CNO Financial Group Reports Second Quarter 2024 Results
CNO Financial Group reported strong Q2 2024 results, with net income up 66% to $116.3 million ($1.06 per diluted share) and operating earnings up 94% to $114.6 million ($1.05 per diluted share). Key highlights include:
- Total new annualized premiums up 4%, with Worksite Division up 18%
- Medicare Supplement NAP up 16%; Medicare Advantage policies sold up 78%
- Annuity collected premiums up 9%; Policyholder assets up 9%
- Book value per share up 30% to $22.80
- Return on equity of 19.9%; operating ROE of 11.2%
- $77.2 million returned to shareholders
CNO's CEO Gary C. Bhojwani noted strong performance across the board, with continued sales momentum, growing agent force, and strong underwriting margins. The company is raising full-year guidance on earnings and cash flow.
Il CNO Financial Group ha riportato risultati solidi per il secondo trimestre del 2024, con un utile netto aumentato del 66% a 116,3 milioni di dollari (1,06 dollari per azione diluita) e utili operativi aumentati del 94% a 114,6 milioni di dollari (1,05 dollari per azione diluita). I principali punti salienti includono:
- Premi annualizzati totali nuovi aumentati del 4%, con la Divisione Worksite in crescita del 18%
- Aumento del 16% dei supplementi Medicare NAP; polizze Medicare Advantage vendute aumentate del 78%
- Premi raccolti dagli annuità aumentati del 9%; attivi degli assicurati aumentati del 9%
- Valore contabile per azione aumentato del 30% a 22,80 dollari
- Ritorno sul capitale proprio del 19,9%; ROE operativo dell'11,2%
- 77,2 milioni di dollari restituiti agli azionisti
Il CEO di CNO, Gary C. Bhojwani, ha sottolineato la forte performance in ogni settore, con una continua spinta nelle vendite, un crescente numero di agenti e margini di sottoscrizione solidi. L'azienda sta aumentando le previsioni annuali sugli utili e sul flusso di cassa.
CNO Financial Group reportó sólidos resultados en el segundo trimestre de 2024, con un ingreso neto que aumentó un 66% a 116.3 millones de dólares (1.06 dólares por acción diluida) y ganancias operativas que aumentaron un 94% a 114.6 millones de dólares (1.05 dólares por acción diluida). Los puntos destacados incluyen:
- Las nuevas primas anualizadas totales aumentaron un 4%, con la División de Worksite aumentando un 18%
- Aumento del 16% en los suplementos de Medicare NAP; pólizas de Medicare Advantage vendidas aumentadas en un 78%
- Primas recolectadas de rentas vitalicias aumentadas en un 9%; activos de los asegurados aumentados en un 9%
- Valor contable por acción aumentado un 30% a 22.80 dólares
- Retorno sobre la equidad del 19.9%; ROE operativo del 11.2%
- 77.2 millones de dólares devueltos a los accionistas
El CEO de CNO, Gary C. Bhojwani, destacó el fuerte desempeño en todos los ámbitos, con un continuo impulso de ventas, un creciente número de agentes y sólidos márgenes de suscripción. La compañía está elevando sus previsiones anuales sobre ganancias y flujo de caja.
CNO 금융 그룹은 2024년 2분기 실적을 발표하며 순이익이 66% 증가한 1억 1,630만 달러 (희석 주당 1.06 달러)와 영업이익이 94% 증가한 1억 1,460만 달러 (희석 주당 1.05 달러)라고 보고했습니다. 주요 하이라이트는 다음과 같습니다:
- 총 신규 연간 보험료가 4% 증가했으며, 근무지 부문은 18% 증가
- 메디케어 보충 보험 NAP가 16% 증가; 메디케어 어드밴티지 정책 판매가 78% 증가
- 연금 수집 보험료 9% 증가; 보험계약자 자산 9% 증가
- 주당 장부가치가 30% 증가하여 22.80 달러
- 자기자본이익률(ROE) 19.9%; 운영 ROE 11.2%
- 주주에게 7,720만 달러가 반환됨
CNO의 CEO인 Gary C. Bhojwani는 전반적으로 강력한 성과를 강조하며, 지속적인 판매 성장, 증가하는 에이전트 수, 강력한 언더라이팅 마진을 언급했습니다. 회사는 연간 수익 및 현금 흐름에 대한 전망을 상향 조정하고 있습니다.
