Earnings per share up 66%; Operating
earnings per share up 94%
CARMEL, Ind., July 29, 2024 /PRNewswire/ -- CNO Financial
Group, Inc. (NYSE: CNO) today reported net income of $116.3 million, or $1.06 per diluted share, in 2Q24 compared to
$73.7 million, or $0.64 per diluted share, in 2Q23. Net operating
income (1) was $114.6
million, or $1.05 per diluted
share, in 2Q24 compared to $62.3
million, or $0.54 per diluted
share, in 2Q23.
"CNO delivered excellent earnings and operating performance
across the board, led by continued sales momentum, a growing agent
force, and strong underwriting margins and net investment income in
the quarter," said Gary C. Bhojwani,
chief executive officer. "Sales grew for the eighth consecutive
quarter, illustrating the strength of our broad product offerings
and diverse distribution model to serve the middle-income
market."
"All of our Growth Scorecard performance metrics were up in the
quarter. Our capital position remained strong as we increased book
value per share, while returning more than $77 million to shareholders."
"CNO enters the second half of the year with consistent sales
momentum and continuing favorable macro trends. We remain
well-positioned to deliver sustainable profitable growth and
long-term shareholder value."
Second Quarter 2024 Highlights (as compared to the
corresponding period in the prior year where applicable)
- Total new annualized premiums ("NAP") (4) up 4%;
Worksite Division NAP up 18%; Consumer Division NAP up 2%
- Medicare Supplement NAP up 16%; Medicare Advantage policies
sold up 78%
- Annuity collected premiums up 9%; Policyholder and client
assets up 9%
- Returned $77.2 million to
shareholders
- Book value per share was $22.80,
up 30%; book value per diluted share, excluding accumulated other
comprehensive loss, (2) was $36.00, up 11%
- Return on equity ("ROE") of 19.9%; operating ROE, as adjusted,
(5) of 11.2%
- Raising full-year guidance on earnings and cash flow
|
FINANCIAL
SUMMARY
Quarter End
(Amounts in millions, except
per share data)
(Unaudited)
|
|
Net operating income, a
non-GAAP(a) financial measure, is used consistently by
CNO's management to evaluate the operating performance of the
Company and is a measure commonly used in the life insurance
industry. It differs from net income primarily because it
excludes certain non-operating items such as net realized
investment gains (losses) from sales and change in the allowance
for credit losses, changes in fair values of embedded derivatives
and market risk benefits and the liability for a deferred
compensation plan, and certain significant and unusual items
included in net income. Management believes an analysis of
net operating income is important in understanding the
profitability and operating trends of the Company's business.
Net income is the most directly comparable GAAP measure.
|
|
|
Per diluted
share
|
|
|
|
|
|
|
|
|
Quarter
ended
|
|
Quarter
ended
|
|
June
30,
|
|
June
30,
|
|
2024
|
|
|
2023
|
|
%
change
|
|
2024
|
|
|
2023
|
|
%
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from insurance
products (b)
|
$
1.10
|
|
|
$
0.64
|
|
72
|
|
$ 120.5
|
|
|
$ 73.7
|
|
64
|
|
Fee income
|
0.01
|
|
|
—
|
|
n/m
|
|
0.8
|
|
|
0.6
|
|
33
|
|
Investment income not
allocated to product lines (c)
|
0.41
|
|
|
0.24
|
|
71
|
|
44.8
|
|
|
28.0
|
|
60
|
|
Expenses not allocated
to product lines
|
(0.16)
|
|
|
(0.18)
|
|
(11)
|
|
(17.5)
|
|
|
(21.1)
|
|
(17)
|
|
Operating earnings
before taxes
|
1.36
|
|
|
0.70
|
|
|
|
148.6
|
|
|
81.2
|
|
|
|
Income tax expense on
operating income
|
(0.31)
|
|
|
(0.16)
|
|
94
|
|
(34.0)
|
|
|
(18.9)
|
|
80
|
|
Net operating income
(1)
|
1.05
|
|
|
0.54
|
|
94
|
|
114.6
|
|
|
62.3
|
|
84
|
|
Net realized investment
losses from sales and change in allowance for credit
losses
|
(0.20)
|
|
|
(0.27)
|
|
|
|
(21.9)
|
|
|
(31.3)
|
|
|
|
Net change in market
value of investments recognized in earnings
|
0.04
|
|
|
(0.04)
|
|
|
|
4.7
|
|
|
(4.0)
|
|
|
|
Changes in fair value
of embedded derivative liabilities and market risk
benefits
|
0.15
|
|
|
0.44
|
|
|
|
16.8
|
|
|
50.4
|
|
|
|
Other
|
0.02
|
|
|
—
|
|
|
|
2.4
|
|
|
(0.2)
|
|
|
|
Non-operating income
before taxes
|
0.01
|
|
|
0.13
|
|
|
|
2.0
|
|
|
14.9
|
|
|
|
Income tax expense on
non-operating income
|
—
|
|
|
(0.03)
|
|
|
|
(0.3)
|
|
|
(3.5)
|
|
|
|
Net non-operating
income
|
0.01
|
|
|
0.10
|
|
|
|
1.7
|
|
|
11.4
|
|
|
|
Net
income
|
$
1.06
|
|
|
$
0.64
|
|
|
|
$ 116.3
|
|
|
$
73.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares outstanding
|
109.3
|
|
|
115.6
|
|
|
|
|
|
|
|
|
|
|
n/m - not
meaningful
|
|
____________________
|
|
(a)
|
GAAP is defined as
accounting principles generally accepted in the United States of
America.
