Solid third quarter results with earnings
per share up 18%, continued strong sales momentum
CARMEL,
Ind., Oct. 31, 2022 /PRNewswire/ -- CNO
Financial Group, Inc. (NYSE: CNO) today announced that for the
quarter ended September 30, 2022, net
income was $105.0 million, or
$0.91 per diluted share, compared to
$99.8 million, or $0.77 per diluted share, in 3Q21. Net operating
income (1) in 3Q22 was $56.9 million,
or $0.49 per diluted share, compared
to $92.8 million, or $0.72 per diluted share, in 3Q21.
"CNO again delivered solid earnings in a challenging
macroeconomic environment," said Gary C.
Bhojwani, chief executive officer. "Continued strong
production in our annuities, direct-to-consumer and worksite
businesses resulted in gains in total new annualized premiums for
the quarter. Increases in our capital ratios and the consistent
strength of our balance sheet underscore our disciplined capital
management. While economic uncertainty is likely to persist, the
resiliency of our diverse business model positions us well to
continue to capitalize on the growing needs of our market and to
deliver sustainable long-term value to our shareholders."
Third Quarter 2022 Highlights
- Earnings per diluted share of $0.91 in 3Q22, up from $0.77 in 3Q21
- Operating (1) EPS of $0.49 in
3Q22, compared to $0.72 in 3Q21
- Pre-tax operating earnings of $74.3
million in 3Q22, compared to $119.3
million in 3Q21, reflecting: (i) lower variable investment
income returns; (ii) unfavorable impacts to the fixed index annuity
margin from market volatility; and (iii) higher expenses related to
continued investment in growth initiatives
- Total new annualized premiums (NAP) (4) up 3% from 3Q21
- Direct-to-consumer life insurance NAP (4) up 4% from 3Q21
- Worksite Division NAP (4) up 33% from 3Q21
- Annuity collected premiums up 11% from 3Q21
- Returned $26.1 million to
shareholders in the form of share repurchases ($10.0 million) and dividends ($16.1 million); reduced weighted average share
count by 10% since 3Q21
- Estimated consolidated risk-based capital ratio of 375% at
September 30, 2022
- Return on equity (ROE) of 13.0%; operating ROE, as adjusted
(6), of 10.2%
- Book value per share was $11.35;
book value per diluted share, excluding accumulated other
comprehensive loss (2), was $29.87
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
|
|
September
30,
|
|
September
30,
|
|
2022
|
|
|
2021
|
|
%
change
|
|
2022
|
|
|
2021
|
|
%
change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from insurance
products (b)
|
$
0.49
|
|
|
$
0.64
|
|
(23)
|
|
$ 56.8
|
|
|
$ 83.1
|
|
(32)
|
Fee income
|
0.01
|
|
|
0.02
|
|
(50)
|
|
1.4
|
|
|
2.6
|
|
(46)
|
Investment income not
allocated to product lines (c)
|
0.28
|
|
|
0.40
|
|
(30)
|
|
32.2
|
|
|
50.9
|
|
(37)
|
Expenses not allocated
to product lines (d)
|
(0.14)
|
|
|
(0.13)
|
|
8
|
|
(16.1)
|
|
|
(17.3)
|
|
(7)
|
Operating earnings
before taxes
|
0.64
|
|
|
0.93
|
|
|
|
74.3
|
|
|
119.3
|
|
|
Income tax expense on
operating income
|
(0.15)
|
|
|
(0.21)
|
|
(29)
|
|
(17.4)
|
|
|
(26.5)
|
|
(34)
|
Net operating income
(1)
|
0.49
|
|
|
0.72
|
|
(32)
|
|
56.9
|
|
|
92.8
|
|
(39)
|
Net realized investment
gains (losses) from sales
and change in allowance for credit losses (net of related
amortization)
|
—
|
|
|
0.02
|
|
|
|
(0.1)
|
|
|
2.2
|
|
|
Net change in market
value of investments recognized in earnings
|
(0.15)
|
|
|
(0.04)
|
|
|
|
(17.0)
|
|
|
(4.6)
|
|
|
Fair value changes in
embedded derivative liabilities
(net of related amortization)
|
0.57
|
|
|
0.09
|
|
|
|
66.0
|
|
|
10.9
|
|
|
Other
|
0.12
|
|
|
—
|
|
|
|
14.0
|
|
|
0.2
|
|
|
Non-operating income
before taxes
|
0.54
|
|
|
0.07
|
|
|
|
62.9
|
|
|
8.7
|
|
|
Income tax expense on
non-operating income
|
(0.12)
|
|
|
(0.02)
|
|
|
|
(14.8)
|
|
|
(1.7)
|
|
|
Net non-operating
income
|
0.42
|
|
|
0.05
|
|
|
|
48.1
|
|
|
7.0
|
|
|
Net
income
|
$
0.91
|
|
|
$
0.77
|
|
|
|
$ 105.0
|
|
|
$
99.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted shares outstanding
|
115.9
|
|
|
129.0
|
|
|
|
|
|
|
|
|
|
|
|
(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, investment
income not allocated to product lines, expenses not allocated to
product lines 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; (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.