CNO Financial Group a rapporté des résultats solides pour le deuxième trimestre de 2024, avec un revenu net en hausse de 66% à 116,3 millions de dollars (1,06 dollar par action diluée) et des bénéfices d'exploitation en hausse de 94% à 114,6 millions de dollars (1,05 dollar par action diluée). Les points saillants comprennent :
- Les nouvelles primes annualisées totales ont augmenté de 4%, avec la Division Worksite en hausse de 18%
- Augmentation de 16% des NAP Medicare Supplement ; les polices Medicare Advantage vendues ont augmenté de 78%
- Primes collectées des rentes en hausse de 9%; actifs des assurés en hausse de 9%
- Valeur comptable par action en hausse de 30% à 22,80 dollars
- Rendement des capitaux propres de 19,9%; ROE opérationnel de 11,2%
- 77,2 millions de dollars retournés aux actionnaires
Le PDG de CNO, Gary C. Bhojwani, a souligné la forte performance dans tous les domaines, avec une dynamique de vente continue, un nombre croissant d'agents et de solides marges de souscription. La société relève ses prévisions annuelles concernant les bénéfices et le flux de trésorerie.
CNO Financial Group hat starke Ergebnisse für das zweite Quartal 2024 gemeldet, mit einem Nettogewinn, der um 66% auf 116,3 Millionen Dollar gestiegen ist (1,06 Dollar pro verwässerter Aktie) und betrieblichen Erträgen, die um 94% auf 114,6 Millionen Dollar gestiegen sind (1,05 Dollar pro verwässerter Aktie). Wichtige Highlights umfassen:
- Gesamte neue annualisierte Prämien, die um 4% gestiegen sind, wobei die Worksite Division um 18% zugenommen hat
- Medicare Supplement NAP um 16% gestiegen; verkaufte Medicare Advantage-Policen um 78% gestiegen
- Während 9% der von Rentenversicherungen gesammelten Prämien gestiegen sind; die Vermögenswerte der Policeninhaber stiegen um 9%
- Buchwert pro Aktie um 30% auf 22,80 Dollar gestiegen
- Eigenkapitalrendite von 19,9%; operative ROE von 11,2%
- 77,2 Millionen Dollar an Aktionäre zurückgegeben
Gary C. Bhojwani, CEO von CNO, wies auf die starke Leistung in allen Bereichen hin, mit anhaltendem Verkaufsdruck, wachsender Agentenanzahl und starken Underwriting-Margen. Das Unternehmen erhöht die Prognosen für die Jahresergebnisse und den Cashflow.
- Net income increased 66% year-over-year to $116.3 million
- Operating earnings per share grew 94% to $1.05
- Total new annualized premiums up 4%, with Worksite Division up 18%
- Medicare Advantage policies sold increased 78%
- Book value per share rose 30% to $22.80
- Return on equity improved to 19.9% from 14.8% last year
- Company is raising full-year guidance on earnings and cash flow
- Debt-to-capital ratio increased to 43.0% from 34.0% at year-end 2023
- Net investment losses of $21.9 million in Q2 2024
CNO Financial Group's Q2 2024 results demonstrate strong performance across key metrics. The 66% increase in earnings per share to
The company's growth strategy appears to be paying off, with total new annualized premiums up 4% and notable increases in specific segments like Worksite Division NAP (
CNO's financial position looks solid, with book value per share increasing
Overall, CNO's Q2 results paint a picture of a company executing well on its strategy, with strong growth, improving profitability and a solid financial foundation. The raised full-year guidance on earnings and cash flow further underscores management's confidence in the company's trajectory.
CNO Financial Group's Q2 2024 results reveal interesting trends in the middle-income insurance market. The 4% increase in total new annualized premiums suggests steady demand for insurance products among this demographic, despite economic uncertainties. Particularly noteworthy is the 18% growth in the Worksite Division, indicating a robust employment market and increased interest in employer-sponsored insurance offerings.
The significant growth in Medicare-related products - Medicare Supplement NAP up 16% and Medicare Advantage policies sold up 78% - points to an aging population becoming increasingly aware of the need for comprehensive health coverage. This trend is likely to continue as the baby boomer generation enters retirement age.
The 9% increase in annuity collected premiums suggests that middle-income consumers are increasingly focused on retirement planning, possibly driven by concerns about the long-term viability of social security and pension systems. This trend could present opportunities for insurers to develop and market innovative retirement products tailored to this demographic.
Overall, these results indicate a growing awareness of insurance and financial planning needs among middle-income consumers, presenting significant opportunities for companies like CNO that specialize in serving this market segment. The challenge will be to maintain growth and profitability in an increasingly competitive landscape while navigating potential economic headwinds.
Earnings per share up
"CNO delivered excellent earnings and operating performance across the board, led by continued sales momentum, a growing agent force, and strong underwriting margins and net investment income in the quarter," said Gary C. Bhojwani, chief executive officer. "Sales grew for the eighth consecutive quarter, illustrating the strength of our broad product offerings and diverse distribution model to serve the middle-income market."
