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    CNO
    Earnings call· Jun 2026(Q2 FY26)

    CNO Financial Group Q2 FY26 earnings call CNO

    Jul 31, 2026 Source

    Executive summary

    CNO Financial Group Q2 FY26 — Strong Earnings and Sales Growth, Raised FY26 EPS Guidance

    CNO Financial Group delivered a very strong Q2 FY26, marked by consistent sales momentum and robust earnings growth, leading to a raised full-year EPS outlook. The company's diversified product portfolio and middle-market focus continue to drive performance, supported by strong investment results and disciplined capital management. Management remains confident in its ability to deliver sustainable growth and long-term value, while strategically investing in the business and managing capital.

    Highlights

    5

    • Operating earnings per diluted share up 45% in Q2 and 43% year-to-date, excluding significant items.

    • 16th consecutive quarter of sales growth and 14th consecutive quarter of producing agent count growth.

    • Full year operating EPS guidance raised to a range of $4.60 to $4.80, an 8% increase at the midpoint.

    • Total new annualized premiums (NAP) up 7%, with multiple sales records set.

    • Annuity collected premiums reached a new record of $536 million, up 3%, and client assets up 24% to a new record.

    Concerns

    3

    • Consumer Life NAP was down 9% for the quarter against a strong comparable, primarily driven by lower direct-to-consumer sales.

    • Supplemental health margins were partially offset by a handful of large claims on older policies, though viewed as isolated events.

    • The expense ratio of 18.4% is viewed as a timing difference and is expected to normalize over the remainder of the year.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full year operating earnings per share
    $4.60 to $4.80
    high materiality
    High
    Expense ratio
    18.8% to 19.0%
    medium materiality
    High
    Effective tax rate
    approximately 21.5%
    medium materiality
    High
    RBC ratio
    Reaffirmed
    medium materiality
    High
    Holding company liquidity
    Reaffirmed
    medium materiality
    High
    Leverage targets
    Reaffirmed
    medium materiality
    High
    Full year free cash flow expectations
    Reaffirmed
    medium materiality
    High
    Operating return on equity
    Exceed 12%
    high materiality
    High
    New ROE targets establishment
    February 2027
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Consumer division
    The Consumer division achieved its 15th consecutive quarter of sustained sales growth, driven by strong performance in Medicare Supplement and annuities. Medicare Supplement NAP surged 52%, reflecting a shift in consumer preferences. Annuity collected premiums reached a record $536 million, and client assets grew 24%. Life NAP was down 9% due to lower direct-to-consumer sales, with a strategic shift towards more efficient non-television marketing channels.
    Consecutive quarters of sustained sales growth: 15Annuity collected premiums: $536MAnnuity collected premiums growth: 3%Annuity account values growth: 7%Consecutive quarters of brokerage and advisory growth: 13Client assets: New recordClient assets growth: 24%Total accounts growth: 13%Total client assets (annuities + brokerage): >$19BTotal client assets growth: 11%Producing agent count growth: 3%Consecutive quarters of producing agent count growth: 14Registered agent count growth: 4%Total Health NAP growth: 17%Consecutive quarters of Total Health NAP growth: 16Supplemental health NAP growth: 5%Long-term care NAP growth: 4%Medicare Supplement NAP growth: 52%Consecutive quarters of Medicare Supplement NAP growth >50%: 3Total Medicare policies sold growth: 12%Life NAP growth: -9%D2C Life sales from non-television marketing channels: 72%
    		————
    Worksite division
    The Worksite division delivered its 17th consecutive quarter of sustained sales growth, with Life and Health NAP up 29%. This growth was broad-based across product lines and driven by both geographic expansion and deeper market penetration. NAP from new clients increased significantly by 84%, with the optimized career agency remaining a key growth engine.
    Consecutive quarters of sustained sales growth: 17Life and Health NAP growth: 29%Consecutive quarters of double-digit insurance sales growth: 7Life sales growth: 44%Hospital Indemnity sales growth: 33%Accident sales growth: 31%Critical illness sales growth: 7%NAP from new clients increase: 84%Producing agent count growth: 6%Consecutive quarters of producing agent count growth: 16Optimized career agency contribution to total worksite insurance sales: ~90%
    		————

    Operational metrics

    12
    Operating earnings per diluted share
    $1.26up 45%
    Q2 FY26

    Excluding significant items.

    Operating earnings per diluted share
    up 43%
    YTD FY26

    Excluding significant items.

    Share repurchases
    $60M
    Q2 FY26

    Part of disciplined capital management.

    Weighted average diluted shares outstanding reduction
    5%
    Q2 FY26

    Result of share repurchases.

    Net investment income not allocated to products
    up 46%YoY
    Q2 FY26

    Driven by higher alternative investment income, FHLB/FABN programs, and gains on option forfeitures.

    FABN issuance
    $300M
    Q2 FY26

    Part of growth in FHLB and FABN programs.

    Holding company liquidity
    $233M
    Q2 FY26

    Above target levels.

    Debt to capital
    26.1%
    Q2 FY26

    Within target levels.

    Expense ratio
    18.4%
    Q2 FY26

    Reflecting favorable expense performance, viewed as a timing difference.

