Q2 2025 CNO Financial Group Inc Earnings Call

Sammy: Thank you for joining the CNO Financial Group second quarter 2025 earnings. My name is Sammy, and I'll be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad to remove yourself from the question queue.

Hello everyone, and thank you for joining the CNO Financial Group. Second quarter 2025 earnings, call. My name is Sammy, and I'll be coordinating your call today.

during the presentation, you can register a question by pressing star, followed by 1 on your telephone keypad,

Adam Auvil: I would now like to hand over to your host, Adam Auvil, from CNO to begin.

If you change your mind, please press star followed by 2 on your telephone keypad, to remove yourself from a question queue.

Adam Auvil: Please go ahead, Adam.

I would now like to hand over to your host, Adam Orville from CNO, to begin. Please go ahead, Adam.

Gary Bhojwani: Good morning, and thank you for joining us on CNO Financial Group's second quarter 2025 earnings conference call. Today's presentation will include remarks from Gary Bhojwani, Chief Executive Officer, and Paul McDonough, Chief Financial Officer. Following the presentation, we will also have other business leaders available for the question and answer period. During this conference call, we will be referring to information contained in yesterday's press release. You can obtain the release by visiting the media section of our website at cnoinc.com. This morning's presentation is also available in the investors section of our website and was filed in a form 8K yesterday.

Good morning, and thank you for joining us on CNO. Financial Group, second quarter 2025 earnings conference call.

Today's presentation will include remarks from Gary Bhojwani, Chief Executive Officer, and Paul McDonough, Chief Financial Officer.

Following the presentation, we will also have other business leaders available for the question-and-answer period.

During this conference call, we will be referring to information contained in yesterday's press release.

You can obtain the release by visiting the media section of our website at CNOinc.com.

This morning's presentation is also available in the Investor section of our website and was filed in a Form 8-K yesterday.

Gary Bhojwani: Let me remind you that any forward-looking statements we make today are subject to a number of factors which may cause actual results to be materially different than those contemplated by the forward-looking statement. Today's presentation contains a number of non-GAAP measures, which should not be considered as substitutes for the most directly comparable GAAP measures. You'll find a reconciliation of the non-GATT measures to the corresponding GATT measures in the appendix. Throughout the presentation, we will be making performance comparisons, and unless otherwise specified, any comparisons made will refer to changes between second quarter 2025 and second quarter 2024.

Let me remind you that any forward-looking statements we make today are subject to a number of factors which may cause actual results to be materially different than those contemplated by the forward-looking statements.

Today's presentation contains a number of non-GAAP measures, which should not be considered as substitutes for the most directly comparable GAAP measures.

You'll find a Reconciliation of the non-gaap measures to the corresponding Gap. Measures in the appendix.

Gary Bhojwani: And with that, I'll turn the call over to Gary. Thanks, Adam. Good morning, everyone, and thank you for joining us. CNO delivered another strong quarter and we remain on track to achieve our 2025 and three-year return on equity improvement. We continue to deliver consistent, repeatable results that demonstrate the steady execution of our strategic plan and position us for sustained profitable growth. Our business fundamentals remain strong. Sales results in the quarter were excellent, including record total new annualized premiums of $120 million, up 17%. Double-digit insurance sales growth in both divisions. and multiple product line sales records.

Throughout the presentations, we will be making performance comparisons, and, unless otherwise specified, any comparisons made, will refer to changes between second quarter, 2025 and second quarter 2024.

And with that, I'll turn the call over to Gary.

Thanks, Adam. Good morning, everyone, and thank you for joining us.

CNO delivered, another strong quarter and we remain on track to achieve our 2025 and 3 year return on Equity. Improvements we continue to deliver consistent. Repeatable, results that demonstrate the steady execution of our strategic plan and position us for sustained profitable growth.

Our business fundamentals. Remain strong.

Sales results in the quarter were excellent, including record total new annualized premiums of $120 million, up 17%.

Double digits insurance sales, growth in both divisions.

Gary Bhojwani: We also delivered our 12th consecutive quarter of strong sales momentum and our 10th consecutive quarter of growth in producing agent I'll cover these results in more detail in each division's comments. Operating earnings per diluted share were $8,700. Earnings continue to benefit from favorable insurance product margin and solid investment results reflecting growth in the business and expansion of the portfolio book yield. New money rates have exceeded 6% for 10 consecutive quarters now while maintaining portfolio quality. Capital and Liquidity remain above target. We returned $117 million to shareholders in the quarter and $234 million year-to-date. Book value per diluted share, excluding AOCI, was $38.05, up 6%.

And multiple product line sales records.

Delivered, our 12th consecutive quarter of strong sales momentum and our 10th consecutive quarter of growth in producing age income.

I'll cover these results in more detail in each division's comments.

Operating earnings per diluted, share were 87 cents.

Earnings continue to benefit from favorable insurance product margins and solid investment results, reflecting growth in the business and expansion of the portfolio book.

New money rates have exceeded 6% for 10 consecutive quarters. Now, while maintaining portfolio quality.

Capital and liquidity remain above Target levels.

We returned 117 million dollars to shareholders in the quarter and 234 million year to date.

Gary Bhojwani: Paul will go into greater detail on our financial performance. Turning to slide five. All of our growth scorecard metrics were up for the quarter. As a reminder, our growth scorecard focuses on three key drivers of our performance. Production, Distribution, and Investments in Capital. I'll discuss each division in the next two slides.

Book value for diluted share, excluding, aoci was 38.05 up 6%.

Paul will go into greater detail on our financial performance.

Turning to slide 5.

For all of our growth scorecard metrics were up for the quarter as a reminder. Our G growth scorecard focuses on 3 key drivers of our performance.

Production.

Distribution.

And investments in capital.

Paul Mcdonough: Paul will cover investments and capital in more detail during his remarks.

I'll discuss each division in the next 2 slides.

Paul will cover Investments and capital in more detail during his remarks.

Gary Bhojwani: Beginning with the Consumer Division on slide. The Consumer Business delivered excellent sales results in our 11th consecutive quarter of sustained growth. Nearly all product lines were up by double. Steady execution and our focus on the underserved middle-income market drive our continued We build lasting relationships with our customers by combining a virtual connection with local agents who deliver the last mile sales and service. As I have shared throughout my tenure with CNO, this personal interaction that our agents maintain is especially valuable to our customers during times of economic uncertainty and market volatility. Annuity Collective Premiums hit a new record, surpassing $500 million for the first time in a single quarter, driven by 19% growth.

Beginning with the consumer division on slide 6.

The consumer business delivered, excellent sales results, and our 11th consecutive quarter of sustained growth.

Nearly all product lines were up by double digits.

Steady execution and our focus on the underserved middle income Market Drive, our continued growth.

We build lasting relationships with our customers, by combining a virtual connection with local agents, who deliver the last mile of sales and service.

Gary Bhojwani: This marks our eighth consecutive quarter of annuity. Average account size was up 11% and in-force account values were up 8%. Our captive distribution and the long term relationships that our agents establish with their clients adds stability to our new We delivered our ninth consecutive quarter of brokerage and advisory. Client assets in brokerage and advisory were up 27% to $4.6 million for the quarter, a new record. New accounts were up 13% and average account size was up 12%. When combined with our annuity account values, our clients now entrust us with more than $17 billion of their assets.