|
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
|
|
September
30,
|
|
2022
|
|
2021
|
|
|
|
|
Trailing twelve months
return on equity (a)
|
13.0 %
|
|
8.4 %
|
Trailing twelve months
operating return on equity, excluding accumulated other
comprehensive income (loss)
and net operating loss carryforwards (a non-GAAP financial measure)
(6)
|
10.2 %
|
|
11.5 %
|
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)
|
9.0 %
|
|
11.6 %
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
$ 1,297.9
|
|
$
5,232.9
|
Accumulated other
comprehensive (income) loss
|
2,165.7
|
|
(1,929.7)
|
|
|
|
|
Shareholders' equity,
excluding accumulated other comprehensive income (loss)
|
3,463.6
|
|
3,303.2
|
Net operating loss
carryforwards
|
(190.9)
|
|
(266.9)
|
Shareholders' equity,
excluding accumulated other comprehensive income (loss) and net
operating loss
carryforwards
|
$ 3,272.7
|
|
$
3,036.3
|
|
|
|
|
Book value per diluted
share
|
$
11.19
|
|
$
41.23
|
Accumulated other
comprehensive (income) loss
|
18.68
|
|
(15.20)
|
|
|
|
|
Book value per diluted
share, excluding accumulated other comprehensive income (loss) (a
non-GAAP
financial measure) (2)
|
$
29.87
|
|
$
26.03
|
|
|
(a)
|
Calculated using
average shareholders' equity for the measurement period.
|
INSURANCE OPERATIONS
Annuity products accounted for 19 percent of the Company's
margin for the quarter.
Annuity premiums collected increased 11 percent and annuity
account values increased 7 percent in 3Q22 compared to 3Q21.
Health products accounted for 60 percent of the Company's
insurance margin for the quarter and 65 percent of insurance policy
income.
Life products accounted for 21 percent of the Company's
insurance margin for the quarter and 34 percent of insurance policy
income.
Sales of health products were up 8 percent and sales of life
products were down slightly in 3Q22 compared to 3Q21.
ANNUITY COLLECTED
PREMIUMS
(Dollars in
millions)
(Unaudited)
|
|
|
Quarter ended
September 30,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Annuity collected
premiums
|
$
370.0
|
|
$
333.3
|
|
11
|
INSURANCE POLICY
INCOME
(Dollars in
millions)
(Unaudited)
|
|
|
Quarter ended
September 30,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Annuity
|
$
6.3
|
|
$
5.8
|
|
9
|
Health
|
403.5
|
|
414.4
|
|
(3)
|
Life
|
213.4
|
|
210.4
|
|
1
|
Total insurance
policy income
|
$
623.2
|
|
$
630.6
|
|
(1)
|
SALES MEASURED AS
NEW ANNUALIZED PREMIUMS FOR
LIFE AND HEALTH
PRODUCTS
(Dollars in
millions)
(Unaudited)
|
|
|
Quarter ended
September 30,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Health
|
$
42.2
|
|
$
39.2
|
|
8
|
Life
|
45.1
|
|
45.4
|
|
(1)
|
Total new
annualized premiums (4)
|
$
87.3
|
|
$
84.6
|
|
3
|
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
|
|
September
30,
2022
|
|
% of
insurance
policy
income
|
|
|
September
30,
2021
|
|
% of
insurance
policy
income
|
|
%
change
|
Margin
|
|
|
|
|
|
|
|
|
|
|
Annuity interest
margin
|
$
39.8
|
|
|
|
|
$
52.5
|
|
|
|
(24)
|
Life insurance
interest margin
|
1.0
|
|
|
|
|
1.7
|
|
|
|
(41)
|
Total
interest-sensitive margin
|
40.8
|
|
|
|
|
54.2
|
|
|
|
(25)
|
Insurance
margin
|
|
|
|
|
|
|
|
|
|
|
Health
|
124.1
|
|
31
|
|
|
117.9
|
|
28
|
|
5
|
Life (a)
|
42.4
|
|
20
|
|
|
51.5
|
|
24
|
|
(18)
|
Total other insurance
margin
|
166.5
|
|
27
|
|
|
169.4
|
|
27
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
Total insurance
margin
|
207.3
|
|
|
|
|
223.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocated
expenses
|
(150.5)
|
|
|
|
|
(140.5)
|
|
|
|
|
Income from
insurance products
|
$
56.8
|
|
|
|
|
$
83.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted
share
|
$
0.49
|
|
|
|
|
$
0.64
|
|
|
|
|
Weighted average
diluted shares
|
115.9
|
|
|
|
|
129.0
|
|
|
|
|
|
|
(a)
|
Net of $22.1 million
and $19.7 million of non-deferred television advertising expense
related to our direct distribution channel in the 2022 and 2021
periods, respectively.