    MedSupp favorable claims reserve development
    $4M
    Q2 FY26

    Due to better-than-expected first quarter claims development, not expected to recur.

    Middle-income consumers turning 65 daily
    11,000
    daily

    Driving durable demand for healthcare products.

    Retired couple healthcare savings increase
    nearly 8%vs 2-3% in recent years
    2026

    Rising healthcare costs pressure household finances.

    Industry KPIs

    7
    MetricValueDetails
    Capital returns$77MUSD
    ROE operating ROE14.1%%
    Book value per share$39.92USD
    Net investment income8%%
    Net premiums written earned7%%
    Statutory regulatory capital377%%
    Prior year reserve development$4MUSD

    Risks & headwinds

    4
    Consumer Life NAP declineQ2 FY26

    down 9%

    Mitigation: Optimizing direct-to-consumer channel by shifting from television advertising to more efficient non-television marketing channels (web, digital, third-party partners) which generated nearly 72% of D2C sales.

    Supplemental health large claimsQ2 FY26

    Partially offset growth

    Mitigation: Management views these as isolated events and does not believe they represent a change in underlying trends.

    Expense ratio timing differenceRemainder of FY26

    18.4% in Q2 FY26

    Mitigation: Expected to normalize over the remainder of the year, with full-year expense dollars consistent with original guidance.

    Competitive pressures in annuity marketOngoing

    Discussed not quantified

    Mitigation: CNO's captive distribution model and focus on the middle-income market provide insulation from the 'arms race' of new entrants, as their primary competition is often bank CDs.

    What to watch in Q3 FY26

    5

    Long-term care margins sustainability

    Q3 FY26
    CurrentModestly lower claims vs expectations
    TargetOutcome of annual review in Q3

    Why it matters

    The sustainability of strong LTC margins impacts overall profitability and investor confidence in the segment's long-term performance.

    It's something that we look at every quarter. It's something that we look at in more detail every year. As you know🎣, we switched to the third quarter for our annual review. So we'll be looking at the recent trends as we go through that exercise in the third quarter.

    Q&A highlights

    7

    Are the strong and improving long-term care margins sustainable, given better-than-expected claims experience?

    Management stated that they review LTC margins quarterly and annually, with the next annual review in Q3. They observed modestly lower claims than expected, but would not pre-empt the annual exercise.

    “It's something that we look at every quarter. It's something that we look at in more detail every year. As you know, we switched to the third quarter for our annual review. So we'll be looking at the recent trends as we go through that exercise in the third quarter.”

    asked by Ryan Krueger · answered by Paul McDonough

    2 min read6 chapters

    Detailed Narrative

    01

    Overall Performance and Strategic Execution

    CNO delivered a very strong second quarter and first half of 2026, with operating earnings per diluted share up 45% in Q2 and 43% year-to-date, excluding significant items. This performance reflects the company's consistent execution, diversified business model, and focus on the middle-income market. Management emphasized its commitment to growing earnings, improving profitability, and reinvesting in the business, leading to a raised full-year operating EPS guidance.

    02

    Consumer Division Momentum

    The Consumer division achieved its 15th consecutive quarter of sustained sales growth, driven by strong demand for health and retirement income solutions. Medicare Supplement NAP surged 52%, marking the third consecutive quarter of over 50% growth, benefiting from a shift in consumer preferences. Annuity collected premiums hit a record $536 million, up 3%, and client assets grew 24% to a new record, reflecting robust asset accumulation.

    03

    Worksite Division Expansion

    The Worksite division recorded its 17th consecutive quarter of sustained sales growth, with Life and Health NAP up 29%, representing the seventh consecutive quarter of double-digit growth. This was fueled by significant increases in Life (up 44%), Hospital Indemnity (up 33%), and Accident (up 31%) sales. Growth was balanced between geographic expansion and deeper penetration into existing markets, with NAP from new clients increasing 84%.

    04

    Investment Income and Portfolio Management

    Net investment income continued to be a significant contributor to earnings, increasing 8% year-over-year and marking the 11th consecutive quarter of growth. The new money rate remained strong at 6.16% for the 14th consecutive quarter. The improvement was driven by higher alternative investment income, growth in FHLB and FABN programs, and increased gains from option forfeitures on annuity surrenders.

    05

    Capital Management and Shareholder Returns

    CNO maintained a robust capital position with a consolidated risk-based capital ratio of 377% and holding company liquidity of $233 million. The company deployed $60 million on share repurchases in the quarter, contributing to a 5% reduction in weighted average diluted shares outstanding. Management reiterated its disciplined and balanced approach to capital management, including reinvestment in initiatives like TechMod and returning excess capital to shareholders.

    06

    Bermuda Strategy and Capital Optimization

    The company continues to explore opportunities to seed more liabilities in its Bermuda entity, consistent with past practices and subject to regulatory approvals. Management noted that excess capital has built up in Bermuda over the past three years, and addressing this, potentially through a third treaty, could contribute to free cash flow generation in the second half of the year, alongside ongoing TechMod investments.

    AI-generated summary of the company’s earnings call. Not investment advice.