As I have shared throughout my tenure with CNO, this personal interaction, that our agents maintain is especially valuable to our customers during times of economic uncertainty and Market volatility. Annuity collected premiums hit a new record surpassing 500 million dollars for the first time in a single quarter driven by 19% growth.

This marks our eighth consecutive quarter of annuity growth.

Average account size was up 11%.

And enforce account values were up 8%.

Our captive distribution and long-term relationships that our agents established with their clients, add stability to our annuity block.

We delivered, our ninth consecutive quarter of brokerage and advisory growth.

Client Assets in brokerage and advisory were up 27% to 4.6 million for the quarter, a new record.

New accounts were up 13% and average account size was up, 12%.

Gary Bhojwani: up 13%. Sustained growth in brokerage and advisory and annuities reflects a critical, but largely unmet need within our markets to help protect them against outliving their retirement income. It has long been our position that middle-income consumers need and deserve access to professional guidance and retirement products. We consider it a great privilege to serve in this market.

When combined, with our annuity account values, are clients now and trust us with more than 17 billion dollars of their assets.

Up 13%.

Sustained growth in brokerage and advisory and annuities reflects a critical, but largely unmet need within our markets to help protect them against outliving, their retirement income.

And has long, been our position that middle income consumers, need, and deserve access to professional guidance and retirement products.

We consider it a great privilege to serve this market.

Gary Bhojwani: Life and Health Math posted double-digit growth in the quarter, up 17%. We are pleased with our life business results, including total life insurance up 20%. record direct-to-consumer life insurance sales up 29% and field agent sold life insurance up for As expected, our live production returned to growth this quarter as DTC lead volumes rebounded nicely. Our results also benefited from initiatives deployed over the last several years to proactively diversify our non-television direct marketing to include more digital, web, and third-party channels. Web and digital now account for over 30% of sales generated by D2C leads. up 39% year over year.

Life and health map posted double-digit growth in the quarter up 17%.

We are pleased with our life business results, including total life insurance up. 20%

Recorded direct-to-consumer life insurance sales were up 29%.

And field agents sold. Life insurance up 4%.

as expected our life for production returned to growth this quarter as D Toc lead volumes, rebounded, nicely,

our results also benefited from initiatives deployed over the last several years to proactively diversify, our non-t television direct marketing to include more digital

Web and third-party channels.

Web and digital now account for over 30% of sales generated by D.Toc leads.

Up. 39% year-over-year.

Gary Bhojwani: We also continue to experiment with select third-party partners to distribute our simplified-issue life products. Total Health NAP was up 13. As I shared last quarter, sustained growth in our health results underscores our strong customer demand for practical solutions to cover out-of-pocket gaps in medical coverage and safeguard against the growing cost of health. Supplemental health was up 21% and Medicare supplement was up 18%. Medicare Advantage policies sold were down in the quarter but are up 4% for the year. Medicare Advantage sales are not reflected in Recall that we manufacture Medicare supplement products and distribute Medicare Advantage policies for more than 20 third party carriers.

We also continue to experiment with select third-party partners to distribute our simplified issue life products.

Total Health nap was up, 13%.

Strong customer demand for practical solutions to cover, out-of-pocket gaps in medical coverage and Safeguard against the growing cost of healthcare.

Supplemental, health was up 21% and Medicare supplement was up 18%.

Medicare Advantage policies sold were down in the quarter, but are up 4% for the year.

Medicare Advantage Sales are not reflected in that.

Recall, that we manufacture Medicare supplement products and distribute Medicare Advantage policies for more than 20 thirds.

Gary Bhojwani: By offering both products, we can provide more coverage options for customers to choose from and respond immediately to shifts in the competitive landscape and healthcare preferences of our middle market. With more than 11,000 people in the U.S. turning 65 every day, demand for Medicare products is steady. Medicare is a year-round business for CNO and remains a flagship door-opening product for us to meet and serve more customers.

By offering both products, we can provide more coverage options for customers to choose from and respond immediately to shifts in the competitive landscape and Healthcare preferences of our Middle Market consumers.

With more than 11,000 people, in the US turning 65 every day. Demand for Medicare products is steady

Medicare is a year-round business for CNO and remains a flagship door opening product for us to meet

and serve more customers.

Gary Bhojwani: agent productivity and retention were strong in the quarter fueling our Producing agent count was up 3% marking our 10th consecutive quarter of growth. registered agent count also increased by six. Investments in technology continue to enable customer experience improvements and drive operational. For example, accelerated underwriting on a portion of our Simplified Life products delivered an 89% instant decision rate on submitted policies in the quarter, up 12% over first quarter 2020.

Agent productivity and retention were strong in the quarter, fueling our sales and rental.

Producing agent count was up 3%, marking our tenth consecutive quarter of growth.

Registered agent count also increased by 6%.

Investments in technology continue to enable customer experience improvements and drive, operational efficiency.

For example, accelerated underwriting on a portion of our simplified Life Products delivered an 89% instant decision rate on submitted policies in the quarter up 12%, over first quarter of 2025.

Gary Bhojwani: Next, slide 7 in our Worksite Division Performance. We delivered a record second quarter performance for insurance sales within WorkSite Life and Health, excuse me, with WorkSite Life and Health NAP up 16%. This represents our 6th consecutive quarter of record NAS growth and our 13th consecutive quarter of overall NAS growth. Highlights included record life insurance sales of 54%. Hospital Indemnity Insurance up 22%. and Accident Insurance up 16%. Life sales now comprise 35% of our total worksite insurance.

Next slide 7 in our work site division performance.

We delivered a record second quarter performance for insurance sales within work site life and health with Excuse me with work site life and health map up 16%.

This represents our sixth consecutive quarter of record nap growth and our 13th consecutive quarter of overall Network.

Highlights included record life insurance sales, up 54%.

Hospital Indemnity insurance up 22%.

And accident Insurance up 16%.

Life sales. Now, comprise 35% of our total work site insurance sales.

Gary Bhojwani: Strategic growth initiatives contributed significantly to our worksite NAF performance. Our Geographic Expansion Initiative delivered 25% of the NAP growth in the quarter, marking the sixth consecutive quarter of growth from this program. Net-ups from new group clients was up 84%. worksite recruiting was up 34% in the quarter and agent productivity was up 16%. Producing agent count was up 4% our 12th consecutive quarter of Recent investments in training and sales technology tools continue to enhance agent productivity and generate momentum. One example was the launch of our new customer relationship management platform to enable sales and new group development.

Strategic growth initiatives contributed significantly to our work site map Performance.

Our geographic expansion initiative delivered 25% of the net asset growth in the quarter, marking the sixth consecutive quarter of growth from this program.

Now, from new group. Clients was up 84%.

Work site recruiting was up 34% in the quarter, and agent productivity was up 16%.

Producing agent count was up 4%, our twelfth consecutive quarter of growth.

Recent investments in training and sales technology tools continue to enhance agent productivity and generate momentum.

Gary Bhojwani: Agent Response has been strong. Fee sales were flat for the quarter.

One example was the launch of our new customer relationship management platform to enable sales and new group development.

Agent responses and strong.

Gary Bhojwani: We expect to see improvement in the second half of the year, driven by a growing interest in our new OptiBiased Clear program. Optimize Clear unites our existing services into a single package for employees, while also adding new Medicare advocacy services and enhancing user technology. Early feedback from our brokers and clients is encouraged.

Fee sales were flat for the quarter.

We expect to see improvements in the second half of the year driven by a growing interest in our new optimized, clear product.

