Cno Financial Group, Inc. · NYSE:CNO
Cno Financial — Q1 2025 Earnings Presentation
44 slides from Cno Financial's earnings presentation, Apr 29, 2025
Slide 1: First Quarter 2025
First Quarter 2025 Financial and operating results for the period ended March 31, 2025 April 28, 2025 Unless otherwise specified, comparisons in this presentation are between 1Q24 and 1Q25. 1
Slide 2: Important Legal Information
IMPORTANT LEGAL INFORMATION Forward-Looking Statements Certain statements made in this presentation should be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These include statements about future results of operations and capital plans. We ca
Slide 3: Our Purpose and Mission
OUR PURPOSE We secure the future of middle-income America. OUR MISSION We secure the future of middle-income America by providing insurance and financial services that help protect their health, income and retirement needs, while building enduring value for all our stakeholders. 3
Slide 4: Quarter in Review
QUARTER IN REVIEW Solid start to 2025; Reaffirm full-year 2025 and three-year ROE guidance Operational ▪ 11th consecutive quarter of strong sales momentum Highlights – Total new annualized premiums (NAP) up 1%; Total Health NAP up 9% – 11th consecutive quarter of growth in Total Health NAP – 8th con
Slide 5: Growth Scorecard
GROWTH SCORECARD Sustained and repeatable growth 2024 2025 Change 1Q 2Q 3Q 4Q FY 1Q vs 1Q24 1 New Annualized Premiums $104.5 $102.9 $99.4 $108.6 $415.4 $105.7 1.1% Consumer 91.5 87.4 83.5 91.0 353.4 91.3 -0.2% Worksite 13.0 15.5 15.9 17.6 62.0 14.4 10.8% PRODUCTION Annuity Collected Premiums $393.3
Slide 6: Consumer Division Update
CONSUMER DIVISION UPDATE 10th consecutive quarter of sustained growth Operational ▪ Annuity collected premiums up 12% Highlights ▪ Client assets in brokerage and advisory up 16% – New accounts up 13%; Average account size up 3% ▪ Life and Health NAP flat ▪ Health NAP up 9% – Supplemental Health up 8
Slide 7: Worksite Division Update
WORKSITE DIVISION UPDATE 12th consecutive quarter of NAP growth; Double-digit growth in 10 of last 12 quarters Operational ▪ Life and Health NAP up 11% Highlights – Critical Illness up 37% – Life up 17% – Accident up 4% ▪ NAP from new group clients up 134% Distribution ▪ PAC up 8%; 11th consecutive
Slide 8: Financial Highlights
FINANCIAL HIGHLIGHTS Operating EPS1 up 42% excluding significant items Earnings Results First Quarter 2025 $0.79 ▪ Operating EPS1 up 52% $0.74 ▪ Operating EPS1 excl. significant items up 42% Net operating $0.52 — Continued strength in insurance product margin earnings per share1 — NII allocated to p
Slide 9: Insurance Product Margin
INSURANCE PRODUCT MARGIN Underwriting margin remains strong Insurance Product Margin Excluding Significant Items1 Highlights 1Q24 2Q24 3Q24 4Q24 1Q25 Annuity margin ▪ Fixed Indexed Annuities – growth in the Annuity $52.0 $76.1 $54.9 $55.0 $54.5 block Fixed Indexed Annuities $43.4 $49.9 $42.8 $43.5 $
Slide 10: Investment Results
INVESTMENT RESULTS 11th consecutive quarter of growth in book yield and invested assets Investment Income Investment Income Not Total Net Allocated to Product Lines Allocated to Product Lines Investment Income1 $300.0 $298.7 $300.0 $300.0 $245.3 $260.7 $257.6 $200.0 $200.0 $200.0 $100.0 $100.0 $100.
