Solid production, agent productivity and
capital return; $100 million in share
repurchases
CARMEL, Ind.,
May 2, 2022 /PRNewswire/
-- CNO Financial Group, Inc. (NYSE: CNO) today announced that for
the quarter ended March 31, 2022, net
income was $112.3 million, or
$0.93 per diluted share, compared to
$147.4 million, or $1.08 per diluted share, in 1Q21. Net operating
income (1) in 1Q22 was $51.1 million,
or $0.42 per diluted share, compared
to $75.2 million, or $0.55 per diluted share, in 1Q21.
"Our results in the first quarter continued to demonstrate the
strength and resilience of our business," said Gary C. Bhojwani, chief executive officer. "From
a production standpoint, we generated increases in four of our five
growth scorecard metrics and delivered sharp improvement in agent
productivity, while returning significant capital to our
shareholders."
"Earnings were pressured by market volatility in the quarter and
we saw several factors begin to normalize, including moderation in
our alternative investment returns and a trend back toward
pre-pandemic claims levels in certain of our healthcare products.
Adjusting for these factors and an increase in non-deferrable
advertising expense, our underlying margins and earnings remained
stable."
"While economic uncertainty is likely to persist, CNO is
well-positioned to navigate prevailing market conditions and
capitalize on the growth opportunities in front of us."
First Quarter 2022 Highlights
- Earnings per diluted share of $0.93 in 1Q22, compared to $1.08 in 1Q21
- Operating (1) EPS of $0.42 in
1Q22, compared to $0.55 in 1Q21
- Pre-tax operating earnings of $68.0
million in 1Q22, compared to $96.9
million (or $104.7 million
excluding significant items) in 1Q21, reflecting:
-
- $15 million decrease from
moderating variable investment income returns
- $10 million unfavorable impact to
fixed income annuity margin from market volatility
- $6 million decrease in net
favorable COVID benefits
- $6 million increase in
non-deferrable advertising spend
- Total new annualized premiums (NAP) (4) up 2% from 1Q21
- Direct-to-consumer life insurance NAP (4) up 16% from 1Q21
- Annuity collected premiums up 13% from 1Q21
- Returned $116.1 million to
shareholders in the form of share repurchases ($100.0 million) and dividends ($16.1 million); reduced weighted average share
count by 11% since 1Q21
- Book value per share was $31.48,
down 14% from 1Q21; book value per diluted share, excluding
accumulated other comprehensive income (2), was $27.70, up 12% from 1Q21
- Return on equity (ROE) of 8.1%; operating ROE, as adjusted (6),
of 11.2%
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 investment gains
(losses), changes in fair values of embedded derivatives 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
|
|
March
31,
|
|
March
31,
|
|
2022
|
|
|
2021
|
|
%
change
|
|
2022
|
|
|
2021
|
|
%
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from insurance
products (b)
|
$
0.37
|
|
|
$
0.50
|
|
(26)
|
|
$
44.4
|
|
|
$
68.6
|
|
(35)
|
Fee income
|
0.08
|
|
|
0.05
|
|
60
|
|
9.9
|
|
|
7.3
|
|
36
|
Investment income not
allocated to product lines (c)
|
0.23
|
|
|
0.32
|
|
(28)
|
|
28.5
|
|
|
43.0
|
|
(34)
|
Expenses not allocated
to product lines
|
(0.12)
|
|
|
(0.16)
|
|
(25)
|
|
(14.8)
|
|
|
(22.0)
|
|
(33)
|
Operating earnings
before taxes
|
0.56
|
|
|
0.71
|
|
|
|
68.0
|
|
|
96.9
|
|
|
Income tax expense on
operating income
|
(0.14)
|
|
|
(0.16)
|
|
(13)
|
|
(16.9)
|
|
|
(21.7)
|
|
(22)
|
Net operating income
(1)
|
0.42
|
|
|
0.55
|
|
(24)
|
|
51.1
|
|
|
75.2
|
|
(32)
|
Net realized investment
gains from sales, impairments and change in allowance for credit
losses (net of related amortization)
|
(0.06)
|
|
|
0.03
|
|
|
|
(7.1)
|
|
|
3.6
|
|
|
Net change in market
value of investments recognized in earnings
|
(0.21)
|
|
|
(0.05)
|
|
|
|
(25.5)
|
|
|
(6.4)
|
|
|
Fair value changes in
embedded derivative liabilities (net of related
amortization)
|
0.75
|
|
|
0.60
|
|
|
|
90.8
|
|
|
82.1
|
|
|
Other
|
0.19
|
|
|
0.10
|
|
|
|
23.1
|
|
|
13.8
|
|
|
Non-operating
income before taxes
|
0.67
|
|
|
0.68
|
|
|
|
81.3
|
|
|
93.1
|
|
|
Income tax expense on
non-operating income
|
(0.16)
|
|
|
(0.15)
|
|
|
|
(20.1)
|
|
|
(20.9)
|
|
|
Net non-operating
income
|
0.51
|
|
|
0.53
|
|
|
|
61.2
|
|
|
72.2
|
|
|
Net
income
|
$
0.93
|
|
|
$
1.08
|
|
|
|
$
112.3
|
|
|
$
147.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares outstanding
|
121.0
|
|
|
136.7
|
|
|
|
|
|
|
|
|
|
|
|
(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 segments, less allocated insurance administrative
expenses. It excludes the fee income segment, excess
investment income, parent 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
premiums 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 is defined as 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 and investment borrowings; and
(iv) certain expenses related to benefit plans that are offset by
special-purpose investment income.