"All of our Growth Scorecard performance metrics were up in the quarter. Our capital position remained strong as we increased book value per share, while returning more than
"CNO enters the second half of the year with consistent sales momentum and continuing favorable macro trends. We remain well-positioned to deliver sustainable profitable growth and long-term shareholder value."
Second Quarter 2024 Highlights (as compared to the corresponding period in the prior year where applicable)
- Total new annualized premiums ("NAP") (4) up
4% ; Worksite Division NAP up18% ; Consumer Division NAP up2% - Medicare Supplement NAP up
16% ; Medicare Advantage policies sold up78% - Annuity collected premiums up
9% ; Policyholder and client assets up9% - Returned
$77.2 million - Book value per share was
$22.80 30% ; book value per diluted share, excluding accumulated other comprehensive loss, (2) was$36.00 11% - Return on equity ("ROE") of
19.9% ; operating ROE, as adjusted, (5) of11.2% - Raising full-year guidance on earnings and cash flow
FINANCIAL SUMMARY
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Net operating income, a non-GAAP(a) financial measure, is used consistently by CNO's management to evaluate the operating performance of the Company and is a measure commonly used in the life insurance industry. It differs from net income primarily because it excludes certain non-operating items such as net realized investment gains (losses) from sales and change in the allowance for credit losses, changes in fair values of embedded derivatives and market risk benefits and the liability for a deferred compensation plan, and certain significant and unusual items included in net income. Management believes an analysis of net operating income is important in understanding the profitability and operating trends of the Company's business. Net income is the most directly comparable GAAP measure. | |||||||||||||
Per diluted share | |||||||||||||
Quarter ended | Quarter ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2024 | 2023 | % change | 2024 | 2023 | % change | ||||||||
Income from insurance products (b) | $ 1.10 | $ 0.64 | 72 | $ 120.5 | $ 73.7 | 64 | |||||||
Fee income | 0.01 | — | n/m | 0.8 | 0.6 | 33 | |||||||
Investment income not allocated to product lines (c) | 0.41 | 0.24 | 71 | 44.8 | 28.0 | 60 | |||||||
Expenses not allocated to product lines | (0.16) | (0.18) | (11) | (17.5) | (21.1) | (17) | |||||||
Operating earnings before taxes | 1.36 | 0.70 | 148.6 | 81.2 | |||||||||
Income tax expense on operating income | (0.31) | (0.16) | 94 | (34.0) | (18.9) | 80 | |||||||
Net operating income (1) | 1.05 | 0.54 | 94 | 114.6 | 62.3 | 84 | |||||||
Net realized investment losses from sales and change in allowance for credit losses | (0.20) | (0.27) | (21.9) | (31.3) | |||||||||
Net change in market value of investments recognized in earnings | 0.04 | (0.04) | 4.7 | (4.0) | |||||||||
Changes in fair value of embedded derivative liabilities and market risk benefits | 0.15 | 0.44 | 16.8 | 50.4 | |||||||||
Other | 0.02 | — | 2.4 | (0.2) | |||||||||
Non-operating income before taxes | 0.01 | 0.13 | 2.0 | 14.9 | |||||||||
Income tax expense on non-operating income | — | (0.03) | (0.3) | (3.5) | |||||||||
Net non-operating income | 0.01 | 0.10 | 1.7 | 11.4 | |||||||||
Net income | $ 1.06 | $ 0.64 | $ 116.3 | $ 73.7 | |||||||||
Weighted average diluted shares outstanding | 109.3 | 115.6 | |||||||||||
n/m - not meaningful | |
____________________ | |
(a) | GAAP is defined as accounting principles generally accepted in |
(b) | Income from insurance products is the sum of the insurance margins of the annuity, health and life product lines, less expenses allocated to the insurance product lines. It excludes the income from our fee income business, investment income not allocated to product lines, net expenses not allocated to product lines (primarily holding company expenses) and income taxes. Insurance margin is management's measure of the profitability of its annuity, health and life segments' performance and consists of insurance policy income plus allocated investment income less insurance policy benefits, interest credited, commissions, advertising expense and amortization of acquisition costs. |
(c) | Investment income not allocated to product lines represents net investment income less: (i) equity returns credited to policyholder account balances; (ii) the investment income allocated to our product lines; (iii) interest expense on notes payable, investment borrowings and financing arrangements; (iv) expenses related to the funding agreement-backed notes ("FABN") program; and (v) certain expenses related to benefit plans that are offset by special-purpose investment income; plus (vi) the impact of annual option forfeitures related to fixed indexed annuity surrenders. |
FINANCIAL SUMMARY (continued)
| |||||||