Slide 11: Portfolio Composition
PORTFOLIO COMPOSITION Continued emphasis on quality and liquidity to weather volatility $29 Billion of Invested Assets1 Highlights ▪ High degree of liquidity: over 47% of portfolio in HY Corporates, 2.1% corporate and government bonds CMBS, 7.8% Municipals, 10.1% ▪ Strong credit risk profile Mortgag
Slide 12: Capital and Liquidity Overview
CAPITAL AND LIQUIDITY OVERVIEW Well positioned for wide range of macroeconomic conditions; Capital and liquidity remain above target levels Consolidated Risk Based Capital (RBC) Ratio1 384% 402% 383% 379% ◼ Target consolidated RBC ratio of approximately 375% ◼ RBC variability expected in periods of
Slide 13: 2025 Guidance
2025 GUIDANCE Reaffirm full-year 2025 and three-year ROE guidance Earnings ▪ Improve run rate operating ROE by 150 basis points through 2027 (off 2024 run rate of 10%) ▪ ~50 basis points of improvement in 2025 ▪ $3.70 - $3.90 operating EPS ▪ 19.0% – 19.4% expense ratio ▪ ~23% effective tax rate Free
Slide 14: Why Invest in CNO
WHY INVEST IN CNO 1 Exclusive focus on underserved middle-income market 2 Significant demographic tailwinds 3 Diverse and integrated "last mile" in-person and virtual model 4 Delivering growth while improving ROE 5 Strong balance sheet and robust free cash flow resilient against market events 6 Trac
Slide 15: Questions and Answers
Questions and Answers CNO FINANCIAL GROUP. 15
Slide 16: Appendix 1: Quarter in Review
Appendix 1: Quarter in Review ▪ Cash Flow Profile Slide 17 ▪ Broker-Dealer/Registered Investment Advisor Slide 18 ▪ Expense Ratio Slide 19 ▪ Levers To Drive Operating ROE Slide 20 ▪ Financial Results Seasonality Slide 21 ▪ New Money Summary Slide 22 ▪ Commercial Mortgage Loans Slide 23 ▪ Commercial
Slide 17: Cash Flow Profile
CASH FLOW PROFILE (dollars in millions) 1 Cash flows exclude acquisitions, dividend payments, stock repurchases, and financing transactions 17
Slide 18: Broker-Dealer/Registered Investment Advisor
BROKER-DEALER/REGISTERED INVESTMENT ADVISOR Account values up 16% YoY; $4 billion in client assets 2024 2025 1Q 2Q 3Q 4Q 1Q Net New Client Assets in Brokerage $ 10.5 $ 55.9 $ 36.6 $ 60.7 $ 60.7 1 Brokerage and Advisory Advisory 57.7 82.9 91.7 94.2 94.2 Total $ 68.2 $ 138.8 $ 128.3 $ 154.9 $ 154.9 Cl
Slide 19: Expense Ratio
EXPENSE RATIO1 2024 2025 1Q 2Q 3Q 4Q 1Q Allocated & Non Allocated Expenses $ 178.4 $ 172.1 $ 171.5 $ 165.1 $ 181.5 Allocated & Non Allocated Expenses - YTD 178.4 350.5 522.0 687.1 181.5 2 Significant Items $ - $ - $ 2.9 $ - $ - 2 Significant Items - YTD - - 2.9 2.9 - Allocated & Non Allocated Expens
Slide 20: Levers to Drive Operating ROE
LEVERS TO DRIVE OPERATING ROE Combination of top and bottom-line actions to improve Operating ROE over the long-term ▪ Accelerating brokerage and advisory growth Products ▪ Product introductions (both insurance and services) ▪ New business terms, processing and underwriting ▪ Optimize agent count an
Slide 21: Financial Results Seasonality
FINANCIAL RESULTS SEASONALITY 1Q 2Q 3Q 4Q Seasonally Medicare Supplement Margin highest claims and surrenders Seasonally Mortality highest mortality Traditionally Traditionally D2C Advertising highest advertising lowest advertising Fee Income* ~1/4 income Near breakeven Near breakeven ~3/4 income Ex
Slide 22: New Money Summary
NEW MONEY SUMMARY 1Q25 General Account New Money Purchases $ % GAAP YTM Duration IG Corp AAA-A 252.9 24.4% 5.70% 7.87 Alternatives 9.2% Residential Mortgage Loans 160.0 15.4% 6.37% 5.06 Rated Notes 155.6 15.0% 6.48% 7.12 ABS Municipals 8.6% IG Corp BBB Municipals 100.3 9.7% 5.89% 12.70 9.7% 7.4% Alt
Slide 23: Commercial Mortgage Loans
COMMERCIAL MORTGAGE LOANS Our CRE loan portfolio is conservatively margined Our CRE loan portfolio emphasizes lower risk sectors with cushion for adverse development Property Type Avg LTV 41.7% Apartment 47.1% Mixed Use Industrial $15.3 Industrial 42.0% $337.6 1% Mixed Use 41.3% 26% Office 55.3% Off
Slide 24: Commercial Mortgage-Backed Securities
COMMERCIAL MORTGAGE-BACKED SECURITIES Our CMBS allocation is highly rated - Our CMBS investments have significant structural 91% AAA/AA/A categories cushion for collateral losses % Loss Absorbing Subordination in BBB, BB, 4% 47% 4% A, Structure 11% 22% AA, 12% 13% AAA, 6% 68% <10 10-15 15-30 >30 The
Slide 25: Long-Term Care Insurance
LONG-TERM CARE INSURANCE Highly differentiated; prudently-managed in-force block New sales focused on short duration products ▪ Recent growth due to strong sales in LTC Fundamental product ▪ 99.9% of new sales for policies with 2 years or less in benefits ▪ Average benefit period of 13 months for po
Slide 26: Glossary of Terms and Definitions
GLOSSARY OF TERMS AND DEFINITIONS New Annualized Premiums - Measured as 100% of new life and health annualized premiums, except for single premium whole life deposits, which are measured at 10% of annualized premium. Fee Revenue - Represents fee revenue from the sales of third-party insurance produc
Slide 27: Tax Asset Summary as of March 31, 2025