|
|
(b)
|
Income from insurance
products is the sum of the insurance margins of the annuity, health
and life product lines, less expenses allocated to the insurance
product lines. It excludes the income from our fee income
business, investment income not allocated to product lines, net
expenses not allocated to product lines (primarily holding company
expenses) and income taxes. Insurance margin is management's
measure of the profitability of its annuity, health and life
segments' performance and consists of insurance policy income plus
allocated investment income less insurance policy benefits,
interest credited, commissions, advertising expense and
amortization of acquisition costs.
|
|
(c)
|
Investment income not
allocated to product lines represents net investment income less:
(i) equity returns credited to policyholder account balances; (ii)
the investment income allocated to our product lines; (iii)
interest expense on notes payable, investment borrowings and
financing arrangements; (iv) expenses related to the funding
agreement-backed notes ("FABN") program; and (v) certain expenses
related to benefit plans that are offset by special-purpose
investment income; plus (vi) the impact of annual option
forfeitures related to fixed indexed annuity surrenders.
|
|
FINANCIAL SUMMARY
(continued)
Management vs. GAAP Measures
(Dollars
in millions, except per share data)
(Unaudited)
|
|
Shareholders' equity,
excluding accumulated other comprehensive income (loss), and book
value per share, excluding accumulated other comprehensive income
(loss), are non-GAAP measures that are utilized by management to
view the business without the effect of accumulated other
comprehensive income (loss) which is primarily attributable to
fluctuations in interest rates associated with fixed maturities,
available for sale. Management views the business in this
manner because the Company has the ability and generally, the
intent, to hold investments to maturity and meaningful trends can
be more easily identified without the fluctuations. In
addition, shareholders' equity excludes net operating loss
carryforwards in our non-GAAP return on equity measures as such
assets are not discounted and, accordingly, will not provide a
return to shareholders until after it is realized as a reduction to
taxes that would otherwise be paid. Management believes that
excluding this value from the equity component of this measure
enhances the understanding of the effect these non-discounted
assets have on operating returns.
|
|
|
|
|
|
|
Quarter
ended
|
|
|
|
|
|
June
30,
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Trailing twelve months
return on equity (a)
|
|
|
|
|
19.9 %
|
|
14.8 %
|
|
Trailing twelve months
operating return on equity, excluding accumulated other
comprehensive income (loss)
and net operating loss carryforwards (a non-GAAP financial measure)
(5)
|
|
|
|
|
11.2 %
|
|
8.0 %
|
|
Trailing twelve months
operating return, excluding significant items, on equity, excluding
accumulated other
comprehensive income (loss) and net operating loss carryforwards (a
non-GAAP financial measure) (5)
|
|
|
|
|
10.0 %
|
|
8.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
$ 2,428.9
|
|
$
1,995.8
|
|
Accumulated other
comprehensive loss
|
|
|
|
|
1,464.3
|
|
1,733.5
|
|
|
|
|
|
|
|
|
|
Shareholders' equity,
excluding accumulated other comprehensive loss
|
|
|
|
|
3,893.2
|
|
3,729.3
|
|
Net operating loss
carryforwards
|
|
|
|
|
(296.5)
|
|
(126.3)
|
|
Shareholders' equity,
excluding accumulated other comprehensive loss and net operating
loss carryforwards
|
|
|
|
|
$ 3,596.7
|
|
$
3,603.0
|
|
|
|
|
|
|
|
|
|
Book value per diluted
share
|
|
|
|
|
$
22.46
|
|
$
17.31
|
|
Accumulated other
comprehensive loss
|
|
|
|
|
13.54
|
|
15.03
|
|
|
|
|
|
|
|
|
|
Book value per diluted
share, excluding accumulated other comprehensive loss (a non-GAAP
financial
measure) (2)
|
|
|
|
|
$
36.00
|
|
$
32.34
|
|
____________________
|
|
(a) Calculated
using average shareholders' equity for the measurement
period.
|
Non-Operating Items
Net investment losses in 2Q24 were
$21.9 million net of a reduction in
the allowance for credit losses of $4.1
million. Net investment losses in 2Q23 were $31.3 million including an increase in the
allowance for credit losses of $9.9
million.
During 2Q24 and 2Q23, we recognized an increase (decrease) in
earnings of $4.7 million and
$(4.0) million, respectively, due to
the net change in market value of investments.
During 2Q24 and 2Q23, we recognized an increase in earnings of
$16.8 million and $50.4 million, respectively, resulting from
changes in the estimated fair value of embedded derivative
liabilities and market risk benefits related to our fixed indexed
annuities. Such amounts include the impacts of changes in
market interest rates and equity impacts used to determine the
estimated fair values of the embedded derivatives and market risk
benefits.