|
FINANCIAL SUMMARY
(continued) Management vs. GAAP Measures (Dollars
in millions, except per share data)
(Unaudited)
|
|
Shareholders' equity,
excluding accumulated other comprehensive income, and book value
per share, excluding accumulated other comprehensive income, are
non-GAAP measures that are utilized by management to view the
business without the effect of accumulated other comprehensive
income 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
|
|
March
31,
|
|
2022
|
|
2021
|
|
|
|
|
Trailing twelve months
return on equity (a)
|
8.1 %
|
|
9.6 %
|
Trailing twelve months
operating return on equity, excluding accumulated other
comprehensive income (loss) and net operating loss carryforwards (a
non-GAAP financial measure) (6)
|
11.2 %
|
|
12.3 %
|
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) (6)
|
10.7 %
|
|
11.7 %
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
$
3,690.9
|
|
$
4,860.7
|
Accumulated other
comprehensive income
|
(380.5)
|
|
(1,518.1)
|
|
|
|
|
Shareholders' equity,
excluding accumulated other comprehensive income
|
3,310.4
|
|
3,342.6
|
Net operating loss
carryforwards
|
(238.2)
|
|
(323.1)
|
Shareholders' equity,
excluding accumulated other comprehensive income and net operating
loss carryforwards
|
$
3,072.2
|
|
$
3,019.5
|
|
|
|
|
Book value per diluted
share
|
$
30.89
|
|
$
36.11
|
Accumulated other
comprehensive income
|
(3.19)
|
|
(11.28)
|
|
|
|
|
Book value per diluted
share, excluding accumulated other comprehensive income (a non-GAAP
financial measure) (2)
|
$
27.70
|
|
$
24.83
|
|
|
(a)
|
Calculated using
average shareholders' equity for the measurement period.
|
INSURANCE OPERATIONS
Annuity products accounted for 24 percent of the Company's
margin for the quarter.
Annuity premiums collected increased 13 percent and annuity
account values increased 8 percent in 1Q22 compared to 1Q21.
Health products accounted for 66 percent of the Company's
insurance margin for the quarter and 65 percent of insurance policy
income.
Life products accounted for 10 percent of the Company's
insurance margin for the quarter and 34 percent of insurance policy
income.
Sales of health products were down 3 percent and sales of life
products were up 5 percent in 1Q22 compared to 1Q21.
ANNUITY COLLECTED
PREMIUMS (Dollars in millions)
(Unaudited)
|
|
|
Quarter ended March 31,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Annuity collected premiums
|
$
368.6
|
|
$
325.4
|
|
13
|
|
INSURANCE POLICY
INCOME (Dollars in millions)
(Unaudited)
|
|
|
Quarter ended March 31,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Annuity
|
$
5.0
|
|
$
5.4
|
|
(7)
|
Health
|
406.7
|
|
416.5
|
|
(2)
|
Life
|
213.3
|
|
210.5
|
|
1
|
Total insurance policy
income
|
$
625.0
|
|
$
632.4
|
|
(1)
|
|
SALES MEASURED AS
NEW ANNUALIZED PREMIUMS FOR LIFE AND HEALTH
PRODUCTS (Dollars in millions)
(Unaudited)
|
|
|
Quarter ended March 31,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Health
|
$
34.8
|
|
$
35.7
|
|
(3)
|
Life
|
55.8
|
|
53.0
|
|
5
|
Total new annualized premiums
(4)
|
$
90.6
|
|
$
88.7
|
|
2
|
INSURANCE
MARGIN (Amounts in millions, except per share data)
(Unaudited)
|
|
Insurance margin is
management's measure of profitability of its annuity, health and
life segments' performance and consists of premiums plus allocated
investment income less insurance policy benefits, interest
credited, commissions, advertising expense and amortization of
acquisition costs. Income from insurance products is the sum of the
insurance margins of the annuity, health and life segments, less
allocated insurance administrative expenses. It excludes the
fee income segment, investment income not allocated to product
lines, expenses not allocated to product lines and income taxes.
Management believes this information helps provide a better
understanding of the business and a more meaningful analysis of our
operations. Insurance income, a non-GAAP measure, is a component of
net operating income, which is reconciled to net income in the
Financial Summary section above.
|
|
|
|
Quarter
ended
|
|
March 31,
2022
|
|
% of
insurance
policy
income
|
|
|
March 31,
2021
|
|
% of
insurance
policy
income
|
|
%
change
|
Margin
|
|
|
|
|
|
|
|
|
|
|
Annuity interest
margin
|
$
44.6
|
|
|
|
|
$
57.9
|
|
|
|
(23)
|
Life insurance
interest margin
|
1.5
|
|
|
|
|
1.9
|
|
|
|
(21)
|
Total interest-sensitive margin
|
46.1
|
|
|
|
|
59.8
|
|
|
|
(23)
|
Insurance
margin
|
|
|
|
|
|
|
|
|
|
|
Health
|
124.8
|
|
31
|
|
|
124.7
|
|
30
|
|
—
|
Life
(a)
|
18.3
|
|
9
|
|
|
25.2
|
|
12
|
|
(27)
|
Total other insurance
margin
|
143.1
|
|
23
|
|
|
149.9
|
|
24
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
Total insurance margin
|
189.2
|
|
|
|
|
209.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocated
expenses
|
(144.8)
|
|
|
|
|
(141.1)
|
|
|
|
|
Income from
insurance products
|
$
44.4
|
|
|
|
|
$
68.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted
share
|
$
0.37
|
|
|
|
|
$
0.50
|
|
|
|
|
Weighted average
diluted shares
|
121.0
|
|
|
|
|
136.7
|
|
|
|
|
|
|
(a)
|
Net of $29.3 million
and $23.3 million of non-deferred television advertising expense
related to our direct distribution channel in the 2022 and 2021
periods, respectively.
|
Total allocated expenses were $144.8
million, up 3 percent from the year-ago quarter.
Total insurance margins were favorably impacted by approximately
$16 million and $22 million in the quarters ended March 31, 2022 and 2021, respectively, due to the
estimated impacts of COVID-19.
ANNUITY RESULTS BY PRODUCT TYPE
(Dollars in millions)
(Unaudited)
|
|
Annuity margin
|
|
Quarter ended
|
|
March 31,
|
|
2022
|
|
2021
|
Fixed index annuities
|
$
33.2
|
|
$
48.3
|
Fixed interest annuities
|
8.1
|
|
8.8
|
Other annuities
|
3.3
|
|
0.8
|
Total
|
$
44.6
|
|
$
57.9
|
|
Annuity collected premiums
|
|
Quarter ended
|
|
March 31,
|
|
2022
|
|
2021
|
Annuity collected premiums
|
$
368.6
|
|
$
325.4
|
|
Average net insurance liabilities
(5)
|
|
Quarter ended
|
|
March 31,
|
|
2022
|
|
2021
|
Fixed index annuities
|
$
8,268.4
|
|
$
7,464.8
|
Fixed interest annuities
|
1,761.9
|
|
1,951.6
|
Other annuities
|
488.0
|
|
512.2
|
Total
|
$
10,518.3
|
|
$
9,928.6
|
|
Margin/average net insurance liabilities
(a)
|
|
Quarter ended
|
|
March 31,
|
|
2022
|
|
2021
|
Fixed index annuities
|
1.61%
|
|
2.59%
|
Fixed interest annuities
|
1.84%
|
|
1.80%
|
Other annuities
|
2.70%
|
|
0.62%
|
Total
|
1.70%
|
|
2.33%
|
|
|
(a)
|
Defined as annualized
quarterly annuity margin divided by average net insurance
liabilities (5).
|
Total annuity margins were favorably impacted by approximately
nil and $1 million in the quarters
ended March 31, 2022 and 2021,
respectively, due to the estimated impacts of COVID-19.
