What are the drivers behind the significant growth in interest-sensitive life sales within the worksite business?

Gary attributed the growth to a combination of good market demand, encouragement from employers, and the maturity of their sales force in utilizing these products. He noted it's a result of consistent 'blocking and tackling' over several years rather than major strategic shifts. “We're seeing encouragement by employers. And we're seeing, frankly, a maturity of our own sales force in understanding and really using these products to their fullest. So I think we're benefiting from a number of different, what I would describe as just small tactical things that we've been doing over the years.”

Can you size the reserve release that contributed to the MedSupp margin increase from mid-20s to mid-30s, and what is the expected run-rate margin?

Paul stated that favorable claims reserve development in MedSupp was around $4 million. He advised adjusting for this amount to get a decent indication of the run-rate margin by looking at the first half results together. “Yes, we saw some favorable claims reserve development, and this is a product where the claims reserves developed quickly. And that was around $4 million. So if you're looking to kind of run rate the margin, you should adjust for that.”

Given the deceleration in Consumer NAP over the past couple of quarters and difficult comparables ahead, can the growth engine be sustained or is a decline possible?

Gary acknowledged the long streak of growth but couldn't predict quarterly fluctuations. He expressed strong confidence in the long-term outlook due to favorable demographics (11,000 retirees daily), excellent product portfolio, and strong field leadership, despite potential short-term variability. “If you ask me, how does our future look over a 3- to 5-year horizon, I would say extremely bright. Can I tell you if Q3 will be above Q2 and by how much? I can't. But if I look out over the long term, we have favorable demographics, an excellent product portfolio, field leadership that is second to none, and it's growing.”

CNO

CNO Financial Group (CNO) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 31, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Full year operating earnings per share	$4.60 to $4.80 high materiality	FY26	High
Expense ratio	18.8% to 19.0% medium materiality	FY26	High
Effective tax rate	approximately 21.5% medium materiality	FY26	High
RBC ratio	Reaffirmed medium materiality	FY26	High
Holding company liquidity	Reaffirmed medium materiality	FY26	High
Leverage targets	Reaffirmed medium materiality	FY26	High
Full year free cash flow expectations	Reaffirmed medium materiality	FY26	High
Operating return on equity	Exceed 12% high materiality	FY26	High
New ROE targets establishment	February 2027 medium materiality	February 2027 · FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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%	—	—	—	—

Risks & headwinds

Consumer Life NAP decline Q2 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 claims Q2 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 difference Remainder 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 market Ongoing

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

Long-term care margins sustainability

Q3 FY26

Current Modestly lower claims vs expectations

Target Outcome 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.

Find out whether CNO delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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%.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.