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CNO Financial Group, Inc. (CNO)·Q3 2025 Earnings Summary

Executive Summary

  • Operating EPS of $1.29 beat S&P Global consensus by 37% (estimate $0.92); revenue of $1.189B beat by ~22% (estimate $0.974B). Book value per diluted share ex-AOCI rose 6% to $38.10, and operating ROE (TTM) was 12.1% . EPS/Revenue estimates from S&P Global.*
  • Management raised its 2027 operating ROE improvement target by 50 bps (to +200 bps off a ~10% 2024 run rate), executed a second Bermuda reinsurance transaction, and decided to exit the Worksite fee services business—actions expected to accelerate ROE improvement and free cash flow .
  • Insurance product margin rose 6% YoY (to $300.5M), with record Direct-to-Consumer and Worksite insurance sales; total NAP up 26% YoY to $125.1M .
  • Non-operating charges weighed on GAAP EPS ($0.24) due to a $96.7M impairment tied to prior fee-services acquisitions and $7.2M TechMod spend; nonetheless capital and liquidity remained above targets, and $60M of buybacks were executed in the quarter .

What Went Well and What Went Wrong

What Went Well

  • Record D2C and Worksite sales; total NAP +26% YoY; Consumer +27% and Worksite +20%. “We’re generating consistent, repeatable results...with record Direct-to-Consumer and Worksite insurance sales in the third quarter.” — CEO Gary Bhojwani .
  • Insurance product margin strength and investment yield tailwind: total margin $300.5M (+6% YoY); average yield on allocated investments 4.91% (+10 bps YoY) .
  • Strategic actions to improve ROE and cash flow: Bermuda treaty ceding ~$1.8B supplemental health reserves and 50% of new business; exit of fee services expected to raise pre-tax income by ~$20M annually .

What Went Wrong

  • GAAP EPS constrained by non-operating items: $96.7M goodwill/intangible impairment related to Web Benefits Design/DirectPath and $7.2M TechMod expense; net non-operating loss $104.1M .
  • Fee income segment underperformance impacted investment income vs expectations; management cited lower fee revenue and the Worksite fee services exit (substantially complete by 1H26) .
  • Medicare Supplement claims pressure baked into assumption review; CFO noted unfavorable morbidity within Medicare Supplement offset by favorable lapses/surrenders in Supplemental Health and FIAs .

Financial Results

Headline Financials vs prior periods

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Billions)$1.130B $1.152B $1.189B
Net Income Diluted EPS ($USD)$0.09 $0.91 $0.24
Operating EPS ($USD)$1.11 $0.87 $1.29
Insurance Product Margin ($USD Millions)$282.2 $252.4 $300.5
  • YoY: Operating EPS +16% to $1.29; revenue +5% to $1.189B; insurance product margin +6% .
  • QoQ: Operating EPS +48%; insurance product margin +19% .

Segment margin breakdown

Segment Margin ($USD Millions)Q3 2024Q2 2025Q3 2025
Annuity$91.1 $54.8 $72.9
Health$127.8 $134.0 $157.0
Life$63.3 $63.6 $70.6

KPIs

KPIQ3 2024Q2 2025Q3 2025
Total NAP ($USD Millions)$99.4 $119.9 $125.1
Consumer Division NAP ($USD Millions)$83.5 $101.9 $106.1
Worksite Division NAP ($USD Millions)$15.9 $18.0 $19.0
Annuity Collected Premiums ($USD Millions)$465.1 $520.5 $472.5
Client Assets in BD & Advisory ($USD Millions)$4,062.4 $4,591.7 $5,039.7
Annuity Account Values ($USD Millions)$12,413.0 $12,856.0 $13,068.1
Producing Agent Count (Total)4,952 4,961 4,928

Estimate comparison (S&P Global)

MetricQ3 2025 EstimateQ3 2025 Actual
Primary EPS Consensus Mean ($USD)0.92*1.29
Revenue Consensus Mean ($USD Millions)973.5*1,188.7
Primary EPS - # of Estimates6*—
Revenue - # of Estimates2*—