Optimized Clearer unites our existing services into a single package for employees while also adding new Medicare advocacy services and enhancing user technology.

Early feedback from our brokers and clients is encouraging.

Gary Bhojwani: As our worksite division ramps up for enrollment season, we also introduced a new marketing campaign. Health is Human. In both the worksite and consumer divisions, our customers are looking for technology to supplement, but not replace, human interaction. This campaign highlights the value that our experienced agents and advocates bring to clients when coupled with our technology.

As our work site division ramps up for enrollment season, we also introduced a new marketing campaign.

Health is human.

In both the work site and consumer divisions. Our customers are looking for technology to supplement but not replace human interaction.

This campaign highlights the value that our experienced agents and Advocates bring to clients when coupled with our technology.

Paul Mcdonough: And with that, I'll turn it over to Paul. Thanks, Gary. Good morning, everyone.

And with that, I'll turn it over to Paul.

Paul Mcdonough: Turning to the financial highlights on slide eight. Operating earnings in the quarter and year-to-date are in line with their expectations with some puts and takes. Insurance product margins continue to benefit from consistent growth in the business. Rising Book Yields, and Net Favorable Claims Experience across the products.

Thanks, Gary, and good morning, everyone.

Turning to the financial highlights on site 8.

operating earnings in the quarter and year to date were in line with their expectations with some puts and takes

Insurance product margins continue to benefit from consistent growth in the business.

Paul Mcdonough: On the other hand, the yield on our alternative investments remain below our long-term run rate expectation, creating a partial offset. In the quarter, we deployed $100 million of excess capital on share repurchase. intentionally bringing risk-based capital and hold co-liquidity closer to our run rate target. The share repurchases in the quarter contributed to an 8% reduction in weighted average dilute shares outstanding. On a trailing 12-month basis, operating return on equity was 11.8% and 11.2% excluding significant items. This does include some elevated earnings in the second half of 2024.

Rising book yields and favorable claims experience across the product set.

On the other hand, the yield on our alternative investments remains below our long-term run rate expectations, creating a partial offset.

Intentionally bringing risk-based capital and hold colli closer to our run rate targets.

The share repurchases in the quarter contributed to an 8% reduction in weighted average diluted shares outstanding.

On a trailing twelve-month basis, operating return on equity was 11.8% and 11.2%, excluding significant items.

Paul Mcdonough: On a run rate basis, we remain on track to generate an operating return on equity of around 10.5% for the full year 2025 and to achieve our three year target of 11.5% in 2027, reflecting an improvement of 150 basis points relative to a run rate return on equity of about 10% in 2024.

This does include some elevated earnings in the second half of 2024.

Paul Mcdonough: Turning to slide nine. Total insurance product margin was solid for the quarter. modestly exceeding our expectation. Spreads and Surrender Activity in line with expectations in our annuity products and with net positive claims experience across our health and life products.

on a run rate basis, we remain on track to generate an operating return on Equity of around 10.5% for the full year 2025 and to achieve our 3-year Target of 11.5% in 2027 reflecting an improvement of 150 basis points relative to a run rate return on Equity of about 10% in 2024,

Turning to slide 9.

Total insurance product margin was solid for the quarter.

Modestly. Exceeding, our expectations.

Paul Mcdonough: Within our health products, supplemental health and long-term care continue to benefit from favorable claims experience, but we have seen higher claims in our MedSupp products. As you know, MedSupp allows for annual rate adjustment. enabling us to respond promptly to claims experience as needed. Life margins reflect lower non-deferrable advertising expense in trad life, with mortality experience and trends generally in line with expectations. Our total margin again demonstrates the value of our diversified product portfolio where we ordinarily see some puts and takes netting to stable and growing margin in total over time.

With spreads and surrender activity in line with expectations in our annuity products and with net positive claims experience across our Health and Life products.

Within our health products, supplemental health, and long-term care, we continue to benefit from favorable claims experience. While we have seen higher claims in our MedSup products,

As you know, MedSup allows for annual rate adjustments, enabling us to respond promptly to claims experience as needed.

Life margins. Reflect lower non-derivative life.

With mortality experience and trends generally in line with expectations.

Our total margin again. Demonstrates the value of our Diversified product portfolio.

Paul Mcdonough: As a reminder, the prior period benefited from a favorable MRB reserve movement in our FIAs and a significantly favorable reserve change in our other annuities driven by favorable mortality.

We ordinarily see some puts and takes netting to stable and growing margin in total over time.

As a reminder of the prior period benefited from a favorable mrb Reserve movement in our fia's and a significantly favorable Reserve change in our other annuities driven by favorable mortality.

Paul Mcdonough: Turning to slide 10. Total net investment income grew for the seventh consecutive quarter. The average yield on allocated investments was 4.92%, up 11 basis points year over year. The increase in yield along with growth in the business drove a 7% increase in net investment income allocated to products for the quarter. This was partially offset by a decline in net investment income not allocated to products.

Turning to slide 10.

Total net investment income. Grew for the seventh consecutive quarter.

The average yield on allocated Investments was 4.92% up 11 basis points year-over-year.

In the increase in yield, along with growth in the business, drove a 7% increase in net investment income allocated to products for the quarter.

Paul Mcdonough: primarily driven by lower option forfeitures as a result of lower annuity surrenders and lower in the money options. tighter spreads in the FHLB program, and higher interest expense on higher average debt outstanding.

This was partially offset by a decline in net investment income not allocated to products, which is primarily driven by lower options forfeitures as a result of lower annuity surrenders and lower in-the-money options.

Paul Mcdonough: Income from our alternative investments was flat year over year, generating a return of 6% as compared to our long-term run rate expectation of between 9 and 10%. In total, net investment income was up 2%.

Tighter spreads in the fhlb program and higher interest expense on higher average, debt outstanding.

Income from our alternative investments was flat year-over-year, generating a return of 6% as compared to our long-term run rate expectation between 9% and 10%.

Paul Mcdonough: Notably, the second quarter marked the 12th consecutive quarter of growth in book yield and invested assets, and the 10th consecutive quarter of new money rates that exceed 6%.

In total, net investment income was up 2%.

Notably, the second quarter marked the 12th consecutive quarter of growth in book yield and invested assets and the 10th consecutive quarter.

Of new money rates that exceed 6%.

Paul Mcdonough: Turning to slide 11. The market value of invested assets grew 5% in the quarter, primarily driven by growth in the business and market appreciation on the investment portfolio.

Turning to slide 11.

The market value of invested assets, grew 5% in the quarter.

Paul Mcdonough: Approximately 96% of our fixed maturity portfolio at quarter end was investment grade rated with an average rating of single A, reflecting our up in quality bias over the last several years. Our portfolio is high-quality, liquid, and built for resilience in volatile market environments.

Primarily driven by growth in the business and Market depreciation on the Investment Portfolio.

Approximately 96% of our fixed maturity portfolio. At quarter end was investment grade rated with an average rating of single a reflecting, our up in quality bias, over the last several years.

Our portfolio is high-quality liquid and built for resilience in volatile market environments.

Paul Mcdonough: Turning to slide 12.

Paul Mcdonough: Over the past several quarters, we have pursued a measured approach to draw down excess capital by returning capital to shareholders through share repurchase. As of June 30, we are closer to our target risk-based capital and minimum Holtco liquidity levels with a consolidated RBC ratio of 378%. and hold co-liquidity of $187 million. Leverage at quarter end was 26.1% at the low end of our target range.