|
Total allocated expenses were $150.5
million, up 7 percent from the year-ago quarter.
Total insurance margins were favorably impacted by approximately
$22 million and $23 million in the quarters ended September 30, 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
|
|
September
30,
|
|
2022
|
|
2021
|
Fixed index
annuities
|
$
29.3
|
|
$
42.4
|
Fixed interest
annuities
|
7.8
|
|
8.6
|
Other
annuities
|
2.7
|
|
1.5
|
Total
|
$
39.8
|
|
$
52.5
|
Annuity collected
premiums
|
|
Quarter
ended
|
|
September
30,
|
|
2022
|
|
2021
|
Annuity collected
premiums
|
$
370.0
|
|
$
333.3
|
Average net
insurance liabilities (5)
|
|
Quarter
ended
|
|
September
30,
|
|
2022
|
|
2021
|
Fixed index
annuities
|
$
8,555.6
|
|
$
7,881.9
|
Fixed interest
annuities
|
1,677.4
|
|
1,856.3
|
Other
annuities
|
476.3
|
|
501.6
|
Total
|
$ 10,709.3
|
|
$ 10,239.8
|
Margin/average net
insurance liabilities (a)
|
|
Quarter
ended
|
|
September
30,
|
|
2022
|
|
2021
|
Fixed index
annuities
|
1.37 %
|
|
2.15 %
|
Fixed interest
annuities
|
1.86 %
|
|
1.85 %
|
Other
annuities
|
2.27 %
|
|
1.20 %
|
Total
|
1.49 %
|
|
2.05 %
|
|
|
(a)
|
Defined as annualized
quarterly annuity margin divided by average net insurance
liabilities (5).
|
Total annuity margins were favorably impacted by approximately
$1 million and $1 million in the quarters ended September 30, 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
|
|
September
30,
|
|
2022
|
|
2021
|
|
|
|
Amount
|
|
% of
insurance
policy
income
|
|
Amount
|
|
% of
insurance
policy
income
|
|
%
change
|
Supplemental health
and other health
|
$
63.3
|
|
36
|
|
$
50.9
|
|
30
|
|
24
|
Medicare
supplement
|
38.2
|
|
23
|
|
37.3
|
|
21
|
|
2
|
Long-term
care
|
22.6
|
|
23
|
|
29.7
|
|
45
|
|
(24)
|
Total
|
$
124.1
|
|
31
|
|
$
117.9
|
|
28
|
|
5
|
Health insurance
policy income
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Supplemental health
and other health
|
$
173.5
|
|
$
171.2
|
|
1
|
Medicare
supplement
|
163.6
|
|
177.4
|
|
(8)
|
Long-term
care
|
66.4
|
|
65.8
|
|
1
|
Total
|
$
403.5
|
|
$
414.4
|
|
(3)
|
Health NAP
(4)
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Supplemental health
and other health
|
$
28.2
|
|
$
22.4
|
|
26
|
Medicare
supplement
|
8.0
|
|
8.0
|
|
—
|
Long-term
care
|
6.0
|
|
8.8
|
|
(32)
|
Total
|
$
42.2
|
|
$
39.2
|
|
8
|
Total health margins were favorably impacted by approximately
$26 million and $25 million in the quarters ended September 30, 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
|
|
|
|
September
30,
|
|
|
|
2022
|
|
2021
|
|
|
|
Amount
|
|
% of
insurance
policy
income
|
|
Amount
|
|
% of
insurance
policy
income
|
|
%
change
|
Life insurance
interest margin
|
$
1.0
|
|
|
|
$
1.7
|
|
|
|
(41)
|
Life insurance
margin:
|
|
|
|
|
|
|
|
|
|
Traditional
life
|
27.1
|
|
16
|
|
33.2
|
|
20
|
|
(18)
|
Interest sensitive
life
|
15.3
|
|
35
|
|
18.3
|
|
43
|
|
(16)
|
Subtotal
|
42.4
|
|
20
|
|
51.5
|
|
24
|
|
(18)
|
Total
margin
|
$
43.4
|
|
|
|
$
53.2
|
|
|
|
(18)
|
Life insurance
policy income
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Traditional
life
|
$
169.9
|
|
$
168.1
|
|
1
|
Interest sensitive
life
|
43.5
|
|
42.3
|
|
3
|
Total
|
$
213.4
|
|
$
210.4
|
|
1
|
Life NAP
(4)
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Traditional
life
|
$
38.2
|
|
$
38.2
|
|
—
|
Interest sensitive
life
|
6.9
|
|
7.2
|
|
(4)
|
Total
|
$
45.1
|
|
$
45.4
|
|
(1)
|
Average net
insurance liabilities (5) and interest margin
|
|
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Interest sensitive