TAX ASSET SUMMARY AS OF MARCH 31, 2025 $256 million / $2.51 per diluted share value of remaining NOLs Value of NOLs Details $256 ▪ Effective January 1, 2024, the Company changed its method of accounting for indirect costs allocable to self- constructed real estate assets. This tax method change will
Slide 28: Appendix 2: Financial Exhibits
Appendix 2: Financial Exhibits Non-GAAP Financial Measures Slides 29 - 44 28
Slide 29: 1Q25 Significant Items
1Q25 SIGNIFICANT ITEMS The table below summarizes the financial impact of significant items on our 1Q25 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. Three months ended March 31, 2025 Excluding significant Ac
Slide 30: 2024 Significant Items
2024 SIGNIFICANT ITEMS The table below summarizes the financial impact of significant items on our 2024 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. Year ended December 31, 2024 Excluding significant Actual
Slide 31: 4Q24 Significant Items
4Q24 SIGNIFICANT ITEMS The table below summarizes the financial impact of significant items on our 4Q24 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. Three months ended December 31, 2024 Excluding significant
Slide 32: 3Q24 Significant Items
3Q24 SIGNIFICANT ITEMS The table below summarizes the financial impact of significant items on our 3Q24 net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results. Three months ended September 30, 2024 Excluding Significan
Slide 33: Quarterly Earnings
QUARTERLY EARNINGS 1Q24 2Q24 3Q24 4Q24 1Q25 Insurance product margin Annuity $ 52.0 $ 76.1 $ 91.1 $ 55.0 $ 54.5 Health 123.0 135.9 127.8 130.1 126.2 Life 54.6 63.1 63.3 68.0 68.2 Total insurance product margin 229.6 275.1 282.2 253.1 248.9 Allocated expenses (161.6) (154.6) (153.0) (146.1) (161.2) I
Slide 34: Information Related to Certain Non-GAAP Financial Measures
INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES The following provides additional information regarding certain non-GAAP measures used in this presentation. A non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that excludes or includes am
Slide 35: Information Related to Certain Non-GAAP Financial Measures
INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES A reconciliation of net income applicable to common stock to net operating income (and related per-share amounts) is as follows: 1Q24 2Q24 3Q24 4Q24 1Q25 Net income applicable to common stock $ 112.3 $ 116.3 $ 9.3 $ 166.1 $ 13.7 Non-operatin
Slide 36: Information Related to Certain Non-GAAP Financial Measures
INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES A reconciliation of operating income and shares used to calculate basic and diluted operating earnings per share is as follows: 1Q24 2Q24 3Q24 4Q24 1Q25 Operating income $ 57.5 $ 114.6 $ 119.2 $ 138.0 $ 81.1 Weighted average shares outstandi
Slide 37: Information Related to Certain Non-GAAP Financial Measures
INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES Book value per diluted share Book value per diluted share reflects the potential dilution that could occur if outstanding stock options were exercised, restricted stock and performance units were vested, and convertible securities were conve
Slide 38: Information Related to Certain Non-GAAP Financial Measures
INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES Operating return measures Management believes that an analysis of net income applicable to common stock before: (i) net realized investment gains or losses from sales, impairments and change in allowance for credit losses, net of taxes; (ii)
Slide 39: Information Related to Certain Non-GAAP Financial Measures
INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES The calculations of: (i) Operating return on equity as adjusted to exclude accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure); (ii) Operating return, excluding significant items,
Slide 40: Information Related to Certain Non-GAAP Financial Measures
INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES The following summarizes: (i) operating earnings; (ii) significant items; (iii) operating earnings, excluding significant items; and (iv) net income (loss): Net operating Net operating income, income, excluding excluding significant Net inco
Slide 41: Information Related to Certain Non-GAAP Financial Measures
INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES 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 item, on equity, e
Slide 42: Information Related to Certain Non-GAAP Financial Measures
INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES 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: 1Q23 2Q23 3Q23 4Q23 Consolid
Slide 43: Information Related to Certain Non-GAAP Financial Measures
INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES 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: Trailing Four Quarter Averag
Slide 44: Information Related to Certain Non-GAAP Financial Measures
INFORMATION RELATED TO CERTAIN NON-GAAP FINANCIAL MEASURES Debt to capital ratio, excluding accumulated other comprehensive income (loss) The debt to capital ratio, excluding accumulated other comprehensive income (loss), differs from the debt to capital ratio because accumulated other comprehensive