Turning to slide 12.

Over the past several quarters. We had pursued a measured approach to draw down excess Capital by returning Capital to shareholders through share repurchases.

As of June 30th, we are closer to our Target, risc-based capital and minimum holdco. Liquidity levels with a Consolidated RBC ratio of 378%.

And hold Co liquidity of 187 million.

Leveraged at quarter end was 26.1% at the low end of our target range.

Paul Mcdonough: Turning to slide 13 in our 2025 guidance. We are reaffirming all guidance as summarized on this slide with one small adjustment. We are lowering the upper bound in the expense ratio range to 19.2% from 19.4%, reflecting better operating leverage as we continue to grow the business.

We are reaffirming all guidance as summarized on this slide, with one small adjustment.

Paul Mcdonough: As a reminder, the guidance does not reflect any new treaties with our Bermuda Company. We continue to work with our domestic regulators and the Bermuda Monetary Authority to explore additional transactions.

We are lowering the upper Bound in the expense ratio range to 19.2% from 19.4%, reflecting better operating leverage, as we continue to grow the business,

As a reminder, the guidance does not reflect any new treaties with our Bermuda company.

Gary Bhojwani: And with that, I'll turn it back to Gary. Thanks, Paul. CNO remains uniquely positioned to serve the growing needs of the middle-income market with our diverse products and distributions. Our business fundamentals remain strong. We move into the second half of the year with considerable sales momentum and a clear line of sight to improve profitability. We continue to be pleased with our consistent, repeatable results and the steady execution against our strategic growth. CNO remains well equipped to navigate the evolving economic environment, drive improved return on equity, and to deliver on our promises to our customers and shareholders.

We continue to work with our domestic regulators and the Bermuda Monetary Authority to explore additional transactions. And with that, I'll turn it back to Gary.

Thanks Paul.

CNO remains uniquely positioned to serve the growing needs of the middle-income market with our diverse products and distribution.

Our business fundamentals. Remain strong.

We move into the second half of the year with considerable sales momentum and a clear line of sight to improve profitability.

We continue to be pleased with our consistent repeatable results and the steady execution against our strategic growth plan.

CNO remains well, equipped to navigate the evolving economic environment Drive improved return on equity.

And to deliver on our promises to our customers and shareholders.

Gary Bhojwani: Before we open up the line for questions, I am pleased to share that in September, we will host the next session in our CNO Investor Briefing Series. This one-hour session will focus on the Consumer Division led by Division President Scott Goldberg. As a reminder, our investor briefings focus on one area of CNO's business. provide a deeper look at that area strategy and approach and offer an opportunity for Q&A with members of Program registration will open in August.

Before we open up the line for questions, I am pleased to share that in September, we will host the next session in our CNO investor briefing series.

This 1-hour session will focus on the consumer division led by division. President Scott Goldberg.

As a reminder, our investor briefings focus on one area of CNO's business.

Provided deeper look at that area strategy and approach and offer an opportunity for Q&A with members of management.

Gary Bhojwani: Event details will be announced. So please ensure that you are signed up to receive our email alerts. We thank you for your support of and interest in CNO Financial.

Program registration will open in August. Event details will be announced soon, so please ensure that you are signed up to receive our email alerts.

We thank you for your support of CNO Financial Group.

Operator: We'll now open it up to questions. Operator? Thank you very much.

and interest in CNO Financial Group. We will now open it up to questions, operator.

Operator: To ask a question, please press star followed by 1 on your telephone keypad now. If you change your mind, please press star followed by 2. When preparing to ask your question, please ensure your device is unmuted locally.

Thank you very much.

To ask a question. Please press star. Followed by 1 on your telephone keypad now.

If you change your mind, please press star followed by 2.

Ryan Krueger: Our first question comes from Ryan Krueger from Keefe, Brouillette and Woods. Your line is open, please go ahead. Hey, thanks. Good morning. My first question was on direct-to-consumer sales. Can you give a little bit more color on the momentum from the web digital piece? It's to what extent do you think that can continue? It seems like, you know, in particular, this is an extremely strong quarter there. So we're just hoping to get a little more color on what's going on underneath the surface.

I'm prepared to ask you a question. Please, ensure your device is unmuted locally.

Our first question comes from Ryan Krueger and Keith for Yet and Woods.

Your line is open; please go ahead.

Hey, thanks. Good morning. My first question was on direct-to-consumer sales.

Um, can you give a little bit more color on the, the momentum from the web digital piece of this in it? To what extent do you think that can continue? It seems like, um, you know, in particular this this was a an extremely strong quarter there, so we're just hoping to get a little more color on, what's going on underneath the surface?

Gary Bhojwani: Yeah, hey, Ryan, this is Gary. Thanks for the question. So let me first say that we're very pleased with how the direct-to-consumer business continues to evolve and grow. We do expect the momentum to continue. All of that said, as I always, when I speak with analysts and investors, this is not a quarter-to-quarter business. This is a much longer term business. And there will be ups and downs. That said, we don't see anything in the near future that's going to slow us down. For this particular cycle, our improvement really came from a handful of areas. Number one, we had very good recovery in our lead generation.

Yeah. Hey Ryan. This is Gary. Thanks for the question. Um, so so let me first say that. Um, we're very pleased with how the director consumer business continues to evolve and grow. Um, we do expect the momentum to continue all of that said, as I as I always, uh, when I speak with analysts and investors, this is not a quarter to quarter business, this is a much longer term business and uh, there will be ups and downs. That said, we don't see anything in the near future that's going to slow us down.

Gary Bhojwani: We continue to have strong success in pivoting to web and digital from traditional lead generation source like TV. Now consumer behavior continues to change around television. So that volume is going down while digital volume is going up. It's really difficult to predict how much they'll offset one another, but we really like what we saw this quarter. As an example, web and digital sales were up 39% versus the prior year and represented nearly a third of our total B2C sales in this quarter. So we continue to see that gain. We continue to see that shift in consumer behavior.

Um, for this particular cycle, our improvement really came from a handful of areas. Number one, we had very good recovery in our lead generation.

Um, we continue to have strong success in pivoting to web and digital from traditional lead generation sources, like TV. Um, now consumer behavior continues to change around television.

So that volume is going down while digital volume is going up. It's really uh, difficult to predict how much the offset 1. Another, but we really like what we saw this quarter

Gary Bhojwani: We have every expectation that we will continue to see good traction with the web and digital. You know, will will every single quarter be up 39%? I can assure you that will not be the case. But over the long term, two to three years, we expect to see this grow very Ryan, did I answer your question?

Um, as an example web and digital sales were up, 39% versus the prior year and represented nearly a third of our total b2c sales in this quarter. Um, so we continue to see that. Uh, again, we continue to see that shift in consumer Behavior. We have every expectation that we will continue to see uh, good traction with the web and digital. Uh,

You know, we'll every single quarter be up 39%. I can assure you that will not be the case. But over the long term, 2 to 3 years, we expect to see this grow very nicely.

Ryan, did I answer your question?

Ryan Krueger: You did, thank you.

Ryan Krueger: And then I had a follow up on Medicare supplement. Your margins have held up pretty well, down a little bit year over year, but overall still pretty good. I know there's a lot of differences between other Medicare areas, I just thought it'd be maybe take the opportunity to have you talk a little bit about what you're seeing in that business, just given all the headlines around the softness at the primary health care company. Yeah, Ryan, thanks. I'm really glad you asked that question because there are lots of different One of the things I would ask our investors and analysts to do is really remember the ways in which our book is different.