In 2Q24, other non-operating items included an increase in
earnings of $3.5 million for the
mark-to-market change in the agent deferred compensation plan
liability which was impacted by changes in the underlying actuarial
assumptions used to value the liability. We recognize the
mark-to-market change in the estimated value of this liability
through earnings as assumptions change.
|
INVESTMENT
PORTFOLIO
(Dollars in millions)
|
|
Fixed maturities,
available for sale, at amortized cost by asset class as of June 30,
2024 are as follows:
|
|
|
Investment
grade
|
|
Below
investment
grade
|
|
Total
|
|
Corporate
securities
|
$ 12,849.3
|
|
$
601.4
|
|
$ 13,450.7
|
|
Certificates of
deposit
|
470.2
|
|
—
|
|
470.2
|
|
United States Treasury
securities and obligations of the United States government and
agencies
|
278.6
|
|
—
|
|
278.6
|
|
States and political
subdivisions
|
3,182.9
|
|
9.6
|
|
3,192.5
|
|
Foreign
governments
|
101.1
|
|
—
|
|
101.1
|
|
Asset-backed
securities
|
1,448.4
|
|
103.8
|
|
1,552.2
|
|
Agency residential
mortgage-backed securities
|
787.3
|
|
—
|
|
787.3
|
|
Non-agency residential
mortgage-backed securities
|
1,231.7
|
|
435.5
|
(a)
|
1,667.2
|
|
Collateralized loan
obligations
|
1,227.6
|
|
—
|
|
1,227.6
|
|
Commercial
mortgage-backed securities
|
2,290.1
|
|
88.6
|
|
2,378.7
|
|
|
|
|
|
|
|
Total
|
$ 23,867.2
|
|
$
1,238.9
|
|
$ 25,106.1
|
|
____________________
|
|
(a)
|
Certain structured
securities rated below investment grade by Nationally Recognized
Statistical Rating Organizations may be assigned a NAIC 1 or NAIC 2
designation based on the cost basis of the security relative to
estimated recoverable amounts as determined by the National
Association of Insurance Commissioners (NAIC).
|
The fair value of CNO's available for sale fixed maturity
portfolio was $22.6 billion compared
with an amortized cost of $25.1
billion. Net unrealized losses were comprised of gross
unrealized gains of $113.2 million
and gross unrealized losses of $2,561.6
million. The allowance for credit losses was
$39.8 million at June 30, 2024.
Statutory (based on non-GAAP measures) and GAAP Capital
Information
The consolidated statutory risk-based capital
ratio of our U.S. based insurance subsidiaries was estimated at
394% at June 30, 2024, reflecting
estimated 2Q24 statutory operating earnings of $28 million (and $24
million in the first six months of 2024) and the payment of
insurance company dividends (net of capital contributions) to the
holding company of $29.7 million
during 2Q24 (and $73.0 million (net
of capital contributions) in the first six months of 2024).
During 2Q24, we repurchased $60.0
million of common stock under our securities repurchase
program (including $1.1 million of
repurchases settled in 3Q24). We repurchased 2.2 million
common shares at an average cost of $27.61 per share. As of June 30, 2024, we had 106.5 million shares
outstanding and had authority to repurchase up to an additional
$421.8 million of our common
stock. During 2Q24, dividends paid on common stock totaled
$17.2 million.
Unrestricted cash and investments held by our holding company
were $429 million at June 30, 2024, compared to $256 million at December
31, 2023. In addition, the holding company has
invested $500 million of the proceeds
from the previously announced issuance of $700.0 million of 6.450% senior notes due 2034
(the "2034 Notes") primarily into certificates of deposit which are
expected to be used for the repayment of $500.0 million of 5.250% senior notes due
May 2025 (the "2025 Notes").
Book value per common share was $22.80 at June 30,
2024 compared to $20.26 at
December 31, 2023. Book value
per diluted share, excluding accumulated other comprehensive income
(loss) (2), was $36.00 at
June 30, 2024, compared to
$33.94 at December 31, 2023.
The debt-to-capital ratio was 43.0% and 34.0% at June 30, 2024 and December
31, 2023, respectively. Our debt-to-total capital
ratio, excluding accumulated other comprehensive income (loss)
(3) was 32.0% and 23.1% at June
30, 2024 and December 31,
2023, respectively. Such debt-to-total capital ratios
reflect the issuance of the 2034 Notes in May 2024. At
June 30, 2024, adjusting for the
expected repayment of the 2025 Notes, the debt-to-total capital
ratio would have been 35.4% and the debt-to-total capital ratio,
excluding accumulated other comprehensive income (loss), would have
been 25.5%.
Return on equity for the trailing four quarters ended
June 30, 2024 and 2023, was 19.9% and
14.8%, respectively. Operating return, excluding significant
items, on equity, excluding accumulated other comprehensive income
(loss) and net operating loss carryforwards (5) for the
trailing four quarters ended June 30,
2024 and 2023, was 10.0% and 8.0%, respectively.