Shareholders' equity, excluding accumulated other comprehensive income (loss), and book value per share, excluding accumulated other comprehensive income (loss), are non-GAAP measures that are utilized by management to view the business without the effect of accumulated other comprehensive income (loss) which is primarily attributable to fluctuations in interest rates associated with fixed maturities, available for sale. Management views the business in this manner because the Company has the ability and generally, the intent, to hold investments to maturity and meaningful trends can be more easily identified without the fluctuations. In addition, shareholders' equity excludes net operating loss carryforwards in our non-GAAP return on equity measures as such assets are not discounted and, accordingly, will not provide a return to shareholders until after it is realized as a reduction to taxes that would otherwise be paid. Management believes that excluding this value from the equity component of this measure enhances the understanding of the effect these non-discounted assets have on operating returns. | |||||||
Quarter ended | |||||||
June 30, | |||||||
2024 | 2023 | ||||||
Trailing twelve months return on equity (a) | 19.9 % | 14.8 % | |||||
Trailing twelve months operating return on equity, excluding accumulated other comprehensive income (loss) | 11.2 % | 8.0 % | |||||
Trailing twelve months operating return, excluding significant items, on equity, excluding accumulated other | 10.0 % | 8.0 % | |||||
Shareholders' equity | $ 2,428.9 | $ 1,995.8 | |||||
Accumulated other comprehensive loss | 1,464.3 | 1,733.5 | |||||
Shareholders' equity, excluding accumulated other comprehensive loss | 3,893.2 | 3,729.3 | |||||
Net operating loss carryforwards | (296.5) | (126.3) | |||||
Shareholders' equity, excluding accumulated other comprehensive loss and net operating loss carryforwards | $ 3,596.7 | $ 3,603.0 | |||||
Book value per diluted share | $ 22.46 | $ 17.31 | |||||
Accumulated other comprehensive loss | 13.54 | 15.03 | |||||
Book value per diluted share, excluding accumulated other comprehensive loss (a non-GAAP financial | $ 36.00 | $ 32.34 | |||||
____________________ |
(a) Calculated using average shareholders' equity for the measurement period. |
Non-Operating Items
Net investment losses in 2Q24 were
During 2Q24 and 2Q23, we recognized an increase (decrease) in earnings of
During 2Q24 and 2Q23, we recognized an increase in earnings of
In 2Q24, other non-operating items included an increase in earnings of
INVESTMENT PORTFOLIO | |||||
Fixed maturities, available for sale, at amortized cost by asset class as of June 30, 2024 are as follows: | |||||
Investment | Below | Total | |||
Corporate securities | $ 12,849.3 | $ 601.4 | $ 13,450.7 | ||
Certificates of deposit | 470.2 | — | 470.2 | ||
United States Treasury securities and obligations of | 278.6 | — | 278.6 | ||
States and political subdivisions | 3,182.9 | 9.6 | 3,192.5 | ||
Foreign governments | 101.1 | — | 101.1 | ||
Asset-backed securities | 1,448.4 | 103.8 | 1,552.2 | ||
Agency residential mortgage-backed securities | 787.3 | — | 787.3 | ||
Non-agency residential mortgage-backed securities | 1,231.7 | 435.5 | (a) | 1,667.2 | |
Collateralized loan obligations | 1,227.6 | — | 1,227.6 | ||
Commercial mortgage-backed securities | 2,290.1 | 88.6 | 2,378.7 | ||
Total | $ 23,867.2 | $ 1,238.9 | $ 25,106.1 | ||
____________________ | |
(a) | Certain structured securities rated below investment grade by Nationally Recognized Statistical Rating Organizations may be assigned a NAIC 1 or NAIC 2 designation based on the cost basis of the security relative to estimated recoverable amounts as determined by the National Association of Insurance Commissioners (NAIC). |
The fair value of CNO's available for sale fixed maturity portfolio was
Statutory (based on non-GAAP measures) and GAAP Capital Information
The consolidated statutory risk-based capital ratio of our
During 2Q24, we repurchased
Unrestricted cash and investments held by our holding company were
Book value per common share was
The debt-to-capital ratio was
Return on equity for the trailing four quarters ended June 30, 2024 and 2023, was
In this news release, CNO includes non-GAAP measures to enhance investors' understanding of management's view of the business. The non-GAAP measures are not a substitute for GAAP, but rather a supplement to increase transparency by providing a broader perspective. CNO's definitions of non-GAAP measures may differ from other companies' definitions. More detailed information including various GAAP and non-GAAP measurements are located at CNOinc.com in the Investors section under SEC Filings.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS:
This press release may contain forward-looking statements within the meaning of federal securities laws. These prospective statements reflect management's current expectations, but are not guarantees of future performance. Accordingly, please refer to CNO's cautionary statement regarding forward-looking statements, and the business environment in which the Company operates, contained in the Company's Form 10-K for the year ended December 31, 2023 and any subsequent Form 10-Q or Form 10-K on file with the Securities and Exchange Commission and on the Company's website at CNOinc.com in the Investors section. CNO specifically disclaims any obligation to update or revise any forward-looking statement because of new information, future developments or otherwise.