You talk a little bit about what you're seeing in that business. That's given all the, um, the headlines around the softness that the primary healthcare companies.

Yeah, Ryan, I think I'm really glad you asked that question because there are lots of differences, and um,

Gary Bhojwani: Because there are some very substantial differences between our business and some of the companies that are currently getting a lot of headlines. And I want to give you maybe a quick framework within which to think about. I would argue that there are three different areas or three different categories, where our business is materially different than some of what you're reading in the headlines. So first and foremost is our distribution profile. We have a long history with captive agents. And remember, the way our captive agents are managed and incented gives us better persistency, there's less of an incentive to churn, there's less of an ability to churn, and it gives us more control.

One of the things I would ask our investors and analysts to do is really remember the ways in which our book is different, because there are some very substantial differences between our business and some of the companies that are currently getting a lot of headlines. I want to give you maybe a quick framework within which to think about this. I would argue that there are three different areas, or three different categories, where our business is materially different than some of what you're reading in the headlines.

Um, so first and foremost, is our distribution profile.

We have a long.

Gary Bhojwani: We've continued to have very good production. And remember that with our captive distribution, we really view Medicare supplement as a way to start the relationship. Now, there are very strict guidelines around how you can cross sell and what you need to do to develop a relationship and so on. And we of course, follow all of those. But we really encourage our captive distribution to think about this as a much broader relationship. They're not just trying to sell one product, they're trying to build a broader relationship. So our distribution is very different. That's the first category.

And remember, the way our captive agents are managed and incentivized gives us better persistency. There's less of an incentive to churn, or less of an ability to churn, and it gives us more control. We've continued to have very good production. Remember that with our captive distribution, we really view Medicare Supplement as a way to start the relationship. Now, there are very strict guidelines around how you can cross-sell and what you need to do to develop a relationship, and so on, and we, of course, follow all of those.

Gary Bhojwani: The second category is what I would just generically describe as underwriting. So first of all, it's really important to remember that MedSup is funded by the premiums received by the policyholders. Medicare Advantage and Medicaid and some of these other things are funded through reimbursement rates set by the government. MedSup has a fixed benefit profile. MedAdvantage has a benefit profile that is up to the carrier that can be negotiated differently. And that's where some of the carriers have gotten into trouble. Remember, we sell MedAdvantage, but we don't manufacture it. So we don't have some of those risks.

But we really encourage our captive distribution to think about this as a much broader relationship. They're not just trying to sell one product; they're trying to build a broader relationship. So our distribution is very different. That's the first category. The second category is what I would just generically describe as underwriting risk. So, first of all, it's really important to remember that MedSup is funded by the premiums received by the policyholders, while Medicare Advantage and Medicaid, along with some of these other programs, are funded through reimbursement rates set by the government.

Gary Bhojwani: The biggest area of risk we have is in Medicare Supplement, which is what we manufacture. We've been doing that for a long time. And as a reminder, we get a chance to reprice that every year. So the underwriting risk around Medicare Supplement is very different than Medicare Advantage and Medicaid. And again, when you're reading these headlines, it's really important to remember that when you're seeing. Finally, If you think about the regulatory risk, it really seems to be concentrated at the moment on Medicare Advantage. And I just want to remind you again, we don't manufacture that, we strictly distribute it.

Medsup has a fixed benefit profile that Advantage has a benefit profile. That is up to the carrier that that can be negotiated differently and that's where some of the carriers have gotten into trouble. Remember we sell Med Advantage, but we don't manufacture it so we don't have some of those risks. The biggest area of risk we have is a Medicare supplement which is what we manufacture. We've been doing that for a long time and as a reminder, we get a chance to reprice that every year. So the underwriting risk around Medicare supplement is very different than Medicare Advantage and Medicaid. And again, when you're reading these headlines, it's really important to to, to remember that. When you're, when you're seeing this,

Gary Bhojwani: Agents are paid the same commission in our system, regardless of the carrier, and there's no incentives for selling specific carrier products. In addition, those Medicare Advantage carriers pay CNO, they don't pay the agents directly. We then distribute that. So we have certain elements of control that really mitigate some of that regulatory risk and some of the things you've been reading up. So just to summarize, distribution risk is different, underwriting risk is different, and regulatory risk is different.

Ryan Krueger: We come at this in a very different way than some of the companies that are currently in that. Great.

Finally, um, if you think about the regulatory risk, it really seems to be concentrated at the moment on Medicare Advantage. And I just want to remind you again, we don't manufacture that, we strictly distribute it. Um, agents are paid the same Commission in our system, regardless of the carrier and there's no incentives for selling specific carrier products. In addition, those Medicare Advantage carriers pay CNO, they don't pay the agents directly, we then distribute that. So we have certain elements of control that really mitigate some of that regulatory risk and some of the things you've been reading on. So just to summarize, distribution, risk is different underwriting, risk is different and Regulatory risk is different. We come at this in a very different way than some of the companies that are currently in the headlines.

Great, thanks. Gary.

John Barnidge: Our next question comes from John Barnidge from Piper Sandler. Your line is open, please go ahead. Thank you very much. Appreciate the opportunity.

Our next question comes from John Barnidge and Piper Sandler. Your line is open. Please go ahead.

Paul Mcdonough: Can you maybe talk about the expense experience in the quarter and the change in the guy? I know there's been a tech and automation aspect. I'll be health expenses while also greater leverage. Sure, good morning, John. It's Paul. So our expenses in the quarter and year to date are generally in line with their expectations on a dollar basis. The expense ratio is a bit better, which is primarily a reflection of better operating leverage as we grow the business of the denominator and the ratio is helping.

Thank you very much. I appreciate the opportunity. We may be able to talk about the expense.

Experience in the quarter and the change in the guy. I know there's been a tech and automation aspect that's...

Probably helped expenses while also greater leverage on distribution. Thanks.

Sure, good morning John, it's Paul. Um, so our expenses in the quarter and, and, and year to date are generally in line with the, uh, with their expectations on a, you know, on a dollar basis. Uh, the expense ratio is a bit better, uh, which I, you know, is primarily reflection of, uh, better operating Leverage is as we grow the business of the denominator and the ratio is, uh, is helping

John Barnidge: Great, thank you.

Paul Mcdonough: And then can you maybe talk about the long term care utilization claim patterns and any notable changes that occurred in the quarter? Thank you. Sure, it's really just a continuation of the favorable claims experience that we've been seeing. We're certainly pleased to see that. You know, looking forward, you know, wouldn't surprise us if we see a bit of a continuation of that. The longer term, we would expect that LTC claims would begin to trend, you know, closer to what the experience had been pre-COVID. But, you know, that's kind of a crystal ball question. Time will tell.

Great, thank you. Um, can you maybe talk about the long-term care utilization claims patterns and any notable changes that occurred in the quarter? Thank you.

That we've been seeing, uh, we're certainly pleased to see that.

You know, looking forward, you know, uh, wouldn't surprise us if we see a bit of a continuation of that the longer term. We would expect that uh LTC claims would begin to Trend, you know, closer to what the experience had been, uh, preco. Um, but you know, that's kind of a crystal ball question. Uh, time will tell.

John Barnidge: Appreciate the answers.