In this news release, CNO includes non-GAAP measures to enhance
investors' understanding of management's view of the
business. The non-GAAP measures are not a substitute for
GAAP, but rather a supplement to increase transparency by providing
a broader perspective. CNO's definitions of non-GAAP measures
may differ from other companies' definitions. More detailed
information including various GAAP and non-GAAP measurements are
located at CNOinc.com in the Investors section under SEC
Filings.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS:
This press release may contain forward-looking statements within
the meaning of federal securities laws. These prospective
statements reflect management's current expectations, but are not
guarantees of future performance. Accordingly, please refer
to CNO's cautionary statement regarding forward-looking statements,
and the business environment in which the Company operates,
contained in the Company's Form 10-K for the year ended
December 31, 2023 and any subsequent
Form 10-Q or Form 10-K on file with the Securities and Exchange
Commission and on the Company's website at CNOinc.com in the
Investors section. CNO specifically disclaims any obligation
to update or revise any forward-looking statement because of new
information, future developments or otherwise.
EARNINGS RELEASE CONFERENCE CALL WEBCAST:
The Company will host a conference call to discuss results on
July 30, 2024 at 11:00 a.m. Eastern Time. During the call,
we will be referring to a presentation that will be available at
the Investors section of the company's website.
To participate by dial-in, please register at
https://www.netroadshow.com/events/login?show=51d949bc&confId=68394.
Upon registering, you will be provided with call details and a
registrant ID used to track attendance on the conference call.
Reminders will also be sent to registered participants via
email.
For those investors who prefer to listen to the call online, we
will be broadcasting the call live via webcast. The event can
be accessed through the Investors section of the company's website:
ir.CNOinc.com. Participants should go to the website at least
15 minutes before the event to register and download any necessary
audio software.
ABOUT CNO FINANCIAL GROUP
CNO Financial Group, Inc. (NYSE: CNO) secures the future of
middle-income America. CNO provides life and health
insurance, annuities, financial services, and workforce benefits
solutions through our family of brands, including Bankers Life,
Colonial Penn, Optavise and Washington National. Our
customers work hard to save for the future, and we help protect
their health, income, and retirement needs with 3.2 million
policies and $36 billion in total
assets. Our 3,500 associates, 4,800 exclusive agents and more than
5,000 independent partner agents guide individuals, families, and
businesses through a lifetime of financial decisions. For more
information, visit CNOinc.com.
|
CNO FINANCIAL GROUP,
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEET
(Dollars in
millions)
(unaudited)
|
|
|
June 30,
2024
|
|
December 31,
2023
|
|
ASSETS
|
|
|
|
|
Investments:
|
|
|
|
|
Fixed maturities,
available for sale, at fair value (net of allowance for credit
losses: June 30,
2024 - $39.8 and December 31, 2023 - $42.9; amortized cost:
June 30, 2024 - $25,106.1 and
December 31, 2023 - $23,699.2)
|
$
22,617.9
|
|
$
21,506.2
|
|
Equity securities at
fair value
|
117.7
|
|
96.9
|
|
Mortgage loans (net of
allowance for credit losses: June 30, 2024 - $13.2 and
December 31,
2023 - $15.4)
|
2,176.0
|
|
2,064.1
|
|
Policy
loans
|
131.3
|
|
128.5
|
|
Trading
securities
|
207.8
|
|
222.7
|
|
Investments held by
variable interest entities (net of allowance for credit losses:
June 30, 2024 -
$2.8 and December 31, 2023 - $3.1; amortized cost: June 30,
2024 - $440.6 and December 31,
2023 - $787.6)
|
425.5
|
|
768.6
|
|
Other invested
assets
|
1,554.0
|
|
1,353.4
|
|
Total
investments
|
27,230.2
|
|
26,140.4
|
|
Cash and cash
equivalents - unrestricted
|
878.8
|
|
774.5
|
|
Cash and cash
equivalents held by variable interest entities
|
113.3
|
|
114.5
|
|
Accrued investment
income
|
262.5
|
|
251.5
|
|
Present value of future
profits
|
170.4
|
|
180.7
|
|
Deferred acquisition
costs
|
2,047.2
|
|
1,944.4
|
|
Reinsurance receivables
(net of allowance for credit losses: June 30, 2024 - $3.0
and
December 31, 2023 - $3.0)
|
3,910.9
|
|
4,040.7
|
|
Market risk benefit
asset
|
84.5
|
|
75.4
|
|
Income tax assets,
net
|
882.8
|
|
936.2
|
|
Assets held in separate
accounts
|
3.2
|
|
3.1
|
|
Other assets
|
706.4
|
|
641.1
|
|
Total
assets
|
$
36,290.2
|
|
$
35,102.5
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Liabilities:
|
|
|
|
|
Liabilities for
insurance products:
|
|
|
|
|
Policyholder account
balances
|
$
16,637.9