life products
|
$
1,025.0
|
|
$ 983.8
|
|
4
|
Interest
margin/average net insurance liabilities (5)
|
0.39 %
|
|
0.69 %
|
|
(43)
|
Total life margins were unfavorably impacted by approximately
$5 million and $3 million in the quarters ended September 30, 2022 and 2021, respectively, due to
the estimated impacts of COVID-19.
QUARTERLY AVERAGE
EXCLUSIVE PRODUCING AGENTS
|
|
|
Average Exclusive
Producing Agent Count
|
|
Quarter
ended
|
|
|
|
September
30,
|
|
%
|
|
2022
|
|
2021
|
|
change
|
Consumer
|
|
|
|
|
|
Field agents (a)
(c)
|
3,913
|
|
4,168
|
|
(6)
|
Tele-sales
agents
|
184
|
|
235
|
|
(22)
|
Total
agents
|
4,097
|
|
4,403
|
|
(7)
|
Registered agents (b)
(c)
|
688
|
|
646
|
|
7
|
Worksite (a)
(c)
|
258
|
|
229
|
|
13
|
____________________
(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: (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; (iv) expenses related to the
FABN program; and (v) certain expenses related to benefit plans
that are offset by special-purpose investment income. 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
September 30,
|
|
|
|
2022
|
|
2021
|
|
%
change
|
Net investment
income
|
$
268.1
|
|
$
308.2
|
|
(13)
|
Allocated to product
lines:
|
|
|
|
|
|
Annuity
|
(117.3)
|
|
(115.5)
|
|
2
|
Health
|
(71.9)
|
|
(72.2)
|
|
—
|
Life
|
(36.6)
|
|
(36.4)
|
|
1
|
Equity returns credited
to policyholder account balances
|
34.9
|
|
(7.2)
|
|
(585)
|
Amounts allocated to
product lines and credited to policyholder account
balances
|
(190.9)
|
|
(231.3)
|
|
(17)
|
Amount related to
variable interest entities and other non-operating items
|
(13.6)
|
|
(7.1)
|
|
92
|
Interest expense on
corporate debt
|
(15.6)
|
|
(15.6)
|
|
—
|
Interest expense on
investment borrowings from the Federal Home Loan Bank
program
|
(10.3)
|
|
(2.3)
|
|
348
|
Expenses related to
FABN program
|
(7.5)
|
|
—
|
|
n/m
|
Less amounts credited
to deferred compensation plans (offsetting investment
income)
|
2.0
|
|
(1.0)
|
|
(300)
|
Total
adjustments
|
(45.0)
|
|
(26.0)
|
|
|
Investment income
not allocated to product lines
|
$
32.2
|
|
$
50.9
|
|
(37)
|
|
|
|
|
|
|
Per diluted
share
|
$
0.28
|
|
$
0.40
|
|
|
INVESTMENT
PORTFOLIO
(Dollars in
millions)
|
|
The composition of the
investment portfolio at September 30, 2022 is as
follows:
|
|
|
$
|
|
% of
total
|
Fixed maturities,
available for sale, at fair value
|
$ 20,301.1
|
|
84
|
Equity securities at
fair value
|
135.8
|
|
1
|
Mortgage
loans
|
1,227.3
|
|
5
|
Policy loans
|
120.2
|
|
—
|
Trading
securities
|
223.3
|
|
1
|
Investments held by
variable interest entities
|
1,099.2
|
|
5
|
Other invested
assets
|
1,028.6
|
|
4
|
Total investment
portfolio
|
$ 24,135.5
|
|
100
|
Fixed maturities,
available for sale, at amortized cost by asset class as of
September 30, 2022 are as follows:
|
|
|
Investment
grade
|
|
Below
investment
grade
|
|
Total
|
Corporate
securities
|
$ 13,242.8
|
|
$
699.4
|
|
$ 13,942.2
|
United States Treasury
securities and obligations of the United States government and
agencies
|
169.5
|
|
—
|
|
169.5
|
States and political
subdivisions
|
2,807.2
|
|
11.6
|
|
2,818.8
|
Foreign
governments
|
84.5
|
|
—
|
|
84.5
|
Asset-backed
securities
|
1,266.5
|
|
135.5
|
|
1,402.0
|
Agency residential
mortgage-backed securities
|
39.0
|
|
—
|
|
39.0
|
Non-agency residential
mortgage-backed securities
|
1,168.2
|
|
587.3
|
(a)
|
1,755.5
|
Collateralized loan
obligations
|
778.3
|
|
—
|
|
778.3
|
Commercial
mortgage-backed securities
|
2,368.6
|
|
84.1
|
|
2,452.7
|
|
|
|
|
|
|
Total
|
$ 21,924.6
|
|
$