Appreciate the answers.

Got.

Wes Carmichael: Our next question comes from Wes Carmichael from Autonomous. Your line is open, please go ahead. Hey, thank you. Good morning. I just wanted to follow up quickly on the Medicare supplement discussion. And I understood all your comments.

On the next question, comes from West Carmichael from Autonomous Carolina's Open.

Please go ahead.

Gary Bhojwani: Gary, I was just wondering if can you share any color on repricing of that product? How much you're going after on a blended basis? I realize it's with the states, but when that should kind of come through margins from from this higher claim utilization in the near term?

Hey, thank you. Good morning. I just wanted to follow up quickly on the Medicare supplement discussion, and I understood all your comments. Gary, I was just wondering if you could share any color on repricing of that product? How much are you going after on a blended basis? I realize it's with the states, but when should that kind of come through margins from this higher claim utilization in the near term?

Paul Mcdonough: Yeah, I don't think we've been sorry, go ahead, Paul. So on the claims experience and how we would respond with rate filings, so I would describe the claims experience as a modest tick up relative to our expectations. We do expect that'll likely persist over the back half of this year, and we're baking all that into our rate filings that are happening sort of right around now is the timing, and would be effective in the first quarter of next year for the lion's share of our book of business. And, you know, sort of order of magnitude, you know, average requested rate filings is in the 10% range.

Yeah, I think we've. Sorry. Go ahead, Paul. Go ahead.

Um, so so on the on the, the uh, you know, the claims experience and, and uh, you know, how we would respond with with rate filings. So I would describe the the claims experience, as a modest pickup relative to our expectations. Um, we do expect that'll likely persist over the back half of this year. You know, we're baking all that into our, uh, rate filings that are, uh, um, you know, happening sort of right around now as the, as the timing and would be effective in the, uh, first quarter of next year, for the Lion Share of our book of business.

And, you know, sort of order of magnitude, uh, you know, average, uh, uh, requested rate filings is in the 10% range.

Wes Carmichael: Got it. That's very helpful, Paul.

Gary Bhojwani: In my follow up, I'm sure we've gotten this question before, but just on competition in the annuity, the fixed annuity space, and I know you guys play more in the middle income area of the market, but have you seen any change in competition in that market over the past few months or years? And I guess I ask it in context of lots of private equity or alt manager related capital chasing that space. I wonder if you're seeing that as well. Look, there's a tremendous amount of interest in competition in this space. That's not going to discontinue anytime soon.

Yeah. That's that's very helpful at all. Um, in my follow-up, I'm sure we've gotten this question before, but just un competition in the annuity, the fixed annuity space, and I know you guys play more in the middle income area of the market. But have you seen any change in competition in that market over the past few months or years? And I guess I ask it in contact of lots of private Equity or alts manager, related Capital, uh, chasing that space. So I wonder if you're seeing that as well.

Gary Bhojwani: The asset managers look at the annuity and the insurance businesses, frankly, a really cheap source of funds. So they're going to continue to be very aggressive here. So there's tons of competition, it's not going to slow down. But, and this is the critical thing, most of those folks are calling on consumers with half a million or a million or more. Very few of those folks are calling on the client base that we're calling on, where you've got the average annuity being sold of $150,000 or less. So tremendous competition, generally speaking in the annuity space, not nearly as much competition in our particular area.

Gary Bhojwani: And we really like it that way. Got it. Thanks, Gary.

Look, there's a tremendous amount of interest in competition in this space. That's not going to discontinue anytime soon. The asset managers look at the annuity and the insurance businesses, frankly, as really cheap sources of funds, so they're going to continue to be very aggressive here. There's tons of competition; it's not going to slow down. But, and this is the critical thing, most of those folks are calling on consumers with half a million or a million or more. Very few of those folks are calling on the client base that we're calling on, where you've got the average annuity being sold of $150,000 or less. So, tremendous competition generally speaking in the annuity space, not nearly as much competition in our particular area. And we really like it that way.

Got it. Thanks Gary.

Suneet Kamath: Our next question comes from Suneet Kamath from Jefferies. Your line is open. Please go ahead. Thank you. I wanted to, yeah, thanks.

On the next question, comes from Sunny to Kamas, from Jeffrey's.

Your line is open.

Gary Bhojwani: I wanted to go back to the Medicare Advantage. I totally get it that you don't underwrite it, you sell it. But I guess how diversified is the mix of carriers that you're using? And then relatedly, I think one of the carriers out there, it's been pretty public, has had some issues in terms of payment of claims. Is there any risk to CNO from that? No risk to CNO from that on that question. On the first question, I believe we have currently about 20 carriers, give or take, so there's no particular concentration risk. We don't see this as a substantial challenge, to be honest with you, given our business model.

Please go ahead. Thank you. Um I wanted to yeah, thanks uh I wanted to go back to the Medicare Advantage. Um I totally get it that. You don't underwrite it, you sell it. But I guess how Diversified is the mix of carriers that you're using and then relatedly, I think 1 of the carriers out there it's been pretty public has had some issues in terms of payment of claims. Is there any risk to CNO from that?

No risk to seeing all from that on that question. On the first question, I believe we have currently about 20 carriers.

Give or take. So, there's no particular concentration risk. Um, we don't see this.

Gary Bhojwani: Virtually every American that turns 65 is going to at least look at Medicare Supplement or Medicare Advantage. The vast majority are going to buy one of those two things, and those consumers that start to shy away from Medicare Advantage will most likely buy Medicare Supplement, and that's just fine by us. You know, if you play the tapes back for the last three to five years on our earnings calls, I've been saying the same thing. We're happy to sell them either. We probably have a slight preference for Medicare Supplement because we both manufacture and distribute it, but we're happy to sell them either.

As a substantial challenge, to be honest with you, given our business model, virtually every American that turns 65 is going to at least look at Medicare Supplement or Medicare Advantage. The vast majority are going to buy one of those two things, and those consumers that start to shy away from Medicare Advantage.

Gary Bhojwani: We're happy to see that demand go to either side of the balloon. It's not a problem for us. We're not concerned by it at all. I think the other thing I would just remind everybody, even if that Medicare Advantage secular trend starts to shift, let's remember that it's been going in one direction for a few years. There's still plenty of room, plenty of volume, and remember that there's still 11,000 folks turning 65 every day. None of that changes whether they start to buy more MAA or MedSoc. Either way is fine by us.

Happy to see that demand. Go to either side of the balloon. It's not a problem for us. We're not concerned by it at all. Um, I think the other thing I would just remind everybody, even if that Medicare Advantage secular trend starts to shift, let's remember that it's been going in one direction for a few years. If it starts to go in the other direction, there's still plenty of room, plenty of volume. And remember that there are still 11 folks turning 65 every day. None of that changes, whether they start to buy more MA or MedSup; either way is fine by us.

Suneet Kamath: Got it. That makes sense.

Suneet Kamath: And then I guess on the annuities, the $520 million of sales, I think was a record. Anything unusual in there? Or should we think about maybe this being a new baseline? And can you comment about the spreads that you're getting on the new business? I think you've talked about the yields, but just curious if there's been any change in the spreads that you're netting. Thanks. I'll let Paul answer the last part of that about the spreads. But there was nothing unusual in there, in the annuity sales. We do expect our sales to remain strong. All of that said, comparable to get tougher.

