CNO Financial Group(US:CNO)2022-08-02 21:09Financial Data and Key Metrics Changes - Operating earnings per share were reported at $0.85, reflecting a 29% increase year-over-year, and a 3% increase when excluding significant items [6][26] - Book value for diluted share, excluding AOCI, increased by 15% [9] - The annualized effective tax rate rose by 80 basis points to 23.5% compared to the previous year [27] Business Line Data and Key Metrics Changes - In the Consumer Division, Life and Health sales decreased by 9% year-over-year, while direct-to-consumer life sales increased by 9% [10][11] - Annuity collected premiums rose by 26% compared to the prior year, with the average policy size increasing by 6% [15] - Worksite insurance sales grew by 33%, driven by a mix of reservice business and new client acquisition [19] Market Data and Key Metrics Changes - Client assets in brokerage and advisory decreased by 3% year-over-year to $2.6 billion, although new accounts increased by 10% [16] - The producing agent count decreased by 9% year-over-year, but there was a 2% growth in recruiting sequentially [17][22] Company Strategy and Development Direction - The company introduced a new Medicare Supplement product and launched the Optavise brand to unify its worksite offerings [8][18] - The focus remains on enhancing agent productivity and expanding the product portfolio, particularly in the Medicare segment [12][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about increasing sales momentum in the second half of the year, despite ongoing challenges from COVID impacts and market volatility [34][35] - The company is well-positioned to respond to changing macroeconomic conditions, with a strong capital position and a focus on organic and inorganic investments [8][24] Other Important Information - The company returned $77 million to shareholders in the second quarter, including $60 million in share buybacks, resulting in a 12% reduction in weighted average diluted shares outstanding [8][28] - The consolidated RBC ratio was reported at 360%, with a target of 375% [33] Q&A Session Summary Question: Share repurchase pace and RBC ratio timeframe - Management indicated that share repurchases would be dialed back in the near term as they aim to build back to the target RBC and holdco liquidity levels [39] Question: Non-variable investment income levels - Management noted that the increase in non-variable investment income was due to favorable market conditions, but it may not be a permanent trend [42][45] Question: RBC ratio recovery expectations - Management explained that the RBC ratio would likely recover symmetrically if equity markets improve, but the recovery would be gradual [48][49] Question: Advertising spend trends - Management clarified that advertising spend is managed based on internal metrics and the effectiveness of ad placements, leading to fluctuations in spending [50][52] Question: Impact of NAIC RBC charges on CLO investments - Management stated that any changes would be manageable and they are monitoring the situation closely [54] Question: Outlook for annuity gross deposits - Management highlighted that demand for annuities tends to increase during market volatility, contributing to strong growth in annuity sales [56][60] Question: Equity market sensitivity in annuities - Management confirmed that the GAAP impacts are symmetrical, with favorable outcomes expected if market conditions reverse [62][64]