EARNINGS RELEASE CONFERENCE CALL WEBCAST:
The Company will host a conference call to discuss results on July 30, 2024 at 11:00 a.m. Eastern Time. During the call, we will be referring to a presentation that will be available at the Investors section of the company's website.
To participate by dial-in, please register at https://www.netroadshow.com/events/login?show=51d949bc&confId=68394. Upon registering, you will be provided with call details and a registrant ID used to track attendance on the conference call. Reminders will also be sent to registered participants via email.
For those investors who prefer to listen to the call online, we will be broadcasting the call live via webcast. The event can be accessed through the Investors section of the company's website: ir.CNOinc.com. Participants should go to the website at least 15 minutes before the event to register and download any necessary audio software.
ABOUT CNO FINANCIAL GROUP
CNO Financial Group, Inc. (NYSE: CNO) secures the future of middle-income America. CNO provides life and health insurance, annuities, financial services, and workforce benefits solutions through our family of brands, including Bankers Life, Colonial Penn, Optavise and Washington National. Our customers work hard to save for the future, and we help protect their health, income, and retirement needs with 3.2 million policies and
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollars in millions) (unaudited) | |||
June 30, | December 31, | ||
ASSETS | |||
Investments: | |||
Fixed maturities, available for sale, at fair value (net of allowance for credit losses: June 30, | $ 22,617.9 | $ 21,506.2 | |
Equity securities at fair value | 117.7 | 96.9 | |
Mortgage loans (net of allowance for credit losses: June 30, 2024 - | 2,176.0 | 2,064.1 | |
Policy loans | 131.3 | 128.5 | |
Trading securities | 207.8 | 222.7 | |
Investments held by variable interest entities (net of allowance for credit losses: June 30, 2024 - | 425.5 | 768.6 | |
Other invested assets | 1,554.0 | 1,353.4 | |
Total investments | 27,230.2 | 26,140.4 | |
Cash and cash equivalents - unrestricted | 878.8 | 774.5 | |
Cash and cash equivalents held by variable interest entities | 113.3 | 114.5 | |
Accrued investment income | 262.5 | 251.5 | |
Present value of future profits | 170.4 | 180.7 | |
Deferred acquisition costs | 2,047.2 | 1,944.4 | |
Reinsurance receivables (net of allowance for credit losses: June 30, 2024 - | 3,910.9 | 4,040.7 | |
Market risk benefit asset | 84.5 | 75.4 | |
Income tax assets, net | 882.8 | 936.2 | |
Assets held in separate accounts | 3.2 | 3.1 | |
Other assets | 706.4 | 641.1 | |
Total assets | $ 36,290.2 | $ 35,102.5 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Liabilities: | |||
Liabilities for insurance products: | |||
Policyholder account balances | $ 16,637.9 | $ 15,667.8 | |
Future policy benefits | 11,479.4 | 11,928.2 | |
Market risk benefit liability | 3.2 | 7.4 | |
Liability for life insurance policy claims | 59.6 | 62.1 | |
Unearned and advanced premiums | 220.9 | 218.9 | |
Liabilities related to separate accounts | 3.2 | 3.1 | |
Other liabilities | 934.4 | 848.8 | |
Investment borrowings | 2,189.0 | 2,189.3 | |
Borrowings related to variable interest entities | 501.4 | 820.8 | |
Notes payable – direct corporate obligations | 1,832.3 | 1,140.5 | |
Total liabilities | 33,861.3 | 32,886.9 | |
Commitments and Contingencies | |||
Shareholders' equity: | |||
Common stock ( | 1.1 | 1.1 | |
Additional paid-in capital | 1,797.6 | 1,891.5 | |
Accumulated other comprehensive loss | (1,464.3) | (1,576.8) | |
Retained earnings | 2,094.5 | 1,899.8 | |
Total shareholders' equity | 2,428.9 | 2,215.6 | |
Total liabilities and shareholders' equity | $ 36,290.2 | $ 35,102.5 | |
CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in millions, except per share data) (unaudited) | |||||||
Three months ended | Six months ended | ||||||
June 30, | June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenues: | |||||||
Insurance policy income | $ 641.5 | $ 628.3 | $ 1,269.9 | $ 1,253.8 | |||
Net investment income: | |||||||
General account assets | 351.7 | 308.1 | 653.6 | 600.3 | |||
Policyholder and other special-purpose portfolios | 57.4 | 91.6 | 224.7 | 142.4 | |||
Investment gains (losses): | |||||||
Realized investment losses | (26.3) | (21.8) | (36.3) | (36.4) | |||
