CNO Financial Group reported third-quarter 2024 net income of $9.3 million, or $0.09 per diluted share, down from $167.3 million, or $1.46 per diluted share, in the third quarter of 2023.
The company noted that non-economic accounting impacts from market volatility affected results in both periods, reducing net income in 2024 and boosting it in 2023. Excluding these impacts, net operating income was $119.2 million, or $1.11 per diluted share, up from $101.3 million, or $0.88 per diluted share, a year earlier.
Third-quarter results reflected key growth metrics: annuity collected premiums rose 25%, policyholder and client assets increased 12%, and new annualized premiums for Medicare Supplement were up 15% while Medicare Advantage sales grew 26%.
Producing agent counts in CNO's Consumer Division and Worksite Division increased by 5% and 17%, respectively. Additionally, CNO raised its full-year guidance for earnings and cash flow and returned $106.8 million to shareholders.
The company’s book value per share at the end of the quarter was $25.86, while book value per diluted share, excluding accumulated other comprehensive loss, was $35.84. Return on equity stood at 11.8%, with an adjusted operating ROE of 11.7%.
In third-quarter investment activity, CNO recorded net investment losses of $11.1 million, including a positive change in the credit loss allowance of $11.6 million. This compares to net investment losses of $20.1 million in the prior year, which included an unfavorable change in credit loss allowances of $2.3 million.
The quarter also saw an earnings increase of $12.3 million from market value changes in investments, compared to a $9.2 million decrease in the prior year.
Changes in the estimated fair value of embedded derivative liabilities and market risk benefits on CNO’s fixed indexed annuities impacted earnings by $(127.1) million in 3Q24, compared to a $109.4 million increase in 3Q23. These changes reflected shifts in market interest rates and equity impacts and were affected by CNO's annual actuarial review, the firm stated.
Non-operating items in the quarter included an $8.3 million charge related to a 5% workforce reduction and outsourcing transition costs. CNO also recorded mark-to-market adjustments on the agent deferred compensation plan liability, with a $3.5 million decrease in 3Q24 compared to a $6.8 million increase in 3Q23, driven by changes in actuarial assumptions.
The fair value of CNO's available-for-sale fixed maturity portfolio was $23.7 billion as of September 30, 2024, with an amortized cost of $25.2 billion. Net unrealized losses consisted of $300.3 million in unrealized gains and $1.8 billion in unrealized losses, with a credit loss allowance of $25.9 million.
Gary C Bhojwani (pictured above), CEO of CNO, highlighted the company’s net operating income and sales performance, noting ongoing agent force growth and underwriting margin strength.
"We posted our ninth consecutive quarter of sales growth, led by record annuity collected premiums and strong Medicare and long-term care sale,” Bhojwani said. He added that the company’s sustained growth is contributing to earnings growth, with operating earnings per share up by 26%.
Bhojwani also noted that CNO’s focus remains on balancing production, profitability, and capital management, as it continues to serve the middle-income market with targeted products and distribution capabilities.
What are your thoughts on this story? Please feel free to share your comments below.