|
|
$
15,667.8
|
|
Future policy
benefits
|
11,479.4
|
|
11,928.2
|
|
Market risk benefit
liability
|
3.2
|
|
7.4
|
|
Liability for life
insurance policy claims
|
59.6
|
|
62.1
|
|
Unearned and advanced
premiums
|
220.9
|
|
218.9
|
|
Liabilities related to
separate accounts
|
3.2
|
|
3.1
|
|
Other
liabilities
|
934.4
|
|
848.8
|
|
Investment
borrowings
|
2,189.0
|
|
2,189.3
|
|
Borrowings related to
variable interest entities
|
501.4
|
|
820.8
|
|
Notes payable – direct
corporate obligations
|
1,832.3
|
|
1,140.5
|
|
Total
liabilities
|
33,861.3
|
|
32,886.9
|
|
Commitments and
Contingencies
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock ($0.01 par
value, 8,000,000,000 shares authorized, shares issued and
outstanding: June 30, 2024 – 106,513,566; December 31, 2023 –
109,357,540)
|
1.1
|
|
1.1
|
|
Additional paid-in
capital
|
1,797.6
|
|
1,891.5
|
|
Accumulated other
comprehensive loss
|
(1,464.3)
|
|
(1,576.8)
|
|
Retained
earnings
|
2,094.5
|
|
1,899.8
|
|
Total shareholders'
equity
|
2,428.9
|
|
2,215.6
|
|
Total liabilities and
shareholders' equity
|
$
36,290.2
|
|
$
35,102.5
|
|
CNO FINANCIAL GROUP,
INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF OPERATIONS
(Dollars in millions,
except per share data)
(unaudited)
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June 30,
|
|
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Insurance policy
income
|
$
641.5
|
|
$
628.3
|
|
$
1,269.9
|
|
$
1,253.8
|
|
Net investment
income:
|
|
|
|
|
|
|
|
|
General account
assets
|
351.7
|
|
308.1
|
|
653.6
|
|
600.3
|
|
Policyholder and other
special-purpose portfolios
|
57.4
|
|
91.6
|
|
224.7
|
|
142.4
|
|
Investment gains
(losses):
|
|
|
|
|
|
|
|
|
Realized investment
losses
|
(26.3)
|
|
(21.8)
|
|
(36.3)
|
|
(36.4)
|
|
Other investment gains
(losses)
|
9.1
|
|
(13.5)
|
|
26.9
|
|
(13.5)
|
|
Total investment
losses
|
(17.2)
|
|
(35.3)
|
|
(9.4)
|
|
(49.9)
|
|
Fee revenue and other
income
|
32.8
|
|
30.1
|
|
83.9
|
|
82.2
|
|
Total
revenues
|
1,066.2
|
|
1,022.8
|
|
2,222.7
|
|
2,028.8
|
|
Benefits and
expenses:
|
|
|
|
|
|
|
|
|
Insurance policy
benefits
|
568.8
|
|
565.9
|
|
1,200.2
|
|
1,175.6
|
|
Liability for future
policy benefits remeasurement (gain) loss
|
(30.0)
|
|
8.3
|
|
(36.4)
|
|
8.9
|
|
Change in fair value
of market risk benefits
|
(0.2)
|
|
(17.6)
|
|
(13.9)
|
|
(2.8)
|
|
Interest
expense
|
64.2
|
|
57.6
|
|
124.4
|
|
112.3
|
|
Amortization of
deferred acquisition costs and present value of future
profits
|
61.4
|
|
56.0
|
|
121.9
|
|
111.5
|
|
Other operating costs
and expenses
|
251.4
|
|
256.5
|
|
529.7
|
|
528.2
|
|
Total benefits and
expenses
|
915.6
|
|
926.7
|
|
1,925.9
|
|
1,933.7
|
|
Income before income
taxes
|
150.6
|
|
96.1
|
|
296.8
|
|
95.1
|
|
Income tax
expense
|
34.3
|
|
22.4
|
|
68.2
|
|
22.2
|
|
Net income
|
$
116.3
|
|
$
73.7
|
|
$
228.6
|
|
$
72.9
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
107,731,000
|
|
114,273,000
|
|
108,347,000
|
|
114,409,000
|
|
Net income
|
$
1.08
|
|
$
.64
|
|
$
2.11
|
|
$
.64
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
109,258,000
|
|
115,650,000
|
|
110,052,000
|
|
116,189,000
|
|
Net income
|
$
1.06
|
|
$
.64
|
|
$
2.08
|
|
$
.63
|
|
|
|
NOTES
|
|
|
(1)
|
Management believes
that an analysis of net income applicable to common stock before:
(i) net realized investment gains or losses from sales, impairments
and the change in allowance for credit losses, net of taxes; (ii)
net change in market value of investments recognized in earnings,
net of taxes; (iii) changes in fair value of embedded derivative
liabilities and market risk benefits related to our fixed indexed
annuities, net of taxes; (iv) fair value changes related to the
agent deferred compensation plan, net of taxes; (v) loss related to
reinsurance transaction, net of taxes; (vi) loss on extinguishment
of debt, net of taxes; (vii) changes in the valuation allowance for
deferred tax assets and other tax items; and (viii) other
non-operating items consisting primarily of earnings attributable
to variable interest entities, net of taxes ("net operating
income," a non-GAAP financial measure) is important to evaluate the
financial performance of the company, and is a key measure commonly
used in the life insurance industry. Management uses this
measure to evaluate performance because the items excluded from net
operating income can be affected by events that are unrelated to
the company's underlying fundamentals. A reconciliation of
net operating income to net income applicable to common stock is
provided in the table on page 2. Additional information
concerning this non-GAAP measure is included in our periodic
filings with the Securities and Exchange Commission that are
available in the "Investors - SEC Filings" section of CNO's
website, CNOinc.com.