HEALTH INSURANCE RESULTS BY PRODUCT TYPE
(Dollars in millions)
(Unaudited)
|
|
Health margin
|
|
Quarter ended
|
|
March 31,
|
|
2022
|
|
2021
|
|
|
|
Amount
|
|
% of
insurance
policy
income
|
|
Amount
|
|
% of
insurance
policy
income
|
|
%
change
|
Supplemental health and other
health
|
$
57.2
|
|
33
|
|
$
50.4
|
|
30
|
|
13
|
Medicare supplement
|
36.2
|
|
22
|
|
38.2
|
|
21
|
|
(5)
|
Long-term care
|
31.4
|
|
47
|
|
36.1
|
|
55
|
|
(13)
|
Total
|
$
124.8
|
|
31
|
|
$
124.7
|
|
30
|
|
—
|
Health insurance policy income
|
|
Quarter ended
|
|
|
|
March 31,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Supplemental health and other
health
|
$
173.5
|
|
$
169.8
|
|
2
|
Medicare supplement
|
166.8
|
|
181.0
|
|
(8)
|
Long-term care
|
66.4
|
|
65.7
|
|
1
|
Total
|
$
406.7
|
|
$
416.5
|
|
(2)
|
|
Health NAP (4)
|
|
Quarter ended
|
|
|
|
March 31,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Supplemental health and other
health
|
$
21.5
|
|
$
21.1
|
|
2
|
Medicare supplement
|
6.5
|
|
8.2
|
|
(21)
|
Long-term care
|
6.8
|
|
6.4
|
|
6
|
Total
|
$
34.8
|
|
$
35.7
|
|
(3)
|
Total health margins were favorably impacted by approximately
$32 million and $40 million in the quarters ended March 31, 2022 and 2021, respectively, due to the
estimated impacts of COVID-19.
LIFE INSURANCE RESULTS BY PRODUCT TYPE
(Dollars in millions)
(Unaudited)
|
|
Life margin
|
|
Quarter ended
|
|
|
|
March 31,
|
|
|
|
2022
|
|
2021
|
|
|
|
Amount
|
|
% of
insurance
policy
income
|
|
Amount
|
|
% of
insurance
policy
income
|
|
%
change
|
Life insurance interest margin
|
$
1.5
|
|
|
|
$
1.9
|
|
|
|
(21)
|
Life insurance margin:
|
|
|
|
|
|
|
|
|
|
Traditional life
|
2.9
|
|
2
|
|
12.9
|
|
8
|
|
(78)
|
Interest sensitive life
|
15.4
|
|
36
|
|
12.3
|
|
30
|
|
25
|
Subtotal
|
18.3
|
|
9
|
|
25.2
|
|
12
|
|
(27)
|
Total margin
|
$
19.8
|
|
|
|
$
27.1
|
|
|
|
(27)
|
Life insurance policy income
|
|
Quarter ended
|
|
|
|
March 31,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Traditional life
|
$
170.2
|
|
$
169.7
|
|
—
|
Interest sensitive life
|
43.1
|
|
40.8
|
|
6
|
Total
|
$
213.3
|
|
$
210.5
|
|
1
|
|
Life NAP (4)
|
|
Quarter ended
|
|
|
|
March 31,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Traditional life
|
$
48.2
|
|
$
45.9
|
|
5
|
Interest sensitive life
|
7.6
|
|
7.1
|
|
7
|
Total
|
$
55.8
|
|
$
53.0
|
|
5
|
|
Average net insurance liabilities (5) and interest
margin
|
|
|
|
Quarter ended
|
|
|
|
March 31,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Interest sensitive life
products
|
$
1,011.9
|
|
$
954.7
|
|
6
|
Interest margin/average net insurance
liabilities (5)
|
0.59 %
|
|
0.80 %
|
|
(26)
|
Total life margins were unfavorably impacted by approximately
$16 million and $19 million in the quarters ended March 31, 2022 and 2021, respectively, due to the
estimated impacts of COVID-19.
QUARTERLY AVERAGE
EXCLUSIVE PRODUCING AGENTS
|
|
|
Average Exclusive Producing Agent
Count
|
|
Quarter ended
|
|
|
|
March 31,
|
|
%
|
|
2022
|
|
2021
|
|
change
|
Consumer
|
|
|
|
|
|
Field agents (a)
(c)
|
3,939
|
|
4,389
|
|
(10)
|
Tele-sales
agents
|
217
|
|
258
|
|
(16)
|
Total agents
|
4,156
|
|
4,647
|
|
(11)
|
Registered
agents (b) (c)
|
663
|
|
646
|
|
3
|
Worksite (a) (c)
|
208
|
|
241
|
|
(14)
|
|
|
|
|
|
|
|
(a)
|
Producing agents
represent the monthly average of exclusive agents that have
submitted at least one policy in the month.
|
(b)
|
Registered agents are
dually licensed as insurance agents and financial representatives
who can buy and sell securities for clients, and/or investment
advisors who can provide ongoing investment advice for
clients.
|
(c)
|
Agent counts
represent the average of the last 3 months.
|
INVESTMENTS INVESTMENT INCOME NOT
ALLOCATED TO PRODUCT LINES (Dollars in millions, except per
share data)
|
|
Management uses
investment income not allocated to product lines as the measure to
evaluate the performance of the investment segment. It is
defined as net investment income less the investment income
allocated to our product segments and interest expense on
debt. We also view investment income not allocated to product
lines per diluted share as an important and useful measure to
evaluate performance of the investment segment as it takes into
consideration our share repurchase program.
