CNO Financial Group ((CNO)) has held its Q3 earnings call. Read on for the main highlights of the call.
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CNO Financial Group’s recent earnings call painted a picture of robust growth and strategic adjustments. The overall sentiment was positive, with significant achievements in new annualized premiums and operating earnings per share. However, the company faced challenges, including the exit from the Worksite fee services business and a decline in Medicare Advantage sales.
Strong Quarterly Performance
CNO Financial Group reported a strong quarter, with record total new annualized premiums reaching $125 million, marking a 26% increase. Operating earnings per diluted share also saw a significant rise, up 16% to $1.29. These figures underscore the company’s solid financial performance and strategic execution.
Record Sales Growth in Consumer Division
The Consumer Division achieved its 12th consecutive quarter of sustained growth, with total life insurance sales up 33%. Notably, direct-to-consumer life insurance sales surged by 56%, highlighting the division’s strong market presence and effective sales strategies.
Worksite Division Insurance Sales
The Worksite Division continued its impressive trajectory with a 20% increase in Worksite Life and Health New Annualized Premiums (NAP), marking the seventh consecutive quarter of record NAP growth. Strategic growth initiatives played a crucial role, contributing to a 42% increase in NAP growth.
Continued Growth in Annuities and Advisory
CNO Financial’s annuity collected premiums grew by 2%, maintaining a nine-quarter growth streak. Additionally, client assets in brokerage and advisory increased by 28%, surpassing $5 billion, reflecting the company’s strong position in the financial advisory sector.
New Bermuda Treaty
The company executed a second Bermuda treaty, ceding approximately $1.8 billion of Supplemental Health U.S. statutory reserves. This strategic move is expected to improve operating ROE by 50 basis points through 2027, showcasing CNO’s proactive approach to financial management.
Exit from Worksite Fee Services Business
CNO decided to exit the Worksite fee services business, which had been underperforming and facing increased competition. This decision, which resulted in a pretax annual loss of approximately $20 million, reflects the company’s focus on optimizing its business portfolio.
Impairment Charges
The company recorded a $96.7 million impairment in non-operating income related to the goodwill and intangibles from the acquisitions of Web Benefit Design and DirectPath. This charge indicates a reassessment of the value of these acquisitions in light of current market conditions.
Challenges in Medicare Advantage Sales
Medicare Advantage sales faced a 24% decline, attributed to a shift in consumer preferences towards Medicare Supplement plans. This trend highlights the evolving landscape of consumer choices in the healthcare insurance market.
Forward-Looking Guidance
Looking ahead, CNO Financial Group remains optimistic, with expectations of continued growth in new annualized premiums and operating earnings per share. The company aims for a 50 basis point improvement in operating ROE through strategic initiatives like the Bermuda treaty. The Consumer Division is expected to maintain its strong performance, while the Worksite Division focuses on optimizing its offerings.
In summary, CNO Financial Group’s earnings call highlighted a quarter of strong growth and strategic realignments. Despite facing challenges in certain areas, the company demonstrated resilience and a forward-thinking approach, setting the stage for continued success in the coming quarters.