On July 29, 2024, CNO Financial Group Inc (CNO, Financial) released its 8-K filing for the second quarter of 2024, showcasing a significant improvement in earnings and operating performance. The company reported net income of $116.3 million, or $1.06 per diluted share, compared to $73.7 million, or $0.64 per diluted share, in the same quarter last year. This represents a 66% increase in earnings per share (EPS).
Company Overview
CNO Financial Group Inc is a holding company for a group of insurance companies that offers middle-income American consumers insurance and securities products through exclusive agents, independent producers, and direct marketing. The company's operating segments include annuity, health, and life insurance product lines, as well as the investment and fee revenue segments. The health product line segment generates the maximum revenue, with annuity premiums accounting for the majority of the total premiums collected.
Performance and Challenges
CNO Financial Group Inc's performance in Q2 2024 was marked by continued sales momentum, a growing agent force, and strong underwriting margins and net investment income. The company reported net operating income of $114.6 million, or $1.05 per diluted share, up from $62.3 million, or $0.54 per diluted share, in Q2 2023. This represents a 94% increase in operating earnings per share.
Despite the strong performance, the company faces challenges such as market volatility and changes in interest rates, which can impact the fair value of investments and embedded derivative liabilities. However, the company's diversified product offerings and distribution model have helped mitigate these risks.
Financial Achievements
Key financial achievements for the quarter include:
- Total new annualized premiums (NAP) up 4%; Worksite Division NAP up 18%; Consumer Division NAP up 2%
- Medicare Supplement NAP up 16%; Medicare Advantage policies sold up 78%
- Annuity collected premiums up 9%; Policyholder and client assets up 9%
- Returned $77.2 million to shareholders
- Book value per share was $22.80, up 3%; book value per diluted share, excluding accumulated other comprehensive loss, was $36.00, up 11%
- Return on equity (ROE) of 19.9%; operating ROE, as adjusted, of 11.2%
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Net Income | $116.3 million | $73.7 million | 58% |
| Net Operating Income | $114.6 million | $62.3 million | 84% |
| EPS | $1.06 | $0.64 | 66% |
| Operating EPS | $1.05 | $0.54 | 94% |
Balance Sheet and Cash Flow
As of June 30, 2024, CNO Financial Group Inc reported total assets of $36.29 billion, up from $35.10 billion at the end of 2023. The company's shareholders' equity increased to $2.43 billion from $2.22 billion. Unrestricted cash and investments held by the holding company were $429 million, compared to $256 million at the end of 2023.
Investment Portfolio
The fair value of CNO’s available-for-sale fixed maturity portfolio was $22.6 billion compared with an amortized cost of $25.1 billion. Net unrealized losses were comprised of gross unrealized gains of $113.2 million and gross unrealized losses of $2,561.6 million. The allowance for credit losses was $39.8 million at June 30, 2024.
Commentary
"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."
Analysis
CNO Financial Group Inc's strong Q2 2024 performance, driven by robust sales and investment income, positions the company well for sustainable growth. The significant increase in net income and operating income highlights the effectiveness of the company's diversified product offerings and distribution model. However, market volatility and interest rate changes remain challenges that the company must navigate carefully.
For more detailed information, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from CNO Financial Group Inc for further details.
