CNO Financial Group(US:CNO)2021-05-02 13:22Financial Data and Key Metrics Changes - The company reported operating earnings per share of $0.55, or $0.59 excluding significant items, compared to $0.58 in the prior period, with no significant items in the prior period [6] - Book value per diluted share, excluding AOCI, grew by 13% [6] - The RBC ratio ended the quarter at 407%, with $324 million in cash at the holding company [7][28] - Operating earnings per share, excluding significant items, were up 2%, and return on equity improved by 60 basis points compared to the prior year [22] Business Line Data and Key Metrics Changes - Life sales increased by a record 29% for the quarter, driven by record direct-to-consumer sales and a significant increase in production from exclusive field agents [9] - Health sales were down 19% year-over-year, reflecting a shift from Medicare supplement towards Medicare Advantage [9] - Annuity collected premiums were up 11%, marking the second consecutive quarterly increase [10] - Client assets in brokerage and advisory grew 38% year-over-year to $2.4 billion, with net client asset inflows and market value appreciation [10] Market Data and Key Metrics Changes - Worksite sales were down 30% year-over-year, but showed sequential improvement, with March sales down only 11% year-over-year [15] - The company expects the Worksite Division to maintain sequential growth and return to year-over-year growth as workplaces reopen [15] Company Strategy and Development Direction - The company is focused on executing its strategic transformation initiated in January 2020, which includes growing the business profitably and launching new products [8] - The acquisition of DirectPath is expected to enhance the company's product offerings and cross-sell opportunities [18] - The company aims to deepen relationships with middle-income clients and has shifted its agent recruiting strategy to rely more on personal referrals [13] Management's Comments on Operating Environment and Future Outlook - Management noted that the adverse case scenario regarding COVID-19 appears increasingly unlikely, with favorable trends in infection and vaccination rates [29] - The company expects a modest net favorable COVID-related mortality and morbidity impact for the balance of 2021, with a potential spike in health care claims post-COVID [30] - Management emphasized the importance of maintaining a conservative capital and liquidity posture amid ongoing uncertainties [28] Other Important Information - The company returned $116 million to shareholders in the first quarter, including $100 million in share buybacks [19] - The 2020 corporate social responsibility report will be available soon, highlighting the company's ESG efforts [20] Q&A Session Summary Question: Long-term care claims experience and reserve releases - The favorable COVID impact in long-term care was $25 million, reflecting $9 million in benefit reserve releases and $16 million in reduced paid claims [37] Question: Updated guidance for underwriting - The company expects a net favorable COVID impact for the balance of 2021, with a return to normal claim patterns in Medicare Supplement and an increase in claims due to pent-up demand [40][41] Question: Buyback strategy and capital allocation - The company maintains a conservative posture regarding its RBC and liquidity targets but plans to gradually become less conservative as uncertainty diminishes [46] Question: Life sales and pandemic awareness - Increased consumer awareness due to the pandemic has contributed to life sales growth, alongside the benefits of the company's business transformation [50][51] Question: Home health care preference impact on claims - The company does not expect a material shift in claims costs between home health care and nursing home care due to the modest nature of the benefits offered [60] Question: Free cash flow and new business strain - New business strain will impact free cash flow, but the company expects to continue generating healthy levels of free cash flow [61]