|
|
|
Quarter ended March 31,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Net investment income
|
$
208.2
|
|
$
338.2
|
|
(38)
|
Allocated to product
lines:
|
|
|
|
|
|
Annuity
|
(115.1)
|
|
(115.7)
|
|
(1)
|
Health
|
(71.8)
|
|
(71.5)
|
|
—
|
Life
|
(36.3)
|
|
(35.8)
|
|
1
|
Equity returns credited
to policyholder account balances
|
71.9
|
|
(42.5)
|
|
(269)
|
Amounts allocated to product lines and credited to
policyholder account balances
|
(151.3)
|
|
(265.5)
|
|
(43)
|
Amount related to
variable interest entities and other non-operating items
|
(7.2)
|
|
(7.8)
|
|
(8)
|
Interest expense on
corporate debt
|
(15.7)
|
|
(15.5)
|
|
1
|
Interest expense on
investment borrowings from the Federal Home Loan Bank
program
|
(2.4)
|
|
(2.7)
|
|
(11)
|
Expenses related to
funding agreement-backed note program
|
(7.3)
|
|
—
|
|
n/m
|
Less amounts credited
to deferred compensation plans (offsetting investment
income)
|
4.2
|
|
(3.7)
|
|
(214)
|
Total adjustments
|
(28.4)
|
|
(29.7)
|
|
|
Investment income not allocated to
product lines
|
$
28.5
|
|
$
43.0
|
|
(34)
|
|
|
|
|
|
|
Per diluted
share
|
$
0.23
|
|
$
0.32
|
|
|
INVESTMENT
PORTFOLIO (Dollars in millions)
|
|
The composition of
the investment portfolio at March 31, 2022 is as
follows:
|
|
|
$
|
|
% of total
|
Fixed maturities,
available for sale, at fair value
|
$
23,479.4
|
|
86
|
Equity securities at
fair value
|
91.0
|
|
—
|
Mortgage
loans
|
1,213.3
|
|
4
|
Policy loans
|
119.5
|
|
1
|
Trading
securities
|
223.0
|
|
1
|
Investments held by
variable interest entities
|
1,180.8
|
|
4
|
Other invested
assets
|
1,121.8
|
|
4
|
Total investment
portfolio
|
$
27,428.8
|
|
100
|
Fixed maturities,
available for sale, at amortized cost by asset class as of March
31, 2022 are as follows:
|
|
|
Investment
grade
|
|
Below
investment
grade
|
|
Total
|
Corporate
securities
|
$
13,110.8
|
|
$
821.8
|
|
$
13,932.6
|
United States Treasury
securities and obligations of the United States government and
agencies
|
168.0
|
|
—
|
|
168.0
|
States and political
subdivisions
|
2,634.4
|
|
11.6
|
|
2,646.0
|
Foreign
governments
|
78.2
|
|
—
|
|
78.2
|
Asset-backed
securities
|
1,034.6
|
|
155.1
|
|
1,189.7
|
Agency residential
mortgage-backed securities
|
33.9
|
|
—
|
|
33.9
|
Non-agency residential
mortgage-backed securities
|
1,163.9
|
|
662.7
|
(a)
|
1,826.6
|
Collateralized loan
obligations
|
681.8
|
|
7.4
|
|
689.2
|
Commercial
mortgage-backed securities
|
2,341.3
|
|
83.8
|
|
2,425.1
|
|
|
|
|
|
|
Total
|
$
21,246.9
|
|
$
1,742.4
|
|
$
22,989.3
|
|
|
|
|
|
|
|
(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 $23.5 billion compared
with an amortized cost of $23.0
billion. Net unrealized gains were comprised of gross
unrealized gains of $1.2 billion and
gross unrealized losses of $647
million. The allowance for credit losses was
$36.6 million at March 31, 2022.
At both amortized cost and fair value, 92 percent of fixed
maturities, available for sale, were rated "investment grade".
Non-Operating Items
Net investment losses in 1Q22 were $7.1
million (net of related amortization) including the
unfavorable change in the allowance for credit losses of
$30.7 million which was recorded in
earnings. Net investment gains in 1Q21 were $3.6 million (net of related amortization)
including the favorable change in the allowance for credit losses
of $9.6 million which was recorded in
earnings.
During 1Q22 and 1Q21, we recognized a decrease in earnings of
$25.5 million and $6.4 million, respectively, due to the net change
in market value of investments recognized in earnings.
During 1Q22 and 1Q21, we recognized an increase in earnings of
$90.8 million and $82.1 million, respectively, resulting from
changes in the estimated fair value of embedded derivative
liabilities related to our fixed index annuities, net of related
amortization. Such amounts include the impacts of changes in
market interest rates used to determine the derivative's estimated
fair value.
In 1Q22 and 1Q21, other non-operating items included an increase
in earnings of $22.7 million and
$13.2 million, respectively, 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.
Statutory (based on non-GAAP measures) and GAAP Capital
Information
Our consolidated statutory risk-based capital ratio was
estimated at 365% at March 31, 2022,
reflecting estimated 1Q22 statutory operating income of
$30 million and the payment of
insurance company dividends to the holding company of $69.6 million during 1Q22.
During the first quarter of 2022, we repurchased $100.0 million of common stock under our
securities repurchase program. We repurchased 4.1 million
common shares at an average cost of $24.65 per share. As of March 31, 2022, we had 117.2 million shares
outstanding and had authority to repurchase up to an additional
$266.9 million of our common
stock. During 1Q22, dividends paid on common stock totaled
$16.1 million.
Unrestricted cash and investments held by our holding company
were $192 million at March 31, 2022, compared to $249 million at December
31, 2021.
Book value per common share was $31.48 at March 31,
2022 compared to $43.69 at
December 31, 2021. Book value per diluted share,
excluding accumulated other comprehensive income (2), was
$27.70 at March 31, 2022, compared to $26.86 at December
31, 2021.
The debt-to-capital ratio was 23.6 percent and 17.8 percent at
March 31, 2022 and December 31, 2021, respectively. Our
debt-to-total capital ratio, excluding accumulated other
comprehensive income (3) was 25.6 percent at both March 31, 2022 and December 31, 2021.
