense ratio projected between 19.0% and 19.4%[284] - Anticipated excess cash flow to the holding company is estimated to be between $200 million and $250 million[285] - The company plans to initiate a $170 million technology modernization project over three years, with $60 million expected in 2025[287] Investment Strategy and Risks - The company emphasizes careful credit analysis and diversification to mitigate risks associated with below-investment grade securities[334] - The company’s investment strategy focuses on active strategic asset allocation and investment management to enhance projected total returns[346] - Future realized losses may occur, which could materially affect the consolidated financial statements[342] - The company has not reported any material changes in market risks or their management in the first three months of 2025[355]