|
|
(2)
|
Book value per diluted
share reflects the potential dilution that could occur if
outstanding stock options were exercised and restricted stock and
performance units were vested. The dilution from options,
restricted shares and performance units is calculated using the
treasury stock method. Under this method, we assume the
proceeds from the exercise of the options (or the unrecognized
compensation expense with respect to restricted stock and
performance units) will be used to purchase shares of our common
stock at the closing market price on the last day of the
period. In addition, the calculation of this non-GAAP measure
differs from the corresponding GAAP measure because accumulated
other comprehensive income (loss) has been excluded from the value
of capital used to determine this measure. Management
believes this non-GAAP measure is useful because it removes the
volatility that arises from changes in the unrealized appreciation
(depreciation) of our investments.
|
|
(3)
|
The calculation of this
non-GAAP measure differs from the corresponding GAAP measure
because accumulated other comprehensive income (loss) has been
excluded from the value of capital used to determine this
measure. Management believes this non-GAAP measure is useful
because it removes the volatility that arises from changes in the
unrealized appreciation (depreciation) of our
investments.
|
|
(4)
|
Measured by new
annualized premiums for life and health products, which includes
10% of single premium whole life deposits and 100% of all other
premiums (excluding annuities). Sales of third-party products
are excluded.
|
|
(5)
|
The following
summarizes the calculations of: (i) operating return on equity,
excluding accumulated other comprehensive income (loss) and net
operating loss carryforwards (a non-GAAP financial measure); (ii)
operating return, excluding significant items, on equity, excluding
accumulated other comprehensive income (loss) and net operating
loss carryforwards (a non-GAAP financial measure); and (iii) return
on equity are as follows (dollars in millions):
|
|
|
|
Trailing twelve months
ended
|
|
|
|
2Q24
|
|
2Q23
|
|
Net operating
income
|
$
407.3
|
|
$ 281.7
|
|
|
|
|
|
|
|
Net operating income,
excluding significant items
|
$
364.0
|
|
$ 281.2
|
|
|
|
|
|
|
|
Net income
|
$
432.2
|
|
$ 286.8
|
|
|
|
|
|
|
|
Average common equity,
excluding accumulated other
|
|
|
|
|
comprehensive income
(loss) and net operating loss
|
|
|
|
|
carryforwards (a
non-GAAP financial measure)
|
$ 3,648.4
|
|
$
3,519.3
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
$ 2,171.4
|
|
$
1,931.5
|
|
|
|
|
|
|
|
Operating return on
equity, excluding accumulated other
|
|
|
|
|
comprehensive income
(loss) and net operating loss
|
|
|
|
|
carryforwards (a
non-GAAP financial measure)
|
11.2 %
|
|
8.0 %
|
|
|
|
|
|
|
|
Operating return,
excluding significant items, on equity, excluding
|
|
|
|
|
accumulated other
comprehensive income (loss) and net
|
|
|
|
|
operating loss
carryforwards (a non-GAAP financial measure)
|
10.0 %
|
|
8.0 %
|
|
|
|
|
|
|
|
Return on
equity
|
19.9 %
|
|
14.8 %
|
|
The following
summarizes: (i) net operating income; (ii) significant items; (iii)
net operating income, excluding significant items; and (iv) net
income (loss) (dollars in millions):
|
|
|
|
|
|
|
|
|
Net
operating
|
|
|
|
|
|
|
|
|
|
|
Net
operating
|
|
income,
|
|
|
|
|
|
|
|
|
|
|
income,
|
|
excluding
|
|
|
|
Net
|
|
|
|
|
|
|
excluding
|
|
significant
|
|
|
|
income -
|
|
|
Net
operating
|
|
Significant
|
|
significant
|
|
items -
trailing
|
|
Net
|
|
trailing
|
|
|
income
|
|
items
|
|
items (a)
|
|
four
quarters
|
|
income
(loss)
|
|
four
quarters
|
|
3Q22
|
|
$
77.9
|
|
$
—
|
|
$
77.9
|
|
$
360.9
|
|
$
175.9
|
|
$
749.8
|
|
4Q22
|
|
82.9
|
|
(0.5)
|
(b)
|
82.4
|
|
342.5
|
|
38.0
|
|
630.6
|
|
1Q23
|
|
58.6
|
|
—
|
|
58.6
|
|
336.6
|
|
(0.8)
|
|
446.4
|
|
2Q23
|
|
62.3
|
|
—
|
|
62.3
|
|
281.2
|
|
73.7
|
|
286.8
|
|
3Q23
|
|
101.3
|
|
(16.9)
|
(c)
|
84.4
|
|
287.7
|
|
167.3
|
|
278.2
|
|
4Q23
|
|
133.9
|
|
(26.4)
|
(d)
|
107.5
|
|
312.8
|
|
36.3
|
|
276.5
|
|
1Q24
|
|
57.5
|
|
—
|
|
57.5
|
|
311.7
|
|
112.3
|
|
389.6
|
|
2Q24
|
|
114.6
|
|
—
|
|
114.6
|
|
364.0
|
|
116.3
|
|
432.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See note (6)
for additional information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Comprised of
$.7 million of the net favorable impact arising from our
comprehensive annual actuarial review, net of tax expense of $.2
million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Comprised of
$21.7 million of legal recoveries, net of expenses and increased
legal accruals, net of tax expense of $4.8 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Comprised of
$33.9 million of the net favorable impact arising from our
comprehensive annual actuarial review, net of tax expense of $7.5
million.