Return on equity for the trailing four quarters ended
March 31, 2022 and 2021, was 8.1% and
9.6%, respectively. Operating return, excluding significant
items, on equity, excluding accumulated other comprehensive income
and net operating loss carryforwards (6) for the trailing four
quarters ended March 31, 2022 and
2021, was 10.7% and 11.7%, 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
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, 2021 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
May 3, 2022 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
http://www.directeventreg.com/registration/event/7976502. 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 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
$35 billion in total assets. Our
3,400 associates, 4,400 exclusive agents and 4,700 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)
|
|
|
March 31,
2022
|
|
December 31,
2021
|
ASSETS
|
|
|
|
Investments:
|
|
|
|
Fixed
maturities, available for sale, at fair value (net of allowance for
credit losses: March 31,
2022 - $36.6 and December 31, 2021 - $7.6; amortized
cost: March 31, 2022 - $22,989.3 and
December 31, 2021 - $21,867.6)
|
$
23,479.4
|
|
$
24,805.4
|
Equity
securities at fair value
|
91.0
|
|
131.1
|
Mortgage loans
(net of allowance for credit losses: March 31, 2022 - $5.1 and
December 31,
2021 - $5.6)
|
1,213.3
|
|
1,218.6
|
Policy
loans
|
119.5
|
|
120.2
|
Trading
securities
|
223.0
|
|
227.2
|
Investments held
by variable interest entities (net of allowance for credit losses:
March 31, 2022
- $5.9 and December 31, 2021 - $3.7; amortized cost:
March 31, 2022 - $1,198.9 and
December 31, 2021 - $1,206.8)
|
1,180.8
|
|
1,199.6
|
Other invested
assets
|
1,121.8
|
|
1,224.0
|
Total investments
|
27,428.8
|
|
28,926.1
|
Cash and cash
equivalents - unrestricted
|
546.0
|
|
632.1
|
Cash and cash
equivalents held by variable interest entities
|
48.0
|
|
99.6
|
Accrued investment
income
|
227.9
|
|
216.4
|
Present value of future
profits
|
222.8
|
|
222.6
|
Deferred acquisition
costs
|
1,487.6
|
|
1,112.0
|
Reinsurance receivables
(net of allowance for credit losses: March 31, 2022 - $3.0
and
December 31, 2021 - $3.0)
|
4,298.2
|
|
4,354.3
|
Income tax assets,
net
|
534.2
|
|
118.3
|
Assets held in separate
accounts
|
3.6
|
|
3.9
|
Other assets
|
671.0
|
|
519.1
|
Total assets
|
$
35,468.1
|
|
$
36,204.4
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Liabilities:
|
|
|
|
Liabilities for
insurance products:
|
|
|
|
Policyholder account liabilities
|
$
14,546.3
|
|
$
13,689.7
|
Future policy benefits
|
11,646.5
|
|
11,670.7
|
Liability for policy and contract claims
|
507.3
|
|
501.8
|
Unearned and advanced premiums
|
250.0
|
|
246.7
|
Liabilities related to separate accounts
|
3.6
|
|
3.9
|
Other
liabilities
|
912.3
|
|
830.9
|
Investment
borrowings
|
1,640.5
|
|
1,715.8
|
Borrowings
related to variable interest entities
|
1,133.1
|
|
1,147.9
|
Notes payable –
direct corporate obligations
|
1,137.6
|
|
1,137.3
|
Total liabilities
|
31,777.2
|
|
30,944.7
|
Commitments and
Contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common stock
($0.01 par value, 8,000,000,000 shares authorized, shares issued
and
outstanding: March 31, 2022 – 117,241,006;
December 31, 2021 – 120,377,152)
|
1.2
|
|
1.2
|
Additional
paid-in capital
|
2,085.7
|
|
2,184.2
|
Accumulated
other comprehensive income
|
380.5
|
|
1,947.1
|
Retained
earnings
|
1,223.5
|
|
1,127.2
|
Total shareholders' equity
|
3,690.9
|
|
5,259.7
|
Total liabilities and shareholders' equity
|
$
35,468.1
|
|
$
36,204.4
|
CNO FINANCIAL
GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF
OPERATIONS (Dollars in millions, except per share data)
(unaudited)
|
|
|
Three months
ended
|
|
March 31,
|
|
2022
|
|
2021
|
Revenues:
|
|
|
|
Insurance policy
income
|
$
625.0
|
|
$
632.4
|
Net investment
income:
|
|
|
|
General account assets
|
277.5
|
|
282.7
|
Policyholder and other special-purpose portfolios
|
(69.3)
|
|
55.5
|
Investment gains
(losses):
|
|
|
|
Realized investment gains (losses)
|
18.8
|
|
(6.0)
|
Other investment gains (losses)
|
(51.5)
|
|
3.2
|
Total investment
losses
|
(32.7)
|
|
(2.8)
|
Fee revenue and
other income
|
42.4
|
|
38.2
|
Total revenues
|
842.9
|
|
1,006.0
|
Benefits and
expenses:
|
|
|
|
Insurance policy
benefits
|
346.7
|
|
459.1
|
Interest
expense
|
23.8
|
|
24.1
|
Amortization
|
103.9
|
|
99.7
|
Other operating
costs and expenses
|
219.2
|
|
233.1
|
Total benefits and expenses
|
693.6
|
|
816.0
|
Income before income taxes
|
149.3
|
|
190.0
|
Income tax expense on
period income
|
37.0
|
|
42.6
|
Net
income
|
$
112.3
|
|
$
147.4
|
Earnings per common
share:
|
|
|
|
Basic:
|
|
|
|
Weighted average
shares outstanding
|
118,622,000
|
|
134,140,000
|
Net
income
|
$
.95
|
|
$
1.10
|
Diluted:
|
|
|
|
Weighted average
shares outstanding
|
121,002,000
|
|
136,653,000
|
Net
income
|
$
.93
|
|
$
1.08
|
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 related
amortization and taxes; (ii) net change in market value of
investments recognized in earnings, net of taxes; (iii) fair value
changes due to fluctuations in the interest rates used to discount
embedded derivative liabilities related to our fixed index
annuities, net of related amortization and taxes; (iv) fair value
changes related to the agent deferred compensation plan, net of
taxes; (v) loss on extinguishment of debt, net of taxes; (vi)
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)
|
Net insurance
liabilities are equal to total insurance liabilities less: (i)
amounts related to reinsured business; (ii) deferred acquisition
costs; (iii) present value of future profits; and (iv) the value of
unexpired options credited to insurance liabilities.
