CNO Financial Group Q1 Earnings Call Highlights

Key Points

• CNO reported a strong start to 2026 with operating EPS up 33% to $1.05 and its 15th consecutive quarter of sales growth, while returning $77 million to shareholders and raising book value ex-AOCI 5% to $38.98.
• The Medicare business powered growth—total Medicare policies sold rose 24% and Medicare Supplement NAP climbed 53%—but management warned of modestly adverse claims and has filed rate increases (approved ~10.2% for a Jan. 1 closed block; expecting ~14.5% for July filings) that will phase in with full effect by Q4 2026.
• Net investment income increased 6% with new-money rates above 6% and about $1.3 billion deployed; capital and liquidity stayed within targets (holding company liquidity $280M, debt-to-capital 26.4%), CNO repurchased $60M of stock and reaffirmed 2026 guidance while flagging potential higher 2027 ROE ambitions.

CNO Financial Group NYSE: CNO reported first-quarter 2026 results that management described as a “strong start to the year,” driven by higher operating earnings, continued sales momentum, and improving investment income. On the earnings call, Chief Executive Officer Gary Bhojwani and Chief Financial Officer Paul McDonough pointed to broad-based growth across the company’s consumer and worksite divisions, while also addressing Medicare Supplement claims trends, expense timing, and capital levels.

Earnings rise as sales growth extends multi-year streak

Bhojwani said the company is “building on our excellent 2025 performance,” noting first-quarter operating earnings per diluted share increased 33% to $1.05 and were up 42% excluding significant items in the prior period. He added that the quarter marked the company’s 15th consecutive quarter of sales growth and its 13th consecutive quarter of producing agent count growth.

Total new annualized premiums increased 11% across both divisions, Bhojwani said, as the company continued to emphasize its middle-income market focus and captive agent distribution model. He also highlighted capital returns and book value growth, stating CNO returned $77 million to shareholders and ended the quarter with book value per diluted share excluding AOCI of $38.98, up 5%.

Consumer division: Medicare Supplement growth offset by claims pressure

In the consumer business, Bhojwani said Life and Health new annualized premium (NAP) rose 9% and total Health NAP increased 20%, marking 15 consecutive quarters of growth. Supplemental health NAP was up 10%.

Medicare results were a major contributor. Bhojwani said total Medicare policies sold increased 24% and Medicare Supplement NAP climbed 53%, reflecting what he described as a shift in consumer preferences “away from Medicare Advantage and towards Medicare Supplement.” He cited industry conditions during the 2025 annual enrollment period, including slowing Medicare Advantage enrollment growth and plan disruptions that prompted higher switching activity.

McDonough said Medicare Supplement results were pressured by “modestly adverse claims experience,” partially offset by growth. He told analysts the company plans rate increases during 2026 to address the claims experience. In response to a question from Jefferies analyst Suneet Kamath, McDonough said CNO filed for two sets of rate increases in 2025:

• A closed block with a January 1, 2026 effective date: filed for 10.5% and received approvals for 10.2%.
• A closed block with July 1, 2026 effective dates: filed for 16.8% and is “expecting approvals for around 14.5%.”

McDonough said the rate increases “earn in over time,” with the full quarterly impact from the two blocks expected to be evident by the fourth quarter of 2026, with benefit ratios also depending on claims trends and future filings. He added the closed block represents roughly two-thirds of the business, with the open block around one-third.

Elsewhere in the consumer segment, Bhojwani said Life NAP increased 1% and that more than half of life production came from direct sales. He said the direct-to-consumer life channel benefited from “technology-driven productivity enhancement” and a marketing mix shift away from television, with non-television lead sources generating nearly 65% of direct life sales for the quarter.

Annuity collected premiums were $434 million, down 2% against what Bhojwani described as a strong comparable period, while account values rose 7% year-over-year. Asked about whether comparisons were becoming too difficult, Bhojwani said he did not see “any particular anomalies” and characterized the decline as “quarter-to-quarter fluctuation,” emphasizing a focus on longer-term trends rather than small quarterly moves.

Worksite division posts double-digit NAP growth

CNO’s worksite division also delivered strong growth, with life and health NAP up 22%, marking the 16th consecutive quarter of sales growth, Bhojwani said. He highlighted gains in several product categories, including life insurance up 56%, hospital indemnity insurance up 121%, and accident insurance up 18%.

NAP from new clients increased 65%, which Bhojwani attributed largely to geographic expansion and deeper penetration of existing markets. The company also reported continued distribution growth in worksite, with producing agent count up for the 15th consecutive quarter and agent recruiting up 8%.

Investment income rises; management maintains guidance amid volatility

McDonough said net investment income increased 6% year-over-year, the 10th consecutive quarter of growth, driven by higher assets tied to growth in net insurance liabilities and “continued improvement in book yields.” He said CNO recorded 13 consecutive quarters of new money rates above 6% and made about $1.3 billion of new investments in the quarter with an average duration of five years.

During the question-and-answer session, Chief Investment Officer Eric Johnson discussed market conditions, saying rate volatility was notable in the quarter while credit spreads were “pretty flat” and the credit market was “pretty well-behaved.” Johnson said the firm stayed disciplined, investing shorter on the curve to match asset-liability needs, and noted new money rates were “around a little higher than 6%, consistent with prior quarters.”

Johnson also addressed the funding agreement-backed note (FABN) market, saying a negative arbitrage environment in the first quarter made issuance less attractive given CNO’s target returns and high-quality approach. He said conditions had moderated somewhat after quarter-end and the company would reassess in a potential June window, adding that CNO is “under no pressure to do anything” unless economics meet its objectives.

On expenses, McDonough said the expense ratio was 18.9% due to “lower than planned spending in the quarter,” which he expects to normalize for the rest of the year. In response to KBW analyst Ryan Krueger, McDonough said quarterly variability can be difficult to plan precisely and that while the first quarter is typically higher expense, results came in better than expected. He reiterated that full-year expenses are expected to align with the company’s original plan, while continued growth may provide leverage through the denominator of the expense ratio.

Capital and liquidity remained within management targets. McDonough said holding company liquidity ended the quarter at $280 million, above the $150 million minimum target, while debt to capital was 26.4% within the company’s 25% to 28% target range. He said CNO repurchased $60 million of shares during the quarter, contributing to a 7% reduction in weighted average diluted shares outstanding.

McDonough also affirmed 2026 guidance, citing macroeconomic volatility and the fact that three quarters remain in the year. He said recent operating return on equity results make it “likely that we will increase our 2027 ROE ambitions,” but added the company does not plan to update that target less than halfway through the cycle. Bhojwani reiterated that 12% ROE was “nothing more than a waypoint.”

About CNO Financial Group NYSE: CNO

CNO Financial Group is an Indiana‐based holding company that offers a range of insurance and retirement solutions through its operating subsidiaries. Its primary business activities include life insurance, annuities, and supplemental health insurance products designed to help individuals plan for retirement and manage health‐related expenses. The company serves middle‐income Americans, with particular emphasis on senior customers seeking guaranteed coverage and reliable income streams.

Originally founded as Conseco in 1979, the company underwent a financial restructuring and rebranded as CNO Financial Group in 2010.

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