|
|
A reconciliation of
pre-tax operating earnings (a non-GAAP financial measure) to net
income is as follows (dollars in millions):
|
|
|
|
Twelve months
ended
|
|
|
|
2Q24
|
|
2Q23
|
|
Pre-tax operating
earnings (a non-GAAP financial measure)
|
$
525.3
|
|
$
365.6
|
|
Income tax
expense
|
(118.0)
|
|
(83.9)
|
|
Net operating
income
|
407.3
|
|
281.7
|
|
Non-operating
items:
|
|
|
|
|
Net realized
investment losses from sales, impairments and change in allowance
for credit
losses
|
(45.2)
|
|
(71.9)
|
|
Net change in market
value of investments recognized in earnings
|
16.7
|
|
(31.9)
|
|
Changes in fair value
of embedded derivative liabilities and market risk
benefits
|
65.6
|
|
99.5
|
|
Fair value changes
related to the agent deferred compensation plan
|
—
|
|
12.2
|
|
Other
|
(3.9)
|
|
(2.0)
|
|
Non-operating income
before taxes
|
33.2
|
|
5.9
|
|
Income tax expense on non-operating income
|
(8.3)
|
|
(0.8)
|
|
Net non-operating
income
|
24.9
|
|
5.1
|
|
Net income
|
$
432.2
|
|
$
286.8
|
|
|
|
|
|
|
|
A reconciliation of
consolidated capital, excluding accumulated other comprehensive
income (loss) and net operating loss carryforwards (a non-GAAP
financial measure) to common shareholders' equity, is as follows
(dollars in millions):
|
|
|
|
1Q22
|
|
2Q22
|
|
3Q22
|
|
4Q22
|
|
Consolidated capital,
excluding accumulated other comprehensive
|
|
|
|
|
|
|
|
|
income (loss) and net
operating loss carryforwards
|
|
|
|
|
|
|
|
|
(a non-GAAP financial
measure)
|
$
3,141.7
|
|
$
3,329.0
|
|
$
3,510.3
|
|
$
3,557.1
|
|
Net operating loss
carryforwards
|
238.2
|
|
214.7
|
|
190.9
|
|
169.0
|
|
Accumulated other
comprehensive loss
|
(561.5)
|
|
(1,415.8)
|
|
(1,837.8)
|
|
(1,957.3)
|
|
Common shareholders'
equity
|
$
2,818.4
|
|
$
2,127.9
|
|
$
1,863.4
|
|
$
1,768.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q23
|
|
2Q23
|
|
3Q23
|
|
4Q23
|
|
Consolidated capital,
excluding accumulated other comprehensive
|
|
|
|
|
|
|
|
|
income (loss) and net
operating loss carryforwards
|
|
|
|
|
|
|
|
|
(a non-GAAP financial
measure)
|
$
3,543.8
|
|
$
3,603.0
|
|
$
3,744.2
|
|
$
3,712.8
|
|
Net operating loss
carryforwards
|
152.4
|
|
126.3
|
|
102.6
|
|
79.6
|
|
Accumulated other
comprehensive loss
|
(1,664.4)
|
|
(1,733.5)
|
|
(1,956.7)
|
|
(1,576.8)
|
|
Common shareholders'
equity
|
$
2,031.8
|
|
$
1,995.8
|
|
$
1,890.1
|
|
$
2,215.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q24
|
|
2Q24
|
|
|
|
|
|
Consolidated capital,
excluding accumulated other comprehensive
|
|
|
|
|
|
|
|
|
income (loss) and net
operating loss carryforwards
|
|
|
|
|
|
|
|
|
(a non-GAAP financial
measure)
|
$
3,536.8
|
|
$
3,596.7
|
|
|
|
|
|
Net operating loss
carryforwards
|
311.2
|
|
296.5
|
|
|
|
|
|
Accumulated other
comprehensive loss
|
(1,480.3)
|
|
(1,464.3)
|
|
|
|
|
|
Common shareholders'
equity
|
$
2,367.7
|
|
$
2,428.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of
consolidated capital, excluding accumulated other comprehensive
income (loss) and net operating loss carryforwards (a non-GAAP
financial measure) to common shareholders' equity, is as follows
(dollars in millions):
|
|
|
|
Trailing four quarter
average
|
|
|
|
2Q24
|
|
2Q23
|
|
Consolidated capital,
excluding accumulated other comprehensive
|
|
|
|
|
income (loss) and net
operating loss carryforwards
|
|
|
|
|
(a non-GAAP financial
measure)
|
$
3,648.4
|
|
$
3,519.3
|
|
Net operating loss
carryforwards
|
176.2
|
|
170.7
|
|
Accumulated other
comprehensive loss
|
(1,653.2)
|
|
(1,758.5)
|
|
Common shareholders'
equity
|
$
2,171.4
|
|
$
1,931.5
|
|
(6)
|
The tables below
summarize the financial impact of significant items on our net
operating income. Management believes that identifying the
impact of these items enhances the understanding of our operating
results (dollars in millions, except per share data).