|
(6)
|
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
|
|
1Q22
|
|
1Q21
|
Net operating
income
|
$
341.5
|
|
$
353.2
|
|
|
|
|
Net operating income,
excluding significant items
|
$
327.1
|
|
$
335.2
|
|
|
|
|
Net income
|
$
405.9
|
|
$
470.4
|
|
|
|
|
Average common
equity, excluding accumulated other comprehensive income (loss) and
net operating loss carryforwards
(a non-GAAP financial measure)
|
$
3,046.7
|
|
$
2,876.5
|
|
|
|
|
Average common
shareholders' equity
|
$
5,023.1
|
|
$
4,903.1
|
|
|
|
|
Operating return on
equity, excluding accumulated other comprehensive income
(loss) and net operating loss carryforwards (a non-GAAP
financial measure)
|
11.2 %
|
|
12.3 %
|
|
|
|
|
Operating return,
excluding significant items, on equity, excluding accumulated
other comprehensive income (loss) and net operating loss
carryforwards (a non-GAAP financial measure)
|
10.7 %
|
|
11.7 %
|
|
|
|
|
Return on
equity
|
8.1 %
|
|
9.6 %
|
The following
summarizes: (i) operating earnings; (ii) significant items; (iii)
operating earnings, 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
|
|
four
quarters
|
2Q20
|
|
$
79.4
|
|
$
(17.7)
|
(b)
|
$
61.7
|
|
$
285.9
|
|
$
82.0
|
|
$
380.8
|
3Q20
|
|
112.6
|
|
—
|
|
112.6
|
|
329.3
|
|
129.2
|
|
468.0
|
4Q20
|
|
86.0
|
|
(6.4)
|
(c)
|
79.6
|
|
338.2
|
|
111.8
|
|
301.8
|
1Q21
|
|
75.2
|
|
6.1
|
(d)
|
81.3
|
|
335.2
|
|
147.4
|
|
470.4
|
2Q21
|
|
89.1
|
|
3.5
|
(e)
|
92.6
|
|
366.1
|
|
78.0
|
|
466.4
|
3Q21
|
|
92.8
|
|
2.3
|
(f)
|
95.1
|
|
348.6
|
|
99.8
|
|
437.0
|
4Q21
|
|
108.5
|
|
(20.2)
|
(g)
|
88.3
|
|
357.3
|
|
115.8
|
|
441.0
|
1Q22
|
|
51.1
|
|
—
|
|
51.1
|
|
327.1
|
|
112.3
|
|
405.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
See note (7) for
additional information.
|
(b)
|
Comprised of: (i)
$45.9 million of net favorable adjustments arising from our review
of actuarial assumptions; (ii) $23.5 million unfavorable impact
related to regulatory matters; and (iii) an increase in tax expense
of $4.7 million.
|
(c)
|
Comprised of: (i)
$11.8 million of net favorable adjustments arising from our review
of actuarial assumptions; (ii) $3.7 million unfavorable impact
related to asset impairments; and (iii) an increase in tax expense
of $1.7 million.
|
(d)
|
Comprised of: (i)
$5.3 million from legal and regulatory matters; (ii) $2.5 million
of transaction expenses related to the previously announced
acquisition of DirectPath, LLC; and (iii) a decrease in tax expense
of $1.7 million.
|
(e)
|
Comprised of: (i)
$4.5 million from legal and regulatory matters; and (ii) a decrease
in tax expense of $1.0 million.
|
(f)
|
Comprised of: (i)
$3.0 million from legal and regulatory matters; and (ii) a decrease
in tax expense of $.7 million.
|
(g)
|
Comprised of: (i)
$25.9 million of net favorable adjustments arising from our review
of actuarial assumptions; and (ii) an increase in tax expense of
$5.7 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
|
|
|
|
1Q22
|
|
1Q21
|
Pre-tax operating
earnings (a non-GAAP financial measure)
|
$
441.7
|
|
$
455.2
|
Income tax
expense
|
(100.2)
|
|
(102.0)
|
Net operating
income
|
341.5
|
|
353.2
|
Non-operating
items:
|
|
|
|
Net realized
investment gains (losses) from sales, impairments and change in
allowance for credit losses, net of related amortization
|
24.1
|
|
36.2
|
Net change in
market value of investments recognized in earnings
|
(36.5)
|
|
39.3
|
Fair value
changes in embedded derivative liabilities, net of related
amortization
|
75.9
|
|
69.7
|
Fair value
changes related to the agent deferred compensation plan
|
18.4
|
|
(3.1)
|
Other
|
3.4
|
|
8.0
|
Non-operating income
(loss) before taxes
|
85.3
|
|
150.1
|
Income tax expense on non-operating
income
|
(20.9)
|
|
(32.9)
|
Net non-operating
income
|
64.4
|
|
117.2
|
Net income
|
$
405.9
|
|
$
470.4
|
|
|
|
|
|
|
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):
|
|
|
|
|
1Q20
|
|
2Q20
|
|
3Q20
|
|
4Q20
|
Consolidated capital,
excluding accumulated other comprehensive income (loss) and net
operating loss carryforwards (a non-GAAP financial
measure)
|
$
2,701.2
|
|
$
2,784.2
|
|
$
2,905.1
|
|
$
2,956.2
|
Net operating loss
carryforwards
|
469.4
|
|
426.8
|
|
377.2
|
|
341.9
|
Accumulated other
comprehensive income
|
595.2
|
|
1,520.2
|
|
1,801.6
|
|
2,186.1
|
Common shareholders'
equity
|
$
3,765.8
|
|
$
4,731.2
|
|
$
5,083.9
|
|
$
5,484.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q21
|
|
2Q21
|
|
3Q21
|
|
4Q21
|
Consolidated capital,
excluding accumulated other comprehensive income (loss) and net
operating loss carryforwards (a
non-GAAP financial measure)
|
$
3,019.5
|
|
$
3,035.6
|
|
$
3,036.3
|
|
$
3,068.9
|
Net operating loss
carryforwards
|
323.1
|
|
292.9
|
|
266.9
|
|
243.7
|
Accumulated other
comprehensive income
|
1,518.1
|
|
1,995.5
|
|
1,929.7
|
|
1,947.1
|
Common shareholders'
equity
|
$
4,860.7
|
|
$
5,324.0
|
|
$
5,232.9
|
|
$
5,259.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q22
|
|
|
|
|
|
|
Consolidated capital,
excluding accumulated other comprehensive income (loss) and net
operating loss carryforwards (a non-GAAP financial