1,517.9
|
|
$ 23,442.5
|
____________________
(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 $20.3 billion compared
with an amortized cost of $23.4
billion. Net unrealized losses were comprised of gross
unrealized gains of $94.0 million and
gross unrealized losses of $3,183.4
million. The allowance for credit losses was
$52.0 million at September 30, 2022.
At amortized cost and fair value, 94 percent and 93 percent of
fixed maturities, available for sale, were rated "investment
grade", respectively.
Non-Operating Items
Net investment losses in 3Q22 were $.1
million (net of related amortization) including the
favorable change in the allowance for credit losses of $7.5 million which was recorded in
earnings. Net investment gains in 3Q21 were $2.2 million (net of related amortization)
including the unfavorable change in the allowance for credit losses
of $1.4 million which was recorded in
earnings.
During 3Q22 and 3Q21, we recognized a decrease in earnings of
$17.0 million and $4.6 million, respectively, due to the net change
in market value of investments recognized in earnings.
During 3Q22 and 3Q21, we recognized an increase in earnings of
$66.0 million and $10.9 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 3Q22, other non-operating items included an increase in
earnings of $12.0 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.
Statutory (based on non-GAAP measures) and GAAP Capital
Information
Our consolidated statutory risk-based capital ratio was
estimated at 375% at September 30,
2022, reflecting estimated 3Q22 statutory operating income
of $65 million (and $189 million in the first nine months of 2022)
and the payment of insurance company dividends to the holding
company of $11.0 million during 3Q22
(and $95.0 million, net of capital
contributions, in the first nine months of 2022).
During the third quarter of 2022, we repurchased $10.0 million of common stock under our
securities repurchase program. We repurchased .6 million
common shares at an average cost of $17.84 per share. As of September 30, 2022, we had 114.4 million shares
outstanding and had authority to repurchase up to an additional
$196.9 million of our common
stock. During 3Q22, dividends paid on common stock totaled
$16.1 million.
Unrestricted cash and investments held by our holding company
were $162 million at September 30, 2022, compared to $249 million at December
31, 2021.
Book value per common share was $11.35 at September 30,
2022 compared to $43.69 at
December 31, 2021. Book value per diluted share,
excluding accumulated other comprehensive income (loss) (2), was
$29.87 at September 30, 2022, compared to $26.86 at December
31, 2021.
The debt-to-capital ratio was 46.7 percent and 17.8 percent at
September 30, 2022 and December 31, 2021, respectively. Our
debt-to-total capital ratio, excluding accumulated other
comprehensive income (loss) (3) was 24.7 percent at September 30, 2022, compared to 25.6 percent at
December 31, 2021.
Return on equity for the trailing four quarters ended
September 30, 2022 and 2021, was
13.0% and 8.4%, respectively. Operating return, excluding
significant items, on equity, excluding accumulated other
comprehensive income (loss) and net operating loss carryforwards
(6) for the trailing four quarters ended September 30, 2022 and 2021, was 9.0% and 11.6%,
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
November 1, 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
https://www.netroadshow.com/events/login?show=95f5bc7a&confld=43374.