Other investment gains (losses) | 9.1 | (13.5) | 26.9 | (13.5) | |||
Total investment losses | (17.2) | (35.3) | (9.4) | (49.9) | |||
Fee revenue and other income | 32.8 | 30.1 | 83.9 | 82.2 | |||
Total revenues | 1,066.2 | 1,022.8 | 2,222.7 | 2,028.8 | |||
Benefits and expenses: | |||||||
Insurance policy benefits | 568.8 | 565.9 | 1,200.2 | 1,175.6 | |||
Liability for future policy benefits remeasurement (gain) loss | (30.0) | 8.3 | (36.4) | 8.9 | |||
Change in fair value of market risk benefits | (0.2) | (17.6) | (13.9) | (2.8) | |||
Interest expense | 64.2 | 57.6 | 124.4 | 112.3 | |||
Amortization of deferred acquisition costs and present value of future | 61.4 | 56.0 | 121.9 | 111.5 | |||
Other operating costs and expenses | 251.4 | 256.5 | 529.7 | 528.2 | |||
Total benefits and expenses | 915.6 | 926.7 | 1,925.9 | 1,933.7 | |||
Income before income taxes | 150.6 | 96.1 | 296.8 | 95.1 | |||
Income tax expense | 34.3 | 22.4 | 68.2 | 22.2 | |||
Net income | $ 116.3 | $ 73.7 | $ 228.6 | $ 72.9 | |||
Earnings per common share: | |||||||
Basic: | |||||||
Weighted average shares outstanding | 107,731,000 | 114,273,000 | 108,347,000 | 114,409,000 | |||
Net income | $ 1.08 | $ .64 | $ 2.11 | $ .64 | |||
Diluted: | |||||||
Weighted average shares outstanding | 109,258,000 | 115,650,000 | 110,052,000 | 116,189,000 | |||
Net income | $ 1.06 | $ .64 | $ 2.08 | $ .63 | |||
NOTES | |
(1) | Management believes that an analysis of net income applicable to common stock before: (i) net realized investment gains or losses from sales, impairments and the change in allowance for credit losses, net of taxes; (ii) net change in market value of investments recognized in earnings, net of taxes; (iii) changes in fair value of embedded derivative liabilities and market risk benefits related to our fixed indexed annuities, net of taxes; (iv) fair value changes related to the agent deferred compensation plan, net of taxes; (v) loss related to reinsurance transaction, net of taxes; (vi) loss on extinguishment of debt, net of taxes; (vii) changes in the valuation allowance for deferred tax assets and other tax items; and (viii) other non-operating items consisting primarily of earnings attributable to variable interest entities, net of taxes ("net operating income," a non-GAAP financial measure) is important to evaluate the financial performance of the company, and is a key measure commonly used in the life insurance industry. Management uses this measure to evaluate performance because the items excluded from net operating income can be affected by events that are unrelated to the company's underlying fundamentals. A reconciliation of net operating income to net income applicable to common stock is provided in the table on page 2. Additional information concerning this non-GAAP measure is included in our periodic filings with the Securities and Exchange Commission that are available in the "Investors - SEC Filings" section of CNO's website, CNOinc.com. |
(2) | Book value per diluted share reflects the potential dilution that could occur if outstanding stock options were exercised and restricted stock and performance units were vested. The dilution from options, restricted shares and performance units is calculated using the treasury stock method. Under this method, we assume the proceeds from the exercise of the options (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the closing market price on the last day of the period. In addition, the calculation of this non-GAAP measure differs from the corresponding GAAP measure because accumulated other comprehensive income (loss) has been excluded from the value of capital used to determine this measure. Management believes this non-GAAP measure is useful because it removes the volatility that arises from changes in the unrealized appreciation (depreciation) of our investments. |
(3) | The calculation of this non-GAAP measure differs from the corresponding GAAP measure because accumulated other comprehensive income (loss) has been excluded from the value of capital used to determine this measure. Management believes this non-GAAP measure is useful because it removes the volatility that arises from changes in the unrealized appreciation (depreciation) of our investments. |
(4) | Measured by new annualized premiums for life and health products, which includes |