Got it, that makes sense. And then I guess on the annuities of the $520 million of sales, I think was a record. Anything unusual in there, or should we think about maybe this being a new baseline? And can you comment about the spreads that you're getting on the new business? I think you've talked about the yields, but I'm just curious if there's been any change in the spreads that you're netting. Thanks.

There was nothing unusual in there.

Gary Bhojwani: You know, I'm not, I'm not willing to commit that every quarter is going to be this strong. But we, we really like the momentum we have, we'd like the response from our customers, we'd love the way our producers are thinking about this. And the other thing I point out that we haven't drawn a lot of attention to the nature of our system, virtually guarantees that we have very little churn as compared to other people. The way our block is set up and you can see that in the growth, the steady growth of the block and the persistency and so on.

Um, we do expect our sales to remain strong, all of that said, comparable to get tougher. Um, you know, I'm not, I'm not willing to commit that, every quarter is going to be this strong, but we, we really like the momentum. We have, we like the response from our customers. We love the way our producers are thinking about this. And the other thing I'd point out that we haven't drawn, a lot of attention to the nature of our system. Virtually guaranteed

That we have very little churn as compared to other companies.

Gary Bhojwani: In addition to the strong sales, we have an absence of churn. And if you look closely at some of the other results out there in the industry, I think that'll be another notable point of difference. But no major differences.

The way our block is set up and you can see that in the growth, the steady growth of the block and the persistency and so on.

Paul Mcdonough: And then Paul, I don't know what you want to share on the spread. Yeah, on the spreads, Suneet, you know, we've referenced some spread compression. You know, over the last couple of years, I would say sequentially and year over year spreads were pretty stable. Certainly no change in our in the spread that we're pricing to meet our in our return expectations for the product.

In addition to the strong sales, we have an absence of churn. And if you look closely at some of the other results out there in the industry, I think that'll be another notable point of difference. Uh, but no major difference is. And then Paul, I don't know what you want to share on the spreads.

Yeah, on the spreads, uh, Sydney, you know, we've referenced some spread compression, um, you know, over the last couple of years. I would say sequentially and year-over-year, spreads are pretty stable.

Um, certainly no change in our, uh, you know, the spreads that we were pricing to.

Um, to meet our return expectations for the product.

Paul Mcdonough: And if the Fed starts cutting rates, does that have any impact on this business or is it not affected? Thanks. In the rate environment generally is an input to where we set the par rate on the product. So in that context, it has an impact, but I wouldn't expect it to have a material impact on on the demand from our target market and, and, and the production. All right, thank you.

And if the Fed starts cutting rates, does that have any impact on this business? Or is it not affected? Thanks.

And the rate environment generally is an input to where we set the par rate on the product.

so, in that context, if, uh, it has an impact but I I wouldn't expect it to have a, a material impact on, on the, the demand from our target market and and, uh, and the production

All right. Thank you.

Joel Hurwitz: Our next question comes from Joel Hurwitz from Dowling Partners. Your line is open. Please go ahead. Hey, good morning. I want to go back to the first question on direct-to-consumer sales. So you touched on the strength from Web and Digital, but I do the math and even back that out, it looked like direct-to-consumer sales outside of Web and Digital were still very strong, despite the lower ad spend.

Our next question comes from Joel hurwitz from Dowling Partners. Your line is open.

Please go ahead.

Gary Bhojwani: So can you just provide some more color outside of Web and Digital, what you saw in D2C sales? We continue to see strong production from our direct sales. We have a handful of independent third party partnerships that we're experimenting with. Those have yielded nice results. And then, of course, as I said, the web and digital. So it's been strength all the way across.

Hey, good morning. Uh, I want to go back to the first question on director consumer sales. So so you touched on the strengths from web and digital, but I do the math. And, and even back that out, it looked like, uh, direct to Consumer sales, outside of web and digital. We're, we're still very strong, uh, despite the, the, the lower ad spend. So can you can you just provide some more caller outside of web and digital, what you saw, indeed to see sales.

We continue to see strong production from our direct sales. We have a handful of independent third-party partnerships that we're experimenting with; those have yielded nice results. Um, and then of course, as I said, the web and digital—so it's been strength all the way across.

Gary Bhojwani: OK.

Paul Mcdonough: Okay, and then Paul, on anything you'd call out on the statutory income or RBC in the quarter, I would have thought there would have been some reversal of the adverse impact that you saw in the first quarter, just given the strong equity market performance in the second. Yeah, hey, Joel. So there was essentially a reversal in the second quarter offsetting that the favorable impact, sorry, the adverse impact in the in the first quarter. You know, stat income in total was a bit below our expectations, I'd say driven on the margin by our alternative investments. And all of that gets baked into our dividend that we're paying up the chain, solving for something a bit above our target 375.

Okay.

Okay. Okay. And then Paul on on uh anything you'd call out on on the statutory income or or RBC in the quarter, I would have thought there would have been some reversal of the the adverse impacts that you saw in the first quarter, just given the the strong Equity market performance in the second.

Yeah, hey Joel. So so there was uh, essentially a reversal uh, in the second quarter offsetting that the uh, the the favorable impact. Sorry, the adverse impact in the uh, in the first quarter. Um, you know, stat income in total was a bit below our expectations. I'd say driven on the margin by uh our alternative Investments.

Paul Mcdonough: So the RBC, essentially flat from quarter to quarter 1Q to 2Q was by design. And, you know, bringing us to the RBC of 378 relative to our target 375.

Uh, from quarter to quarter, 1Q to 2Q was by design.

um, and uh,

You know, bringing us to the RBC of 378 relative to our Target, 375.

Paul Mcdonough: Got it. Thank you.

got it. Thank you.

Wilma Burdis: Our next question comes from Wilma Burdis from Raymond James, your line is open, please go ahead. Hey, good morning. Following up on the recent session you all hosted on investments, can you talk about how the environment looks today? Has anything changed and where are you seeing the best opportunities? Thanks. Wilma, sorry, can you repeat? I didn't catch the first part of your question. Oh, sorry. Yeah, just following up on the recent session you all hosted on investment. So just talk a little bit more about the investments, what you're seeing today, if anything's changed, and what looks like the best opportunities.

On the next question. It comes from Wilma Berdis from Raymond James.

Your line is open, please go ahead.

Hey, good morning. Following on the recent session you all hosted on investments, can you talk about how the...

Today.

Has anything changed in where you're seeing the best opportunities? Thanks.

Well, I'm sorry. Can you repeat? I didn't catch the first part of your question.

Eric Johnson: Thanks.

Oh, sorry. Yeah, just following up on the recent session you all hosted on investments. So, just talk a little bit more about the investments—what you're seeing today, if anything's changed, and what looks like the best opportunities. Thanks.

Eric Johnson: Good morning. This is Eric Johnson, and happy to follow up on that question. As you remember, on our Investor Day, we talked a fair bit about two or three particular asset classes that we thought would bear fruit for us through the remainder of the year. I'll give you a couple of reminders or examples. First off, we talked about residential mortgage loans, where we thought there was good value, particularly in agency-eligible loans, that were paying as much as 100, 150 basis points over single-A corporates with about the same level, ultimately, of expected loss and about the same level of capital required.