|
|
|
Three months
ended
|
|
|
December 31,
2023
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant
items
|
|
Insurance product
margin
|
|
|
|
|
|
|
|
Annuity
margin
|
|
$
63.6
|
|
$
(12.9)
|
(a)
|
$
50.7
|
|
Health
margin
|
|
146.4
|
|
(22.3)
|
(a)
|
124.1
|
|
Life margin
|
|
64.6
|
|
1.3
|
(a)
|
65.9
|
|
Total insurance product
margin
|
|
274.6
|
|
(33.9)
|
|
240.7
|
|
Allocated
expenses
|
|
(138.8)
|
|
—
|
|
(138.8)
|
|
Income from insurance
products
|
|
135.8
|
|
(33.9)
|
|
101.9
|
|
Fee income
|
|
17.8
|
|
—
|
|
17.8
|
|
Investment income not
allocated to product lines
|
|
38.3
|
|
—
|
|
38.3
|
|
Expenses not allocated
to product lines
|
|
(19.8)
|
|
—
|
|
(19.8)
|
|
Operating earnings
before taxes
|
|
172.1
|
|
(33.9)
|
|
138.2
|
|
Income tax (expense)
benefit on operating income
|
|
(38.2)
|
|
7.5
|
|
(30.7)
|
|
Net operating
income
|
|
$
133.9
|
|
$
(26.4)
|
|
$
107.5
|
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
1.18
|
|
$
(0.23)
|
|
$
0.95
|
|
___________
|
|
(a)
Comprised of $33.9 million of the net favorable impact arising from
our comprehensive annual actuarial review.
|
|
|
Three months
ended
|
|
|
September 30,
2023
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant
items
|
|
Insurance product
margin
|
|
|
|
|
|
|
|
Annuity
margin
|
|
$
57.0
|
|
$
—
|
|
$
57.0
|
|
Health
margin
|
|
123.2
|
|
—
|
|
123.2
|
|
Life margin
|
|
59.8
|
|
—
|
|
59.8
|
|
Total insurance product
margin
|
|
240.0
|
|
—
|
|
240.0
|
|
Allocated
expenses
|
|
(153.2)
|
|
—
|
|
(153.2)
|
|
Income from insurance
products
|
|
86.8
|
|
—
|
|
86.8
|
|
Fee income
|
|
(2.9)
|
|
—
|
|
(2.9)
|
|
Investment income not
allocated to product lines
|
|
38.4
|
|
—
|
|
38.4
|
|
Expenses not allocated
to product lines
|
|
7.5
|
|
(21.7)
|
(a)
|
(14.2)
|
|
Operating earnings
before taxes
|
|
129.8
|
|
(21.7)
|
|
108.1
|
|
Income tax (expense)
benefit on operating income
|
|
(28.5)
|
|
4.8
|
|
(23.7)
|
|
Net operating
income
|
|
$
101.3
|
|
$
(16.9)
|
|
$
84.4
|
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.88
|
|
$
(0.14)
|
|
$
0.74
|
|
___________
|
|
(a)
Comprised of $21.7 million of legal recoveries, net of expenses and
increased legal accruals.
|
|
|
Three months
ended
|
|
|
December 31,
2022
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant
items
|
|
Insurance product
margin
|
|
|
|
|
|
|
|
Annuity
margin
|
|
$
50.8
|
|
$
3.2
|
(a)
|
$
54.0
|
|
Health
margin
|
|
140.4
|
|
(18.3)
|
(a)
|
122.1
|
|
Life margin
|
|
43.3
|
|
14.4
|
(a)
|
57.7
|
|
Total insurance product
margin
|
|
234.5
|
|
(0.7)
|
|
233.8
|
|
Allocated
expenses
|
|
(149.1)
|
|
—
|
|
(149.1)
|
|
Income from insurance
products
|
|
85.4
|
|
(0.7)
|
|
84.7
|
|
Fee income
|
|
9.2
|
|
—
|
|
9.2
|
|
Investment income not
allocated to product lines
|
|
25.2
|
|
—
|
|
25.2
|
|
Expenses not allocated
to product lines
|
|
(12.8)
|
|
—
|
|
(12.8)
|
|
Operating earnings
before taxes
|
|
107.0
|
|
(0.7)
|
|
106.3
|
|
Income tax (expense)
benefit on operating income
|
|
(24.1)
|
|
0.2
|
|
(23.9)
|
|
Net operating
income
|
|
$
82.9
|
|
$
(0.5)
|
|
$
82.4
|
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.71
|
|
$
—
|
|
$
0.71
|
|
___________
|
|
(a)
Comprised of $0.7 million of the net favorable impact arising from
our comprehensive annual actuarial review.
|
View original
content:https://www.prnewswire.com/news-releases/cno-financial-group-reports-second-quarter-2024-results-302208833.html
SOURCE CNO Financial Group