(5) | The following summarizes the calculations of: (i) operating return on equity, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure); (ii) operating return, excluding significant items, on equity, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure); and (iii) return on equity are as follows (dollars in millions): |
Trailing twelve months ended | |||||
2Q24 | 2Q23 | ||||
Net operating income | $ 407.3 | $ 281.7 | |||
Net operating income, excluding significant items | $ 364.0 | $ 281.2 | |||
Net income | $ 432.2 | $ 286.8 | |||
Average common equity, excluding accumulated other | |||||
comprehensive income (loss) and net operating loss | |||||
carryforwards (a non-GAAP financial measure) | $ 3,648.4 | $ 3,519.3 | |||
Average common shareholders' equity | $ 2,171.4 | $ 1,931.5 | |||
Operating return on equity, excluding accumulated other | |||||
comprehensive income (loss) and net operating loss | |||||
carryforwards (a non-GAAP financial measure) | 11.2 % | 8.0 % | |||
Operating return, excluding significant items, on equity, excluding | |||||
accumulated other comprehensive income (loss) and net | |||||
operating loss carryforwards (a non-GAAP financial measure) | 10.0 % | 8.0 % | |||
Return on equity | 19.9 % | 14.8 % | |||
The following summarizes: (i) net operating income; (ii) significant items; (iii) net operating income, excluding significant items; and (iv) net income (loss) (dollars in millions): |
Net operating | ||||||||||||
Net operating | income, | |||||||||||
income, | excluding | Net | ||||||||||
excluding | significant | income - | ||||||||||
Net operating | Significant | significant | items - trailing | Net | trailing | |||||||
income | items | items (a) | four quarters | income (loss) | four quarters | |||||||
3Q22 | $ 77.9 | $ — | $ 77.9 | $ 360.9 | $ 175.9 | $ 749.8 | ||||||
4Q22 | 82.9 | (0.5) | (b) | 82.4 | 342.5 | 38.0 | 630.6 | |||||
1Q23 | 58.6 | — | 58.6 | 336.6 | (0.8) | 446.4 | ||||||
2Q23 | 62.3 | — | 62.3 | 281.2 | 73.7 | 286.8 | ||||||
3Q23 | 101.3 | (16.9) | (c) | 84.4 | 287.7 | 167.3 | 278.2 | |||||
4Q23 | 133.9 | (26.4) | (d) | 107.5 | 312.8 | 36.3 | 276.5 | |||||
1Q24 | 57.5 | — | 57.5 | 311.7 | 112.3 | 389.6 | ||||||
2Q24 | 114.6 | — | 114.6 | 364.0 | 116.3 | 432.2 | ||||||
(a) See note (6) for additional information. | ||||||||||||
(b) Comprised of | ||||||||||||
(c) Comprised of | ||||||||||||
(d) Comprised of | ||||||||||||
A reconciliation of pre-tax operating earnings (a non-GAAP financial measure) to net income is as follows (dollars in millions): |
Twelve months ended | |||||
2Q24 | 2Q23 | ||||
Pre-tax operating earnings (a non-GAAP financial measure) | $ 525.3 | $ 365.6 | |||
Income tax expense | (118.0) | (83.9) | |||
Net operating income | 407.3 | 281.7 | |||
Non-operating items: | |||||
Net realized investment losses from sales, impairments and change in allowance for credit | (45.2) | (71.9) | |||
Net change in market value of investments recognized in earnings | 16.7 | (31.9) | |||
Changes in fair value of embedded derivative liabilities and market risk benefits | 65.6 | 99.5 | |||
Fair value changes related to the agent deferred compensation plan | — | 12.2 | |||
Other | (3.9) | (2.0) | |||
Non-operating income before taxes | 33.2 | 5.9 | |||
Income tax expense on non-operating income | (8.3) | (0.8) | |||
Net non-operating income | 24.9 | 5.1 | |||
Net income | $ 432.2 | $ 286.8 | |||
A reconciliation of consolidated capital, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure) to common shareholders' equity, is as follows (dollars in millions): |
1Q22 | 2Q22 | 3Q22 | 4Q22 | ||||||
Consolidated capital, excluding accumulated other comprehensive | |||||||||
income (loss) and net operating loss carryforwards | |||||||||
(a non-GAAP financial measure) | $ 3,141.7 | $ 3,329.0 | $ 3,510.3 | $ 3,557.1 | |||||
Net operating loss carryforwards | 238.2 | 214.7 | 190.9 | 169.0 | |||||
Accumulated other comprehensive loss | (561.5) | (1,415.8) | (1,837.8) | (1,957.3) | |||||
Common shareholders' equity | $ 2,818.4 | $ 2,127.9 | $ 1,863.4 | $ 1,768.8 | |||||
1Q23 | 2Q23 | 3Q23 | 4Q23 | ||||||
Consolidated capital, excluding accumulated other comprehensive | |||||||||
income (loss) and net operating loss carryforwards | |||||||||
(a non-GAAP financial measure) | $ 3,543.8 | $ 3,603.0 | $ 3,744.2 | $ 3,712.8 | |||||
