CNO Financial Group Reports Second Quarter 2025 Results
Strong production; Solid financial results; On track to deliver 2025-2027 ROE targets
CARMEL, Ind., July 28, 2025 /PRNewswire/ -- CNO Financial Group, Inc. (NYSE:CNO) today reported net income of $91.8 million, or $0.91 per diluted share, in 2Q25 compared to $116.3 million or $1.06 per diluted share, in 2Q24. Non-economic accounting impacts due to market volatility increased net income in both 2Q25 and 2Q24. Net operating income,(1) which excludes these non-economic accounting impacts, was $87.5 million, or $0.87 per diluted share, in 2Q25 compared to $114.6 million, or $1.05 per diluted share, in 2Q24.
"Building on our strong second quarter and first half results, CNO remains on track to achieve our full-year 2025-2027 return on equity targets," said Gary C. Bhojwani, chief executive officer. "Our consistent, repeatable results demonstrate the steady execution of our strategic plan and continue to position us for sustained, profitable growth."
"Our business fundamentals remain strong. This quarter marked our twelfth consecutive quarter of sustained sales momentum underpinned by growing underwriting margins and investment income. Second quarter 2024 earnings were elevated relative to our typical run rate, thereby impacting 2025 comparables. Operating earnings per share are up 6% year-to-date, in line with expectations. Our robust capital position enabled us to once again deliver meaningful results while returning capital to shareholders and investing in the long-term health of the business."
"CNO remains uniquely positioned to serve the growing needs of the middle-income market with our diverse products and distribution. With considerable momentum and favorable demographic tailwinds, we are well-equipped to navigate the evolving economic environment and continue to drive improved profitability."
Second Quarter 2025 Highlights (as compared to the corresponding period in the prior year unless otherwise stated)
Total new annualized premiums ("NAP")(4) up 17%; Total Life NAP up 22%; Total Health NAP up 11%
Consumer Division NAP up 17%; Worksite Division NAP up 16%
Annuity collected premiums up 19%; Client assets in brokerage and advisory up 27%
Returned $116.7 million to shareholders
Book value per share was $25.92; Book value per diluted share, excluding accumulated other comprehensive loss,(2) was $38.05, up 6%
Return on equity ("ROE") of 11.9%; Operating ROE(5) of 11.8%
FINANCIAL SUMMARYQuarter End(Amounts in millions, except per share data)(Unaudited)
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 as defined in note (1). 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,
2025
2024
% change
2025
2024
% change
Income from insurance products (b)
1.03
$ 1.10
(6)
$ 103.0
$ 120.5
(15)
Fee income
0.01
0.01
—
0.8
0.8
—
Investment income not allocated to product lines (c)
0.33
0.41
(20)
33.8
44.8
(25)
Expenses not allocated to product lines
(0.25)
(0.16)
56
(25.3)
(17.5)
45
Operating earnings before taxes
1.12
1.36
112.3
148.6
Income tax expense on operating income
(0.25)
(0.31)
(19)
(24.8)
(34.0)
(27)
Net operating income (1)
0.87
1.05
(17)
87.5
114.6
(24)
Net realized investment losses from sales, impairments and change in allowance for credit losses
(0.22)
(0.20)
(21.8)
(21.9)
Net change in market value of investments recognized in earnings
0.03
0.04
3.4
4.7
Changes in fair value of embedded derivative liabilities and market risk benefits
0.25
0.15
25.2
16.8
Other
(0.01)
0.02
(1.1)
2.4
Non-operating income before taxes
0.05
0.01
5.7
2.0
Income tax expense on non-operating income
(0.01)
—
(1.4)
(0.3)
Net non-operating income
0.04
0.01
4.3
1.7
Net income
$ 0.91
$ 1.06
$ 91.8
$ 116.3
Weighted average diluted shares outstanding
100.4
109.3
____________________
(a)
GAAP is defined as accounting principles generally accepted in the United States of America.
