CNO Financial Group NYSE: CNO reported stronger second-quarter results, citing broad sales growth, favorable underwriting and higher investment income, while raising its full-year operating earnings outlook.
Operating earnings per diluted share rose 45% year over year to $1.26, excluding significant items, Chief Executive Officer Gary Bhojwani said on the company’s second-quarter 2026 earnings call. Year-to-date operating earnings per share increased 43%, excluding significant items.
The insurer raised its 2026 operating earnings per share guidance to a range of $4.60 to $4.80, an 8% increase at the midpoint from its prior outlook. Chief Financial Officer Paul McDonough said the company also narrowed its projected expense ratio range to 18.8% to 19.0%, lowering the high end by 20 basis points, while reaffirming its other full-year guidance measures.
Sales Growth Extends Across Divisions
Total new annualized premiums increased 7% during the quarter, and Bhojwani said the company recorded multiple sales records. CNO marked its 16th consecutive quarter of sales growth and its 14th consecutive quarter of growth in producing agent count.
In the Consumer Division, total health new annualized premiums, or NAP, climbed 17%. Supplemental health NAP rose 5%, long-term care increased 4%, and Medicare Supplement NAP jumped 52%, marking the third straight quarter of growth above 50% in that category.
Bhojwani said results have benefited from a shift in consumer preferences from Medicare Advantage plans toward Medicare Supplement coverage. Total Medicare policies sold increased 12%.
“Medicare remains a flagship door-opening product for CNO,” Bhojwani said, adding that it supports efforts to expand the number of households served by the company.
Life NAP in the Consumer Division declined 9%, primarily due to lower direct-to-consumer sales against a strong prior-year comparison. Bhojwani said CNO is taking a measured approach to its direct-to-consumer channel and continues to shift away from television advertising. Web, digital and third-party partner channels accounted for nearly 72% of direct-to-consumer life sales during the quarter.
Meanwhile, annuity collected premiums reached a record $536 million, up 3%, while annuity account values rose 7%. Brokerage and advisory client assets increased 24% to a record level, and total accounts rose 13%. Combined annuity account values and brokerage and advisory client assets exceeded $19 billion, up 11%.
In the Worksite Division, life and health NAP reached a record and increased 29%. Life sales rose 44%, hospital indemnity sales increased 33%, accident sales gained 31%, and critical illness sales rose 7%.
NAP from new Worksite clients increased 84%, with growth balanced between geographic expansion and deeper penetration of existing markets, according to Bhojwani. Producing agent count in the division rose 6%, its 16th consecutive quarter of growth. The company’s career agency distribution channel generated about 90% of Worksite insurance sales.
Margins and Investment Income Support Earnings
McDonough said insurance product margin grew across CNO’s three major product categories as sales momentum combined with broadly favorable claims experience.
Medicare Supplement margins benefited from block growth, favorable morbidity and rate increases implemented earlier in the year. The results also included roughly $4 million of favorable claims-reserve development, McDonough said in response to an analyst question. He said investors assessing the product’s run-rate margin should adjust for that item.
Long-term care results benefited from block growth and lower morbidity. McDonough said the company has observed modestly lower claims than expected, toward the favorable end of its existing assumptions, but said management would review the trends further during its annual third-quarter review.
Supplemental health margins reflected block growth, partly offset by several large claims on older policies. McDonough characterized those claims as isolated events rather than evidence of a change in underlying trends.
Net investment income increased 8% from a year earlier, marking CNO’s 11th consecutive quarter of growth in total net investment income. The company’s new-money rate was 6.16%, its 14th straight quarter above 6%.
Investment income allocated to product lines rose 3%, supported by a 4% increase in average net insurance liabilities. Net investment income not allocated to products increased 46%, driven by alternative-investment income, growth in the company’s FHLB and FABN programs, including a $300 million FABN issuance during the quarter, and higher gains on option forfeitures from annuity surrenders.
Capital Position and Shareholder Returns
CNO returned $77 million to shareholders during the quarter, including $60 million of share repurchases. Repurchases contributed to a 5% reduction in weighted average diluted shares outstanding, McDonough said.
Book value per diluted share, excluding accumulated other comprehensive income, was $39.92, up 5%. The company reported a consolidated risk-based capital ratio of 377%, holding-company liquidity of $233 million and debt-to-capital of 26.1% at quarter-end.
Trailing 12-month operating return on equity was 14.1%, or 13.1% excluding significant items. McDonough said CNO now expects its 2026 operating return on equity to exceed its previously established 12% target for year-end 2027. Management intends to set new return-on-equity targets in February 2027.
On capital deployment, McDonough said the company’s priorities have not changed: reinvesting to support growth, maintaining target capital and liquidity levels, considering selective inorganic opportunities, and returning excess capital through dividends and share repurchases. He cited the company’s TechMod modernization initiative as a significant ongoing reinvestment effort.
CNO also said it expects to move closer to target capital levels at its operating subsidiaries, including Bermuda, during the second half of the year, subject to regulatory approvals. McDonough said potential additional reinsurance activity could be part of that process, but did not provide details.
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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