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating EPS ($)FY 2025Narrower band; same midpoint (prior disclosed band; midpoint unchanged) $3.75–$3.85 Maintained midpoint; narrowed range
Expense Ratio (%)FY 2025~19.0–19.2% ~19.0% Lowered (tightened)
Effective Tax Rate (%)FY 2025~23% 22.0–22.5% Lowered
Excess Cash Flow to Holdco ($USD Millions)FY 2025$200–$250 $365–$385 Raised
Consolidated RBC RatioOngoing Target~375% ~375% Maintained
Holdco Liquidity ($USD Millions)Minimum Target≥$150 ≥$150 Maintained
Target Leverage (Debt/Capital ex-AOCI)Ongoing Target25–28% 25–28% Maintained
Operating ROE ImprovementThrough 2027+150 bps vs ~10% 2024 +200 bps vs ~10% 2024 Raised by 50 bps
Dividend per Share ($)Quarterly$0.17 (prior declared) [10: prior PR Aug-25]$0.17 declared Nov 12, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q1 2025)Current Period (Q3 2025)Trend
Bermuda reinsurance strategyExploring platform; robust capital return Lay groundwork; leverage captive Executed 2nd treaty; ~$1.8B reserves ceded; 50% new supplemental health ceded; exploring life cessions Accelerating balance sheet optimization
Exit Worksite fee servicesNot discussedNot discussedStrategic exit to sharpen focus; expected +$20M pre-tax annually; exit charges $15–$20M in 4Q25 Portfolio simplification; earnings accretion
Medicare dynamicsGrowth in assets/distributionMedicare Supplement NAP +24% Shift from MA to Med Supp; Med Supp NAP +33%; claims pressure reflected in assumptions and pricing (~10% filings) Favorable demand; pricing offsets claims
Tech modernization (TechMod)Ongoing projectPlanned multi-year spend$7.2M quarter expense; 3-year modernization underway Investment in platform; near-term non-op drag
Distribution productivity12th consecutive sales momentum Solid production, agent metrics Record D2C; 89% instant decisions; agent productivity importance; web/digital/partners 72% of D2C life Mix shift to digital; sustained productivity
Investment yieldsNew money >6%New money >6%; book yield stable 11th straight quarter new money >6%; avg allocated yield 4.91% Yield tailwind persists

Management Commentary

  • “Continued sales growth and expanding underwriting margins underscore our momentum…record Direct-to-Consumer and Worksite insurance sales in the third quarter.” — CEO Gary Bhojwani .
  • “We are revising our operating ROE target for 2027 to an improvement of 200 basis points…raising guidance for excess cash flow to the holding company to $365–$385 million.” — CFO Paul McDonough .
  • On acquisitions discipline: “There are clearly some lessons we need to take from this…It will definitely impact the way we move forward.” — CEO Gary Bhojwani (re: impairments and exit) .

Q&A Highlights

  • D2C partnerships and sustainability: Partner-driven marketing boosted Q3; expect softer Q4 seasonality but continued growth; selective partnerships (e.g., Hispanic market) to expand reach .
  • Bermuda cadence: Management views one material in-force cession per year as a reasonable cadence; future life cessions considered for diversification .
  • Fee services exit impact: Eliminates ~$20M annual pre-tax loss in fee segment; largely real-time cash benefits; minimal impact to Worksite insurance sales .
  • Medicare Supplement pricing: Filings around ~10% consistent with claim trends; assumption review incorporated current experience .
  • Capital deployment: Elevated Holdco cash from Bermuda; balanced between repurchases and investment in sales/TechMod; Q3 buybacks likely indicative of go-forward pace absent better uses .

Estimates Context

  • Q3 2025 Operating EPS of $1.29 vs S&P Global consensus $0.92; Q3 2025 revenue $1,188.7M vs $973.5M consensus — meaningful beat on both EPS and revenue; target price consensus $44.4; 6 EPS estimates, 2 revenue estimates for Q3 . Estimates from S&P Global.*
  • Outlook: With fee services exit and Bermuda treaty benefits, Street may lift FY25–26 EPS and ROE trajectories; management narrowed FY25 EPS to $3.75–$3.85 and lowered tax/expense assumptions .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Strong beat quarter: Operating EPS +37% vs consensus and revenue +22% vs consensus; product margins and investment yields underpin repeatability . Estimates from S&P Global.*
  • Structural ROE uplift: Bermuda treaty + fee exit raise 2027 operating ROE improvement target to +200 bps; near-term EPS supported by lower tax/expense ratio guidance .
  • Growth engines intact: D2C and Worksite sales at records; NAP +26% YoY; Health margin strength; client assets >$5B (+28% YoY) .
  • Watch GAAP vs non-GAAP: Non-operating impairment and TechMod spend depress GAAP EPS; operating metrics better reflect core profitability .
  • Capital flexibility: Excess Holdco cash/treaty proceeds with disciplined buybacks; RBC, leverage, and liquidity at or above targets .
  • Medicare pivot: Shift from MA to Med Supp supports NAP and pricing power; filed ~10% rate increases to address claims .
  • Dividend maintained: $0.17 quarterly dividend; continued capital return alongside strategic reinvestment .