Good morning, this is Eric Johnson and happy to happy to follow up on that on that question. Um as you remember uh on our uh investor day we talked a fair bit about 2 or 3 particular, uh, asset classes that that we thought would bear fruit for us through the remainder of the Year. I'll give you a couple of of of reminders or examples. Uh, first off we talked about

Eric Johnson: And we've continued to work in that area. Also, we talked a little bit about CRECDO AA and maybe some AAAs as well, which pay a nice spread, are very, very loss-remote, and are pretty short on the curve. So, we'll do well if the Fed follows through with those. And then lastly, we talked a little bit about the munis space, the taxable munis, which I think we think continue to offer some good value and diversified risk factors as well. So it's pretty much, I'd say, steady as she goes in those areas. We continue to pile up quarter after quarter of pretty good book yield and core income.

Residential Mortgage Loans, where we thought, uh, there was good value, particularly in agency eligible, loans, uh, that were were paying as much as a hundred 150 basis points over over single a corporates with about the same level ultimately of, of, of expected loss, uh, and about the same level of of capital required. And we've continued to work, work in that area. Also, uh, we talked a little bit about, uh, uh, CRA CDO, uh, a uh, and, uh, and maybe some Triple A's as well. Uh, which, which pay a nice spread are very, very lost remote, uh, and are pretty short on the curve. So, uh, we'll do well, uh, if, uh, if, if the FED follows through with some, with some, with some rate Cuts, uh, and then, uh, lastly, we talked a little bit about the, uh, the mun space. The taxable munities which, um,

Eric Johnson: And while we continue to also hold quality high and liquidity pretty high as well. I hope I answered your question. Thank you.

I think we think continue to offer, uh, some good, good value, uh, and and and diversified risk, uh, factors as well. So, uh, you know, it's pretty much, uh, I'd say Steady As She Goes, uh, in those areas uh we continue to, you know uh pile up quarter after quarter of pretty good uh book yield and and car income. Uh and while we uh continue to also hold quality high and uh and liquidity pretty high as well. I hope I answered your question.

Gary Bhojwani: And could you give us a little more color on recruiting, recruiting activity in the quarter, and just talk a little bit about training of new agents and, you know, how we should expect that to convert into sales later in 2025. Thanks. Yeah, we we really like where we are in terms of Asian productivity, both in the worksite and consumer divisions. We've had good recruiting, good productivity. We expect that to continue. And, and our point of emphasis, I think, is productivity, that will continue to be the case. And you've seen that in the numbers. I think the strong sales numbers speak for themselves.

Um, thank you. And could you give us a little more color on recruiting activity in the quarter?

And just talk a little bit about, uh, training new agents and, you know, how we should expect that to convert into sales later in 2025. Thanks.

Yeah, we really like where we are in terms of Asian productivity, both in the work site and consumer divisions. We've had good recruiting and good productivity. We expect that to continue.

uh,

and and, uh,

Gary Bhojwani: And we don't see any reason for that to slow down. Conventional wisdom is held that in if the economy does soften, that should help recruiting. But even in a relatively robust economy like we've seen, we've been able to and I would expect that to continue. I see no reason to see this slowed down.

Our point of emphasis, I think, is productivity—that will continue to be the case, and you've seen that in the numbers. I think the strong sales numbers speak for themselves, and we don't see any reason for that to slow down. Conventional wisdom has held that if the economy does soften, that should help recruiting.

But even in a relatively robust economy, like we've seen, we've been able to maintain that, and I would expect that to continue. I see no reason to see this slow down.

Jack Matten: Our next question comes from Jack Matten from BMO, your line is open, please go ahead. Good morning, just to follow up on the capital question earlier, the lower kind of stat earnings you saw change your view at all excess cash flow generation this year, I think the outlook was 200 to 250 million. And given that you're ultimately solving to be around that 375% RBC ratio. Sure.

My next question comes from Jack Maten from BMO.

Your line is open; please go ahead.

Just a follow-up on the capital question earlier. Um, just the lower kind of stat earnings. You saw change your view at all of excess cash flow generation this year. I think the Alec was $200 million to $250 million, um, and given that in your ultimate solving to be around that 375%, um, RBC ratio.

Paul Mcdonough: Good morning, Jack. So the first thing I'd say is that free cash flow is often lumpy from quarter to quarter and more stable on an annual basis. So we did generate about $50 million of free cash flow in the quarter and year-to-date, but over $200 million on a trailing 12-month basis through June 30. So we do remain confident in our full-year guidance. Then with respect to the first half, the free cash flow was certainly a bit below our expectations, primarily driven by tax. In the ordinary course, taxes on our stat income are paid from the opcos to the holdco, which is where all the NOLs currently reside.

Sure, uh, good morning, Jack. So, the first thing I'd say is that free cash flow is off and lumpy from quarter to quarter.

On a trailing 12-month basis through June 30. Um so we do remain confident and our full year guidance. Then with respect to the first half that the free cash flow was certainly a bit below, our expectations primarily driven by taxes.

Paul Mcdonough: In the first half, we actually had no taxable stat income due to the tax reserve fluctuations in our fixed indexed annuities. This is really just timing. We do expect tax payments up the chain to resume in the second half. So hopefully that provides some color. Our bottom line is we remain confident in the full year guidance. That's helpful.

In the, in, in the ordinary course taxes, on our stat income or paid from the opco to the hold Co, which is where all the nols currently reside in the first half. We actually had no taxable stat income. Due to the tax Reserve fluctuations in our fixed index. Annuities, this is really just timing. We do expect tax payments up, the chain to resume in the in the second half.

so hopefully that you know, provides some some color bottom line is, we remain confident in the the full year guidance

Jack Matten: Thank you.

Gary Bhojwani: And then can you just remind us where where CNO stands and considering additional opportunities with your Bermuda company? And to what extent do you think could support ROE accretion as part of the targets you've laid out? Yeah, so we are very pleased with how the Bermuda operation continues to develop. As we've shared before, we have a very strong incentive in continuing to maximize that entity. We are engaged in discussions with regulators there. And we're very pleased with how those discussions are going. We also think it's critical that we not front run any of those discussions.

That's a total. Thank you. And then, um, can you just remind us where Co stands in considering additional opportunities with your Bermuda company? Until next time, do you think you could support Row? We could increase it as part of the targets you laid out.

Yeah, so we are very pleased with how the Bermuda operation continues to develop, as we've shared before. We have a very strong incentive and are continuing to maximize that entity. We are engaged in discussions with regulators there, and we're very pleased with how those discussions are going. We also think it's critical.

Gary Bhojwani: And we really don't want to provide any more details until we have greater definitive responses from our regulatory interactions. But the bottom line is, we like the way everything's trending, and we continue to engage in discussions with the Bermuda Monetary Authority. Got it.

that we not front-run any of those discussions, and we really don't want to provide any more details until we have.

Greater definitive responses from our regulatory interactions. But, the bottom line is, we like the way everything is trending. And we continue to engage in discussions with the Bermuda Monetary Authority.

Gary Bhojwani: Thank you.

Got it. Thank you.

Adam Auvil: We currently have no further questions, so I'd now like to hand back to Adam for some closing remarks. Thank you, Operator, and thank you all for participating in today's call. As a reminder, if you're interested in receiving details on our upcoming investor briefing, please ensure that you are signed up to receive our email alerts.

We currently have no further questions, so I'd now like to hand back to Adam for some closing remarks.

Adam Auvil: Have a great rest of your day.

Thank you, operator, and thank you all for participating in today's call. As a reminder, if you're interested in receiving details on our upcoming investor briefing, please ensure that you are signed up to receive our email alerts.

Have a great rest of your day.