(b)
Income from insurance products is the sum of the insurance product 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 product 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. Investment income not allocated to product lines includes investment income on investments in excess of amounts allocated to product lines, investments held by our holding companies, the spread we earn from our federal home loan bank ("FHLB") investment borrowing and FABN programs and variable components of investment income (including call and prepayment income, adjustments to returns on structured securities due to cash flow changes, income (loss) from company-owned life insurance ("COLI") and alternative investments income not allocated to product lines), net of interest expense on corporate debt and financing arrangements. The spread earned from our FHLB investment borrowing and FABN programs includes the investment income on the matched assets less: (i) interest on investment borrowings related to the FHLB investment borrowing program; (ii) interest credited on funding agreements; and (iii) amortization of deferred acquisition costs related to the FABN program.
FINANCIAL SUMMARY (continued)Management vs. GAAP Measures(Dollars in millions, except per share data)(Unaudited)
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,
2025
2024
Trailing four quarters:
Net Income
$ 305.5
$ 432.2
Net operating income (a non-GAAP financial measure)
425.8
407.3
Net operating income, excluding significant items
401.7
364.0
Average of each of the trailing four quarters average:
Shareholders' equity
$ 2,558.5
$ 2,171.4
Accumulated other comprehensive loss
1,271.2
1,653.2
Shareholders' equity, excluding accumulated other comprehensive loss
3,829.7
3,824.6
Net operating loss carryforwards
(232.4)
(176.2)
Shareholders' equity, excluding accumulated other comprehensive loss and net operating loss carryforwards
$ 3,597.3
$ 3,648.4
Ratios:
Return on equity
11.9 %
19.9 %
Operating return on equity (a non-GAAP financial measure) (5)
11.8 %
11.2 %
Operating return on equity, excluding significant items (a non-GAAP financial measure) (5)
11.2 %
10.0 %
Shareholders' equity
$ 2,522.7
$ 2,428.9
Accumulated other comprehensive loss
1,252.7
1,464.3
Shareholders' equity, excluding accumulated other comprehensive loss
3,775.4
3,893.2
Basic shares outstanding
97,319,000
106,513,566
Diluted shares outstanding
99,221,445
108,140,009
Book value per share
$ 25.92
$ 22.80
Book value per diluted share
$ 25.42
$ 22.46
Accumulated other comprehensive loss per diluted share
12.63
13.54
Book value per diluted share, excluding accumulated other comprehensive loss (a non-GAAP financial measure) (2)
$ 38.05
$ 36.00
Non-Operating ItemsNet investment losses in 2Q25 were $21.8 million, including the unfavorable change in the allowance for credit losses of $1.0 million. Net investment losses in 2Q24 were $21.9 million, including the favorable change in the allowance for credit losses of $4.1 million.
During 2Q25 and 2Q24, we recognized an increase in earnings of $3.4 million and $4.7 million, respectively, due to the net change in market value of investments.
In 2Q24, we recognized an increase in earnings of $3.5 million for the mark-to-market change in the agent deferred compensation plan liability which was impacted by changes in the underlying actuarial assumptions used to value the liability. We recognize the mark-to-market change in the estimated value of this liability through earnings as assumptions change.
During 2Q25 and 2Q24, we recognized an increase in earnings of $25.2 million and $16.8 million, respectively, resulting from changes in the estimated fair value of embedded derivative liabilities and market risk benefits related to our fixed indexed annuities. Such amounts include the impacts of changes in market interest rates and equity impacts used to determine the estimated fair values of the embedded derivatives and market risk benefits. In addition, certain 4Q24 and 1Q25 amounts were revised to conform to the current period's presentation for the correction of an error that is immaterial to the reported periods. The revision impacted net income, shareholders' equity, and the related metrics of book value per common share, debt-to-capital ratio, and net income, trailing four quarters for those periods.
Other non-operating items in 2Q25 included $3.2 million of expense related to TechMod, a three-year project to modernize certain elements of our technology. In addition, other non-operating items included a reduction in the allowance for credit losses on reinsurance of $2.0 million.
INVESTMENT PORTFOLIO(Dollars in millions)
Fixed maturities, available for sale, at amortized cost by asset class as of June 30, 2025 are as follows:
Investment grade
Below investment grade
Total
Corporate securities
13,380.8
$ 678.1
$ 14,058.9
United States Treasury securities and obligations of the United States government and agencies
217.9
—
217.9
States and political subdivisions
3,318.7
23.6
3,342.3
Foreign governments
113.6
—
113.6
Asset-backed securities
1,497.2