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 $33 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)
|
|
|
September
30,
2022
|
|
December 31,
2021
|
ASSETS
|
|
|
|
Investments:
|
|
|
|
Fixed maturities,
available for sale, at fair value (net of allowance for credit
losses:
September 30, 2022 - $52.0 and December 31, 2021 - $7.6;
amortized cost: September 30,
2022 - $23,442.5 and December 31, 2021 - $21,867.6)
|
$
20,301.1
|
|
$
24,805.4
|
Equity securities at
fair value
|
135.8
|
|
131.1
|
Mortgage loans (net of
allowance for credit losses: September 30, 2022 - $5.3 and
December 31, 2021 - $5.6)
|
1,227.3
|
|
1,218.6
|
Policy
loans
|
120.2
|
|
120.2
|
Trading
securities
|
223.3
|
|
227.2
|
Investments held by
variable interest entities (net of allowance for credit losses:
September 30,
2022 - $6.5 and December 31, 2021 - $3.7; amortized cost:
September 30, 2022 - $1,166.7 and
December 31, 2021 - $1,206.8)
|
1,099.2
|
|
1,199.6
|
Other invested
assets
|
1,028.6
|
|
1,224.0
|
Total
investments
|
24,135.5
|
|
28,926.1
|
Cash and cash
equivalents - unrestricted
|
498.0
|
|
632.1
|
Cash and cash
equivalents held by variable interest entities
|
55.5
|
|
99.6
|
Accrued investment
income
|
236.0
|
|
216.4
|
Present value of future
profits
|
218.9
|
|
222.6
|
Deferred acquisition
costs
|
1,886.4
|
|
1,112.0
|
Reinsurance receivables
(net of allowance for credit losses: September 30, 2022 - $2.0
and
December 31, 2021 - $3.0)
|
4,271.9
|
|
4,354.3
|
Income tax assets,
net
|
1,180.2
|
|
118.3
|
Assets held in separate
accounts
|
2.7
|
|
3.9
|
Other assets
|
552.2
|
|
519.1
|
Total
assets
|
$
33,037.3
|
|
$
36,204.4
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Liabilities:
|
|
|
|
Liabilities for
insurance products:
|
|
|
|
Policyholder account
liabilities
|
$
14,653.7
|
|
$
13,689.7
|
Future policy
benefits
|
11,747.5
|
|
11,670.7
|
Liability for policy
and contract claims
|
454.3
|
|
501.8
|
Unearned and advanced
premiums
|
238.2
|
|
246.7
|
Liabilities related to
separate accounts
|
2.7
|
|
3.9
|
Other
liabilities
|
749.4
|
|
830.9
|
Investment
borrowings
|
1,639.9
|
|
1,715.8
|
Borrowings related to
variable interest entities
|
1,115.3
|
|
1,147.9
|
Notes payable – direct
corporate obligations
|
1,138.4
|
|
1,137.3
|
Total
liabilities
|
31,739.4
|
|
30,944.7
|
Commitments and
Contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common stock ($0.01 par
value, 8,000,000,000 shares authorized, shares issued and
outstanding: September 30, 2022 – 114,367,345;
December 31, 2021 – 120,377,152)
|
1.1
|
|
1.2
|
Additional paid-in
capital
|
2,030.6
|
|
2,184.2
|
Accumulated other
comprehensive income (loss)
|
(2,165.7)
|
|
1,947.1
|
Retained
earnings
|
1,431.9
|
|
1,127.2
|
Total shareholders'
equity
|
1,297.9
|
|
5,259.7
|
Total liabilities and
shareholders' equity
|
$
33,037.3
|
|
$
36,204.4
|
CNO FINANCIAL GROUP,
INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF OPERATIONS
(Dollars in millions,
except per share data)
(unaudited)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenues:
|
|
|
|
|
|
|
|
Insurance policy
income
|
$
623.2
|
|
$
630.6
|
|
$
1,873.8
|
|
$
1,893.5
|
Net investment
income:
|
|
|
|
|
|
|
|
General account
assets
|
289.0
|
|
289.5
|
|
884.2
|
|
854.3
|
Policyholder and other
special-purpose portfolios
|
(20.9)
|
|
18.7
|
|
(184.0)
|
|
171.3
|
Investment gains
(losses):
|
|
|
|
