CNO Financial (CNO) Q3 2025 Earnings Transcript

Core Insights - The company reported strong financial performance with a return of $76 million to shareholders in the quarter and $310 million year to date, alongside a 6% increase in book value per diluted share to $38.1 [1][2][3] - The Consumer division achieved record total new annualized premiums of $125 million, reflecting a 26% increase, and continued strong insurance sales growth across both divisions [2][4] - The company is focused on improving profitability and has taken strategic actions expected to enhance operating return on equity (ROE) by an additional 50 basis points through 2027 [3][17] Financial Performance - Operating earnings per diluted share rose to $1.29, a 16% increase, driven by favorable insurance product margins and solid investment results [2][14] - The expense ratio was reported at 18.6% for the quarter, with a trailing twelve-month basis of 19% [14] - The company anticipates a favorable impact on earnings and ROE from exiting the worksite fee services business, which has not met financial performance expectations [10][16] Sales and Growth Metrics - The Consumer division has seen its life and health new annualized premiums (NAP) grow by 27%, with total life insurance up 33% and direct-to-consumer life insurance sales up 56% [4][11] - The health NAP increased by 21%, marking 13 consecutive quarters of growth, with Medicare Supplement policies up 33% [6][11] - Annuity collected premiums rose by 2% in the quarter, totaling nearly $475 million, and client assets in brokerage and advisory increased by 28% to surpass $5 billion [7][11] Strategic Initiatives - The company is exiting the worksite fee services business to focus on core insurance products, which have shown strong sales growth [10][12] - Investments in technology have enhanced customer experience and operational efficiency, with an 89% instant decision rate on simplified life products [8][11] - The company is exploring additional reinsurance transactions with Bermuda to improve its capital position and support middle-income consumers [13][17] Future Guidance - The company revised its operating return on equity target for 2027 to an improvement of 200 basis points, up from a previous target of 150 basis points [22][24] - The anticipated exit from the fee services business and the new Bermuda treaty are expected to contribute to a 50 basis point increase in operating ROE starting in Q4 2025 [17][22] - The guidance for excess cash flow to the holding company has been raised to a range of $365 million to $385 million, reflecting the impact of the new Bermuda reinsurance transaction [24]