measure)
|
$
3,072.2
|
|
|
|
|
|
|
Net operating loss
carryforwards
|
238.2
|
|
|
|
|
|
|
Accumulated other
comprehensive income
|
380.5
|
|
|
|
|
|
|
Common shareholders'
equity
|
$
3,690.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
1Q22
|
|
1Q21
|
Consolidated capital,
excluding accumulated other comprehensive income (loss) and
net operating loss carryforwards (a non-GAAP financial measure)
|
$
3,046.7
|
|
$
2,876.5
|
Net operating loss
carryforwards
|
271.0
|
|
385.5
|
Accumulated other
comprehensive income
|
1,705.4
|
|
1,641.1
|
Common shareholders'
equity
|
$
5,023.1
|
|
$
4,903.1
|
|
|
|
|
|
|
|
(7)
|
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,
2021
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant items
|
Insurance product margin
|
|
|
|
|
|
|
Annuity
margin
|
|
$
93.9
|
|
$
(26.9)
|
(a)
|
$
67.0
|
Health
margin
|
|
129.5
|
|
—
|
|
129.5
|
Life
margin
|
|
30.4
|
|
1.0
|
(a)
|
31.4
|
Total insurance product
margin
|
|
253.8
|
|
(25.9)
|
|
227.9
|
Allocated
expenses
|
|
(143.3)
|
|
—
|
|
(143.3)
|
Income from insurance
products
|
|
110.5
|
|
(25.9)
|
|
84.6
|
Fee income
|
|
2.9
|
|
—
|
|
2.9
|
Investment income not
allocated to product lines
|
|
42.8
|
|
—
|
|
42.8
|
Expenses not allocated
to product lines
|
|
(17.4)
|
|
—
|
|
(17.4)
|
Operating earnings before taxes
|
|
138.8
|
|
(25.9)
|
|
112.9
|
Income tax (expense)
benefit on operating income
|
|
(30.3)
|
|
5.7
|
|
(24.6)
|
Net operating income
|
|
$
108.5
|
|
$
(20.2)
|
|
$
88.3
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.87
|
|
$
(0.16)
|
|
$
0.71
|
|
|
|
|
|
|
|
(a)
|
Adjustments arising
from our comprehensive annual actuarial review of
assumptions.
|
|
|
Three months
ended
|
|
|
September 30,
2021
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant items
|
Insurance product margin
|
|
|
|
|
|
|
Annuity
margin
|
|
$
52.5
|
|
$
—
|
|
$
52.5
|
Health
margin
|
|
117.9
|
|
—
|
|
117.9
|
Life
margin
|
|
53.2
|
|
—
|
|
53.2
|
Total insurance product
margin
|
|
223.6
|
|
—
|
|
223.6
|
Allocated
expenses
|
|
(140.5)
|
|
—
|
|
(140.5)
|
Income from insurance
products
|
|
83.1
|
|
—
|
|
83.1
|
Fee income
|
|
2.6
|
|
—
|
|
2.6
|
Investment income not
allocated to product lines
|
|
50.9
|
|
—
|
|
50.9
|
Expenses not allocated
to product lines
|
|
(17.3)
|
|
3.0
|
(a)
|
(14.3)
|
Operating earnings before taxes
|
|
119.3
|
|
3.0
|
|
122.3
|
Income tax (expense)
benefit on operating income
|
|
(26.5)
|
|
(0.7)
|
|
(27.2)
|
Net operating income
|
|
$
92.8
|
|
$
2.3
|
|
$
95.1
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.72
|
|
$
0.02
|
|
$
0.74
|
|
|
|
|
|
|
|
(a)
|
Comprised of $3.0
million from legal and regulatory matters.
|
|
|
Three months
ended
|
|
|
June 30,
2021
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant items
|
Insurance product margin
|
|
|
|
|
|
|
Annuity
margin
|
|
$
66.0
|
|
$
—
|
|
$
66.0
|
Health
margin
|
|
120.9
|
|
—
|
|
120.9
|
Life
margin
|
|
39.7
|
|
—
|
|
39.7
|
Total insurance product
margin
|
|
226.6
|
|
—
|
|
226.6
|
Allocated
expenses
|
|
(141.6)
|
|
—
|
|
(141.6)
|
Income from insurance
products
|
|
85.0
|
|
—
|
|
85.0
|
Fee income
|
|
6.6
|
|
—
|
|
6.6
|
Investment income not
allocated to product lines
|
|
47.8
|
|
—
|
|
47.8
|
Expenses not allocated
to product lines
|
|
(23.8)
|
|
4.5
|
(a)
|
(19.3)
|
Operating earnings before taxes
|
|
115.6
|
|
4.5
|
|
120.1
|
Income tax (expense)
benefit on operating income
|
|
(26.5)
|
|
(1.0)
|
|
(27.5)
|
Net operating income
|
|
$
89.1
|
|
$
3.5
|
|
$
92.6
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.66
|
|
$
0.03
|
|
$
0.69
|
|
|
|
|
|
|
|
(a)
|
Comprised of $4.5
million from legal and regulatory matters.
|
|
|
Three months
ended
|
|
|
March 31,
2021
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant items
|
Insurance product margin
|
|
|
|
|
|
|
Annuity
margin
|
|
$
57.9
|
|
$
—
|
|
$
57.9
|
Health
margin
|
|
124.7
|
|
—
|
|
124.7
|
Life
margin
|
|
27.1
|
|
—
|
|
27.1
|
Total insurance product
margin
|
|
209.7
|
|
—
|
|
209.7
|
Allocated
expenses
|
|
(141.1)
|
|
—
|
|
(141.1)
|
Income from insurance
products
|
|
68.6
|
|
—
|
|
68.6
|
Fee income
|
|
7.3
|
|
—
|
|
7.3
|
Investment income not
allocated to product lines
|
|
43.0
|
|
—
|
|
43.0
|
Expenses not allocated
to product lines
|
|
(22.0)
|
|
7.8
|
(a)
|
(14.2)
|
Operating earnings before taxes
|
|
96.9
|
|
7.8
|
|
104.7
|
Income tax (expense)
benefit on operating income
|
|
(21.7)
|
|
(1.7)
|
|
(23.4)
|
Net operating income
|
|
$
75.2
|
|
$
6.1
|
|
$
81.3
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.55
|
|
$
0.04
|
|
$
0.59
|
|
|
|
|
|
|
|
(a)
|
Comprised of: (i)
$5.3 million from legal and regulatory matters; and (ii) $2.5
million of transaction expenses related to the previously announced
acquisition of DirectPath, LLC. The legal and regulatory matters
primarily consist of an increase to our liability for claims and
interest pursuant to the Global Resolution Agreement, as we have
now processed and verified most of the claims provided by the third
party auditor allowing us to more accurately estimate the ultimate
liability.