|
|
|
|
Realized investment
gains (losses)
|
(8.2)
|
|
3.7
|
|
3.6
|
|
14.8
|
Other investment gains
(losses)
|
(9.5)
|
|
(6.0)
|
|
(102.8)
|
|
11.4
|
Total investment gains
(losses)
|
(17.7)
|
|
(2.3)
|
|
(99.2)
|
|
26.2
|
Fee revenue and other
income
|
31.7
|
|
31.8
|
|
128.4
|
|
102.1
|
Total
revenues
|
905.3
|
|
968.3
|
|
2,603.2
|
|
3,047.4
|
Benefits and
expenses:
|
|
|
|
|
|
|
|
Insurance policy
benefits
|
412.2
|
|
524.8
|
|
1,099.1
|
|
1,641.3
|
Interest
expense
|
37.6
|
|
23.7
|
|
89.2
|
|
71.8
|
Amortization
|
87.5
|
|
57.9
|
|
279.5
|
|
200.2
|
Other operating costs
and expenses
|
230.8
|
|
233.9
|
|
673.5
|
|
714.5
|
Total benefits and
expenses
|
768.1
|
|
840.3
|
|
2,141.3
|
|
2,627.8
|
Income before income
taxes
|
137.2
|
|
128.0
|
|
461.9
|
|
419.6
|
Income tax expense on
period income
|
32.2
|
|
28.2
|
|
108.5
|
|
94.4
|
Net income
|
$
105.0
|
|
$
99.8
|
|
$
353.4
|
|
$
325.2
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
114,354,000
|
|
126,429,000
|
|
116,170,000
|
|
130,528,000
|
Net income
|
$
.92
|
|
$
.79
|
|
$
3.04
|
|
$
2.49
|
Diluted:
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
115,928,000
|
|
129,018,000
|
|
118,072,000
|
|
133,162,000
|
Net income
|
$
.91
|
|
$
.77
|
|
$
2.99
|
|
$
2.44
|
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
|
|
|
|
3Q22
|
|
3Q21
|
Net operating
income
|
$
316.6
|
|
$ 343.1
|
|
|
|
|
|
|
Net operating income,
excluding significant items
|
$
279.0
|
|
$ 348.6
|
|
|
|
|
|
|
Net income
|
$
469.2
|
|
$ 437.0
|
|
|
|
|
|
|
Average common equity,
excluding accumulated other
|
|
|
|
|
comprehensive income
(loss) and net operating loss
|
|
|
|
|
carryforwards (a
non-GAAP financial measure)
|
$ 3,114.5
|
|
$
2,995.5
|
|
|
|
|
|
|
Average common
shareholders' equity
|
$ 3,607.0
|
|
$
5,206.8
|
|
|
|
|
|
|
Operating return on
equity, excluding accumulated other
|
|
|
|
|
comprehensive income
(loss) and net operating loss
|
|
|
|
|
carryforwards (a
non-GAAP financial measure)
|
10.2 %
|
|
11.5 %
|
|
|
|
|
|
|
Operating return,
excluding significant items, on equity, excluding
|
|
|
|
|
accumulated other
comprehensive income (loss) and net
|
|
|
|
|
operating loss
carryforwards (a non-GAAP financial measure)
|
9.0 %
|
|
11.6 %
|
|
|
|
|
|
|
Return on
equity
|
13.0 %
|
|
8.4 %
|
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
|
4Q20
|
|
$
86.0
|
|
$
(6.4)
|
(b)
|
$
79.6
|
|
$
338.2
|
|
$
111.8
|
|
$
301.8
|
1Q21
|
|
75.2
|
|
6.1
|
(c)
|
81.3
|
|
335.2
|
|
147.4
|
|
470.4
|
2Q21
|
|
89.1
|
|
3.5
|
(d)
|
92.6
|
|
366.1
|
|
78.0
|
|
466.4
|
3Q21
|
|
92.8
|
|
2.3
|
(e)
|
95.1
|
|
348.6
|
|
99.8
|
|
437.0
|
4Q21
|
|
108.5
|
|
(20.2)
|
(f)
|
88.3
|
|
357.3
|
|
115.8
|
|
441.0
|
1Q22
|
|
51.1
|
|
—
|
|
51.1
|
|
327.1
|
|
112.3
|
|
405.9
|
2Q22
|
|
100.1
|
|
(17.4)
|
(g)
|
82.7
|
|
317.2
|
|
136.1
|
|
464.0
|
3Q22
|
|
56.9
|
|
—
|
|
56.9
|
|
279.0
|
|
105.0
|
|
469.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
See note (7) for
additional information.
|
(b)
|
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.
|
(c)
|
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 Optavise, LLC ("Optavise", formerly known
as DirectPath, LLC prior to its name change in April 2022); and
(iii) a decrease in tax expense of $1.7 million.
|
(d)
|
Comprised of: (i) $4.5
million from legal and regulatory matters; and (ii) a decrease in
tax expense of $1.0 million.
