CNO Financial Group(US:CNO)2025-11-04 17:00Financial Data and Key Metrics Changes - Operating earnings per diluted share increased by 16% to $1.29, benefiting from favorable insurance product margins and solid investment results [5][14] - Total new annualized premiums reached a record $125 million, up 26%, marking the 13th consecutive quarter of strong insurance sales [4][5] - Book value per diluted share, excluding AOCI, rose by 6% to $38.10 [5] Business Line Data and Key Metrics Changes - Consumer division reported a 27% growth in Life and Health NAP, with total life insurance up 33% and direct-to-consumer life insurance sales up 56% [6][8] - Worksite division achieved record insurance sales with life and health NAP up 20%, marking the 14th consecutive quarter of overall NAP growth [12][13] - Annuity collected premiums increased by 2%, totaling nearly $475 million, with in-force account values exceeding $13 billion for the first time [8][9] Market Data and Key Metrics Changes - Medicare Supplement policies sold increased by 33%, while Medicare Advantage policies sold decreased by 24%, indicating a shift in consumer preferences [8][9] - Client assets in brokerage and advisory grew by 28%, surpassing $5 billion, with total accounts and average account size each up 13% [9] Company Strategy and Development Direction - The company plans to exit the worksite fee services business to focus on core insurance products, expecting this decision to improve earnings and return on equity [11][16] - A second Bermuda treaty was executed to seed approximately $1.8 billion of supplemental health U.S. statutory reserves, enhancing the company's ability to serve middle-income consumers [14][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth across both divisions, despite tougher comparisons in the consumer segment [75] - The exit from the fee services business is expected to lead to a favorable impact on earnings and return on equity starting in Q4 2025 [16][20] Other Important Information - The company returned $76 million to shareholders in the quarter and $310 million year-to-date [5] - The average yield on allocated investments was 4.91%, up 10 basis points year-over-year, contributing to a 7% increase in net investment income [18] Q&A Session Summary Question: Strong D2C sales contribution from new partnerships - Management noted selective partnerships are contributing to growth, particularly in the Hispanic market, and expects continued growth despite a pull forward in advertising expenses [24][25] Question: Impact of exiting the fee services business - The annual earnings loss from the fee services business will improve the fee income segment by about $20 million [26] Question: Opportunities for additional transactions with Bermuda - Management is exploring opportunities to seed additional business, particularly in life insurance, to enhance diversification [30] Question: Claims trends in Medicare supplement business - Management confirmed that the annual assumption update incorporated current trends, with expectations for a 10% average rate increase in filings for the upcoming year [68][69] Question: Future cash benefits from exiting fee services - Management indicated that the $20 million freed up from the fee services business will have a cash impact, aligning with GAAP accruals [51]