|
|
|
Three months
ended
|
|
|
December 31,
2020
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant items
|
Insurance product margin
|
|
|
|
|
|
|
Annuity
margin
|
|
$
68.1
|
|
$
(16.1)
|
(a)
|
$
52.0
|
Health
margin
|
|
125.2
|
|
—
|
|
125.2
|
Life
margin
|
|
37.3
|
|
4.3
|
(a)
|
41.6
|
Total insurance product
margin
|
|
230.6
|
|
(11.8)
|
|
218.8
|
Allocated
expenses
|
|
(162.7)
|
|
—
|
|
(162.7)
|
Income from insurance
products
|
|
67.9
|
|
(11.8)
|
|
56.1
|
Fee income
|
|
2.9
|
|
—
|
|
2.9
|
Investment income not
allocated to product lines
|
|
57.8
|
|
—
|
|
57.8
|
Expenses not allocated
to product lines
|
|
(17.8)
|
|
3.7
|
(b)
|
(14.1)
|
Operating earnings before taxes
|
|
110.8
|
|
(8.1)
|
|
102.7
|
Income tax (expense)
benefit on operating income
|
|
(24.8)
|
|
1.7
|
|
(23.1)
|
Net operating income
|
|
$
86.0
|
|
$
(6.4)
|
|
$
79.6
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.61
|
|
$
(0.04)
|
|
$
0.57
|
|
|
|
|
|
|
|
(a)
|
Adjustments arising
from our comprehensive annual actuarial review of
assumptions.
|
(b)
|
Unfavorable impact
related to asset impairments.
|
|
|
Three months
ended
|
|
|
June 30,
2020
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant items
|
Insurance product margin
|
|
|
|
|
|
|
Annuity
margin
|
|
$
123.8
|
|
$
40.0
|
(a)
|
$
72.3
|
|
|
|
|
(91.5)
|
(a)
|
|
Health
margin
|
|
95.5
|
|
—
|
|
95.5
|
Life
margin
|
|
36.1
|
|
5.6
|
(a)
|
41.7
|
Total insurance product
margin
|
|
255.4
|
|
(45.9)
|
|
209.5
|
Allocated
expenses
|
|
(128.1)
|
|
—
|
|
(128.1)
|
Income from insurance
products
|
|
127.3
|
|
(45.9)
|
|
81.4
|
Fee income
|
|
5.2
|
|
—
|
|
5.2
|
Investment income not
allocated to product lines
|
|
8.2
|
|
—
|
|
8.2
|
Expenses not allocated
to product lines
|
|
(38.5)
|
|
23.5
|
(b)
|
(15.0)
|
Operating earnings before taxes
|
|
102.2
|
|
(22.4)
|
|
79.8
|
Income tax (expense)
benefit on operating income
|
|
(22.8)
|
|
4.7
|
|
(18.1)
|
Net operating income
|
|
$
79.4
|
|
$
(17.7)
|
|
$
61.7
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.55
|
|
$
(0.12)
|
|
$
0.43
|
|
|
|
|
|
|
|
(a)
|
Given our expectation
that interest rates will remain low for the long-term, we performed
an actuarial unlocking exercise in the second quarter of 2020 to
reflect our assumption that average new money rates will remain
flat at 4 percent forever. This change and the related
impacts to persistency assumptions had a $45.6 million unfavorable
impact on pre-tax earnings. As part of the actuarial
unlocking exercise, we also changed our assumptions related to the
future option costs we incur in providing benefits on fixed index
annuities which had a favorable impact on pre-tax earnings of $91.5
million. The impact of these changes in assumptions is
summarized below (dollars in millions):
|
|
|
|
Line of
business
|
|
|
|
Fixed index
annuities
|
|
Fixed interest
annuities
|
|
Interest-
sensitive life
|
|
Total
|
|
Favorable
(unfavorable)
|
Impacts of an average new money rate assumption of 4
percent
|
|
|
|
|
|
|
|
Insurance policy
benefits
|
$
(5.0)
|
|
$
—
|
|
$
(7.4)
|
|
$
(12.4)
|
Amortization
|
(25.6)
|
|
(9.4)
|
|
1.8
|
|
(33.2)
|
Subtotal
|
(30.6)
|
|
(9.4)
|
|
(5.6)
|
|
(45.6)
|
Impacts of changes in future option
costs
|
|
|
|
|
|
|
|
Insurance policy
benefits
|
104.8
|
|
—
|
|
—
|
|
104.8
|
Amortization
|
(13.3)
|
|
—
|
|
—
|
|
(13.3)
|
Subtotal
|
91.5
|
|
—
|
|
—
|
|
91.5
|
Impact on pre-tax
income
|
$
60.9
|
|
$
(9.4)
|
|
$
(5.6)
|
|
$
45.9
|
|
|
|
This actuarial
unlocking exercise did not replace our comprehensive annual review
of all assumptions for our insurance products, which we completed
in the fourth quarter of 2020.
|
|
(b)
|
We increased our
liability for claims and interest pursuant to the previously
disclosed Global Resolution Agreement entered into in November
2018. Pursuant to this agreement, a third-party auditor is
acting on behalf of 42 states and the District of Columbia for the
purpose of identifying deceased insureds and contract holders where
benefits are payable pursuant to unclaimed property laws. The
third-party auditor has provided information that we have processed
and verified allowing us to more accurately estimate the ultimate
liability pursuant to this agreement.
|
View original
content:https://www.prnewswire.com/news-releases/cno-financial-group-reports-first-quarter-2022-results-301537660.html
SOURCE CNO Financial Group