Net operating loss carryforwards | 152.4 | 126.3 | 102.6 | 79.6 | |||||
Accumulated other comprehensive loss | (1,664.4) | (1,733.5) | (1,956.7) | (1,576.8) | |||||
Common shareholders' equity | $ 2,031.8 | $ 1,995.8 | $ 1,890.1 | $ 2,215.6 | |||||
1Q24 | 2Q24 | ||||||||
Consolidated capital, excluding accumulated other comprehensive | |||||||||
income (loss) and net operating loss carryforwards | |||||||||
(a non-GAAP financial measure) | $ 3,536.8 | $ 3,596.7 | |||||||
Net operating loss carryforwards | 311.2 | 296.5 | |||||||
Accumulated other comprehensive loss | (1,480.3) | (1,464.3) | |||||||
Common shareholders' equity | $ 2,367.7 | $ 2,428.9 | |||||||
A reconciliation of consolidated capital, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (a non-GAAP financial measure) to common shareholders' equity, is as follows (dollars in millions): |
Trailing four quarter average | |||||
2Q24 | 2Q23 | ||||
Consolidated capital, excluding accumulated other comprehensive | |||||
income (loss) and net operating loss carryforwards | |||||
(a non-GAAP financial measure) | $ 3,648.4 | $ 3,519.3 | |||
Net operating loss carryforwards | 176.2 | 170.7 | |||
Accumulated other comprehensive loss | (1,653.2) | (1,758.5) | |||
Common shareholders' equity | $ 2,171.4 | $ 1,931.5 | |||
(6) | The tables below summarize the financial impact of significant items on our net operating income. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions, except per share data). |
Three months ended | ||||||
December 31, 2023 | ||||||
Actual | Significant | Excluding items | ||||
Insurance product margin | ||||||
Annuity margin | $ 63.6 | $ (12.9) | (a) | $ 50.7 | ||
Health margin | 146.4 | (22.3) | (a) | 124.1 | ||
Life margin | 64.6 | 1.3 | (a) | 65.9 | ||
Total insurance product margin | 274.6 | (33.9) | 240.7 | |||
Allocated expenses | (138.8) | — | (138.8) | |||
Income from insurance products | 135.8 | (33.9) | 101.9 | |||
Fee income | 17.8 | — | 17.8 | |||
Investment income not allocated to product lines | 38.3 | — | 38.3 | |||
Expenses not allocated to product lines | (19.8) | — | (19.8) | |||
Operating earnings before taxes | 172.1 | (33.9) | 138.2 | |||
Income tax (expense) benefit on operating income | (38.2) | 7.5 | (30.7) | |||
Net operating income | $ 133.9 | $ (26.4) | $ 107.5 | |||
Net operating income per diluted share | $ 1.18 | $ (0.23) | $ 0.95 | |||
___________ |
(a) Comprised of |
Three months ended | ||||||
September 30, 2023 | ||||||
Actual | Significant | Excluding items | ||||
Insurance product margin | ||||||
Annuity margin | $ 57.0 | $ — | $ 57.0 | |||
Health margin | 123.2 | — | 123.2 | |||
Life margin | 59.8 | — | 59.8 | |||
Total insurance product margin | 240.0 | — | 240.0 | |||
Allocated expenses | (153.2) | — | (153.2) | |||
Income from insurance products | 86.8 | — | 86.8 | |||
Fee income | (2.9) | — | (2.9) | |||
Investment income not allocated to product lines | 38.4 | — | 38.4 | |||
Expenses not allocated to product lines | 7.5 | (21.7) | (a) | (14.2) | ||
Operating earnings before taxes | 129.8 | (21.7) | 108.1 | |||
Income tax (expense) benefit on operating income | (28.5) | 4.8 | (23.7) | |||
Net operating income | $ 101.3 | $ (16.9) | $ 84.4 | |||
Net operating income per diluted share | $ 0.88 | $ (0.14) | $ 0.74 | |||
___________ |
(a) Comprised of |
Three months ended | ||||||
December 31, 2022 | ||||||
Actual | Significant | Excluding items | ||||
Insurance product margin | ||||||
Annuity margin | $ 50.8 | $ 3.2 | (a) | $ 54.0 | ||
Health margin | 140.4 | (18.3) | (a) | 122.1 | ||
Life margin | 43.3 | 14.4 | (a) | 57.7 | ||
Total insurance product margin | 234.5 | (0.7) | 233.8 | |||
Allocated expenses | (149.1) | — | (149.1) | |||
Income from insurance products | 85.4 | (0.7) | 84.7 | |||
Fee income | 9.2 | — | 9.2 | |||
Investment income not allocated to product lines | 25.2 | — | 25.2 | |||
Expenses not allocated to product lines | (12.8) | — | (12.8) | |||
Operating earnings before taxes | 107.0 | (0.7) | 106.3 | |||
Income tax (expense) benefit on operating income | (24.1) | 0.2 | (23.9) | |||
Net operating income | $ 82.9 | $ (0.5) | $ 82.4 | |||
Net operating income per diluted share | $ 0.71 | $ — | $ 0.71 | |||
___________ |
(a) Comprised of |
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SOURCE CNO Financial Group
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