CNO Financial Group NYSE: CNO reported third-quarter operating earnings per diluted share of $1.90, up 47% from the prior-year period, as insurance product margins and investment income increased. The company raised its full-year operating EPS guidance to a range of $5.05 to $5.15, a 9% increase at the midpoint from its previous outlook.
Chief Executive Officer Gary Bhojwani said the insurer recorded its 17th consecutive quarter of sales growth and its 15th consecutive quarter of producing-agent-count growth. Producing agent count increased 4% during the quarter.
“Our performance remains consistent and repeatable, underpinned by strong execution and our focus on the underserved middle-income market,” Bhojwani said.
Consumer and Worksite Sales Growth
In the consumer division, CNO posted its 16th consecutive quarter of sustained sales growth, with continued strength in health products, annuities, brokerage and advisory services. Total health net annualized premiums, or NAP, rose 7%, marking the company’s 17th straight quarter of growth in the category.
Medicare Supplement NAP increased 41%, while total Medicare policies sold, including Medicare Advantage policies, rose 20%. Bhojwani said the results reflect a continuing consumer shift from Medicare Advantage toward Medicare Supplement coverage.
He noted that more than 3 million Medicare Advantage members will need to choose new coverage for 2027 as carriers exit plans, reduce benefits or scale back service areas. CNO offers both Medicare Supplement and Medicare Advantage products through its local agent network.
Life NAP declined 9% from the prior year, though the comparison included $13 million of NAP from a third-party pilot program that CNO discontinued earlier in 2026. Excluding that production, life NAP increased 20%. Direct-to-consumer life NAP rose 29%, and non-television channels—including web, digital and third-party partners—accounted for 71% of direct-to-consumer life sales.
Annuity collected premiums totaled $514 million, up 9%, while annuity account values rose 7%. Brokerage and advisory client assets increased 15% to a record level, and total accounts grew 13%. Combined annuity account values and brokerage and advisory client assets reached nearly $20 billion, up 9%.
CNO’s worksite division delivered its 18th consecutive quarter of sustained sales growth. Life and health NAP increased 18%, representing the eighth consecutive quarter of double-digit growth. Worksite producing agent count reached a record level, increasing 6%, while NAP generated by career field agents grew 29%.
Within worksite sales, life NAP rose 59%, while hospital indemnity and accident product sales each increased 16%. NAP from new clients increased 168%, with growth split between geographic expansion and deeper penetration of existing markets, according to Bhojwani.
Margins, Investment Income and Expenses
Chief Financial Officer Paul McDonough said operating EPS excluding significant items associated with the annual actuarial review was $1.42, up 48% year over year. Year-to-date operating EPS excluding those items was up 45%.
The company’s annual actuarial review produced a $56.3 million favorable impact on operating income. The benefit reflected favorable experience across traditional life, fixed indexed annuities, supplemental health and long-term care, partly offset by unfavorable claims trends in Medicare Supplement.
Total insurance product margin excluding significant items increased 7%. McDonough said the improvement was primarily driven by sustained sales momentum and growth in the business.
Medicare Supplement results reflected higher morbidity, partly offset by block growth and rate increases. Supplemental health also faced less favorable morbidity versus the prior year, while long-term care benefited from lower morbidity. Interest-sensitive life benefited from block growth and lower mortality.
Net investment income increased 13%, extending CNO’s streak of quarterly growth in total investment income to 12 quarters. Net investment income not allocated to products increased 72%, driven primarily by favorable alternative investment income and higher funding and margins in the company’s FHLB and FABN programs.
McDonough said the unallocated investment-income result was approximately $12 million above CNO’s long-term yield estimate and is not expected to persist at that level. The company’s new-money rate was 6.24%, its 15th consecutive quarter above 6%, while book yield rose 9 basis points year over year.
The trailing 12-month expense ratio was 18.5%, a 50-basis-point improvement from the prior year. McDonough attributed the improvement to operating leverage from business growth, with expenses somewhat lower than expected and revenue higher due to strong sales.
Capital Actions and Bermuda Reinsurance
CNO returned $77 million to shareholders during the quarter, including $60 million of share repurchases. The repurchases contributed to a 4% reduction in weighted average diluted shares outstanding. Book value per diluted share, excluding accumulated other comprehensive income, was $41.29, up 8%.
The company’s trailing 12-month operating return on equity was 15.4%, or 14.1% excluding significant items. McDonough said the result included roughly 50 basis points of benefit from investment income outperformance not allocated during the period.
Effective Oct. 1, CNO ceded approximately $270 million of U.S. statutory graded-benefit life reserves from Colonial Penn Life Insurance Company to CNO Bermuda Re, its Bermuda affiliate. It was the company’s third reinsurance transaction with the Bermuda operation.
McDonough said CNO now has annuity, health and life reserves in Bermuda, providing greater liability diversification and opportunities to optimize assets and capital. The company expects that work to be a focus in 2027, with the Bermuda operation moving toward a more run-rate cadence in 2028 and beyond.
CNO does not currently expect material additional in-force reserve blocks to be transferred to Bermuda. Chief Actuary Jeremy Williams said the latest life transaction covered more than 600,000 policies, despite its reserve amount appearing relatively modest.
Updated 2026 Outlook
Along with the higher EPS outlook, CNO reduced its projected full-year expense ratio to 18.6% to 18.8%, from a prior range of 18.8% to 19.0%. The company expects an operating effective tax rate of about 20.5%, compared with its prior estimate of 21.5%, and fee income of approximately $25 million.
Full-year free cash flow is now expected to range from $220 million to $240 million. McDonough said the figure includes the effect of the third Bermuda treaty and reflects investments in technology modernization, which are expected to total roughly $70 million in cash spending for 2026.
The company said it remains on track to exceed its previously established 12% operating return-on-equity target for year-end 2027 and plans to establish new long-term targets in February.
About CNO Financial Group (NYSE:CNO)
CNO Financial Group, Inc is a holding company for a group of insurance and financial services businesses focused on serving middle-income Americans, particularly individuals approaching or in retirement. Through its operating companies, CNO provides products designed to help customers protect income, manage health care expenses and prepare for retirement.
CNO's principal brands include Bankers Life, Colonial Penn and Washington National. Its offerings include life insurance, annuities, supplemental health insurance, Medicare supplement insurance and other insurance products.
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