|
(e)
|
Comprised of: (i) $3.0
million from legal and regulatory matters; and (ii) a decrease in
tax expense of $.7 million.
|
(f)
|
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.
|
(g)
|
Comprised of: (i) an
experience refund of $22.5 million related to a reinsurance
agreement; and (ii) an increase in tax expense of $5.1
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
|
|
|
|
3Q22
|
|
3Q21
|
Pre-tax operating
earnings (a non-GAAP financial measure)
|
$
410.8
|
|
$
442.6
|
Income tax
expense
|
(94.2)
|
|
(99.5)
|
Net operating
income
|
316.6
|
|
343.1
|
Non-operating
items:
|
|
|
|
Net realized
investment gains (losses) from sales, impairments and change in
allowance for
credit losses, net of related amortization
|
(28.6)
|
|
42.7
|
Net change in market
value of investments recognized in earnings
|
(76.3)
|
|
0.7
|
Fair value changes in
embedded derivative liabilities, net of related
amortization
|
255.6
|
|
64.4
|
Fair value changes
related to the agent deferred compensation plan
|
44.4
|
|
10.1
|
Other
|
4.1
|
|
2.6
|
Non-operating income
before taxes
|
199.2
|
|
120.5
|
Income tax expense on non-operating income
|
(46.6)
|
|
(26.6)
|
Net non-operating
income
|
152.6
|
|
93.9
|
Net income
|
$
469.2
|
|
$
437.0
|
|
|
|
|
|
|
|
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
|
|
2Q22
|
|
3Q22
|
|
|
Consolidated capital,
excluding accumulated other comprehensive
|
|
|
|
|
|
|
|
|
income (loss) and net
operating loss carryforwards
|
|
|
|
|
|
|
|
|
(a non-GAAP financial
measure)
|
$
3,072.2
|
|
$
3,162.3
|
|
$
3,272.7
|
|
|
Net operating loss
carryforwards
|
238.2
|
|
214.7
|
|
190.9
|
|
|
Accumulated other
comprehensive income (loss)
|
380.5
|
|
(1,165.0)
|
|
(2,165.7)
|
|
|
Common shareholders'
equity
|
$
3,690.9
|
|
$
2,212.0
|
|
$
1,297.9
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
3Q22
|
|
3Q21
|
Consolidated capital,
excluding accumulated other comprehensive
|
|
|
|
|
income (loss) and net
operating loss carryforwards
|
|
|
|
|
(a non-GAAP financial
measure)
|
$
3,114.5
|
|
$
2,995.5
|
Net operating loss
carryforwards
|
231.4
|
|
320.0
|
Accumulated other
comprehensive income
|
261.1
|
|
1,891.3
|
Common shareholders'
equity
|
$
3,607.0
|
|
$
5,206.8
|
(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
|
|
|
June 30,
2022
|
|
|
Actual
results
|
|
Significant
items
|
|
Excluding
significant
items
|
Insurance product
margin
|
|
|
|
|
|
|
Annuity
margin
|
|
$
37.1
|
|
$
—
|
|
$
37.1
|
Health
margin
|
|
113.4
|
|
—
|
|
113.4
|
Life margin
|
|
56.8
|
|
—
|
|
56.8
|
Total insurance product
margin
|
|
207.3
|
|
—
|
|
207.3
|
Allocated
expenses
|
|
(152.2)
|
|
—
|
|
(152.2)
|
Income from insurance
products
|
|
55.1
|
|
—
|
|
55.1
|
Fee income
|
|
3.2
|
|
—
|
|
3.2
|
Investment income not
allocated to product lines
|
|
68.5
|
|
—
|
|
68.5
|
Expenses not allocated
to product lines
|
|
2.9
|
|
(22.5)
|
(a)
|
(19.6)
|
Operating earnings
before taxes
|
|
129.7
|
|
(22.5)
|
|
107.2
|
Income tax (expense)
benefit on operating income
|
|
(29.6)
|
|
5.1
|
|
(24.5)
|
Net operating
income
|
|
$
100.1
|
|
$
(17.4)
|
|
$
82.7
|
|
|
|
|
|
|
|
Net operating income
per diluted share
|
|
$
0.85
|
|
$
(0.14)
|
|
$
0.71
|
___________
(a)
|
Comprised of an
experience refund of $22.5 million related to a reinsurance
agreement.
|
|
|
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 Optavise. 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.
|
View original
content:https://www.prnewswire.com/news-releases/cno-financial-group-reports-third-quarter-2022-results-301663679.html
SOURCE CNO Financial Group, Inc.