Strong second quarter with earnings per share up 100% and operating earnings per share up 29%

CNO Financial Group Inc (NYSE: CNO) today announced that for the quarter ended June 30 2022 net income was $1361 million or $116 per diluted share compared to $780 million or $058 per diluted share in 2Q21 Net operating income (1) in 2Q22 was $1001 million or $085 per diluted share compared to $891 million or $066 per diluted share in 2Q21

CNO posted another quarter of strong earnings said Gary C Bhojwani chief executive officer Our annuities direct-to-consumer and worksite businesses performed well in the quarter We also saw a sharp increase in new money rates signaling a positive trend in our earned yields  CNO's balance sheet is solid and we remain well-positioned to continue navigating the current economic uncertainty from a position of strength

Second Quarter 2022 Highlights

• Earnings per diluted share of $116 in 2Q22 up from $058 in 2Q21
• Operating (1) EPS of $085 in 2Q22 up 29% from 2Q21; up 3% excluding significant items in 2Q22 and 2Q21
• Net investment income up 8% from 2Q21
• Total new annualized premiums (NAP) (4) down 5% from 2Q21
• Direct-to-consumer life insurance NAP (4) up 9% from 2Q21
• Worksite Division NAP (4) up 33% from 2Q21
• Annuity collected premiums up 26% from 2Q21
• Returned $765 million to shareholders in the form of share repurchases ($600 million) and dividends ($165 million); reduced weighted average share count by 12% since 2Q21
• Return on equity (ROE) of 103%; operating ROE as adjusted (6) of 115%

INSURANCE OPERATIONS 

Annuity products accounted for 18 percent of the Company's margin for the quarter

Annuity premiums collected increased 26 percent and annuity account values increased 8 percent in 2Q22 compared to 2Q21

Health products accounted for 55 percent of the Company's insurance margin for the quarter and 64 percent of insurance policy income

Life products accounted for 27 percent of the Company's insurance margin for the quarter and 35 percent of insurance policy income

Sales of health products were down 10 percent and sales of life products were down 2 percent in 2Q22 compared to 2Q21

       

Total allocated expenses were $1522 million up 7 percent from the year-ago quarter

Total insurance margins were favorably impacted by approximately $22 million and $21 million in the quarters ended June 30 2022 and 2021 respectively due to the estimated impacts of COVID-19

Total annuity margins were favorably impacted by approximately $1 million and $2 million in the quarters ended June 30 2022 and 2021 respectively due to the estimated impacts of COVID-19

Total health margins were favorably impacted by approximately $21 million and $30 million in the quarters ended June 30 2022 and 2021 respectively due to the estimated impacts of COVID-19

Total life margins were unfavorably impacted by approximately $11 million in the quarter ended June 30 2021 due to the estimated impacts of COVID-19  There was no material impact on the life margins in the quarter ended June 30 2022 related to COVID-19

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The fair value of CNO's available for sale fixed maturity portfolio was $214 billion compared with an amortized cost of $231 billion  Net unrealized losses were comprised of gross unrealized gains of $2952 million and gross unrealized losses of $19791 million  The allowance for credit losses was $542 million at June 30 2022

At both amortized cost and fair value 93 percent of fixed maturities available for sale were rated investment grade

Non-Operating Items
Net investment losses in 2Q22 were $261 million (net of related amortization) including the unfavorable change in the allowance for credit losses of $237 million which was recorded in earnings  Net investment gains in 2Q21 were $243 million (net of related amortization) including the favorable change in the allowance for credit losses of $57 million which was recorded in earnings

During 2Q22 and 2Q21 we recognized an increase (decrease) in earnings of $(217) million and $57 million respectively due to the net change in market value of investments recognized in earnings

During 2Q22 and 2Q21 we recognized an increase (decrease)  in earnings of $797 million and $(449) million respectively resulting from changes in the estimated fair value of embedded derivative liabilities related to our fixed index annuities net of related amortization  Such amounts include the impacts of changes in market interest rates used to determine the derivative's estimated fair value

In 2Q22 other non-operating items included an increase in earnings of $140 million for the mark-to-market change in the agent deferred compensation plan liability which was impacted by changes in the underlying actuarial assumptions used to value the liability We recognize the mark-to-market change in the estimated value of this liability through earnings as assumptions change

Statutory (based on non-GAAP measures) and GAAP Capital Information
Our consolidated statutory risk-based capital ratio was estimated at 360% at June 30 2022 reflecting estimated 2Q22 statutory operating income of $93 million (and $124 million in the first six months of 2022) and the payment of insurance company dividends to the holding company of $290 million during 2Q22 (and $986 million in the first six months of 2022)

During the second quarter of 2022 we repurchased $600 million of common stock under our securities repurchase program  We repurchased 25 million common shares at an average cost of $2352 per share  As of June 30 2022 we had 1148 million shares outstanding and had authority to repurchase up to an additional $2069 million of our common stock  During 2Q22 dividends paid on common stock totaled $165 million

Unrestricted cash and investments held by our holding company were $141 million at June 30 2022 compared to $249 million at December 31 2021

Book value per common share was $1927 at June 30 2022 compared to $4369 at December 31 2021  Book value per diluted share excluding accumulated other comprehensive income (loss) (2) was $2906 at June 30 2022 compared to $2686 at December 31 2021 

The debt-to-capital ratio was 340 percent and 178 percent at June 30 2022 and December 31 2021 respectively  Our debt-to-total capital ratio excluding accumulated other comprehensive income (loss) (3) was 252 percent at June 30 2022 compared to 256 percent at December 31 2021

Return on equity for the trailing four quarters ended June 30 2022 and 2021 was 103% and 91% respectively  Operating return excluding significant items on equity excluding accumulated other comprehensive income (loss) and net operating loss carryforwards (6) for the trailing four quarters ended June 30 2022 and 2021 was 103% and 124% respectively

In this news release CNO includes non-GAAP measures to enhance investors' understanding of management's view of the business  The non-GAAP measures are not a substitute for GAAP but rather a supplement to increase transparency by providing broader perspective  CNO's definitions of non-GAAP measures may differ from other companies' definitions  More detailed information including various GAAP and non-GAAP measurements are located at CNOinccom in the Investors section under SEC Filings

CAUTION REGARDING FORWARD-LOOKING STATEMENTS:

This press release may contain forward-looking statements within the meaning of federal securities laws  These prospective statements reflect management's current expectations but are not guarantees of future performance  Accordingly please refer to CNO's cautionary statement regarding forward-looking statements and the business environment in which the Company operates contained in the Company's Form 10-K for the year ended December 31 2021 and any subsequent Form 10-Q or Form 10-K on file with the Securities and Exchange Commission and on the Company's website at CNOinccom in the Investors section  CNO specifically disclaims any obligation to update or revise any forward-looking statement because of new information future developments or otherwise

EARNINGS RELEASE CONFERENCE CALL WEBCAST:

The Company will host a conference call to discuss results on August 2 2022 at 11:00 am Eastern Time  During the call we will be referring to a presentation that will be available at the Investors section of the company's website

To participate by dial-in please register at https://igenetroadshowcom/registration/q4inc/11345/cno-financial-group-second-quarter-2022-earnings-results/  Upon registering you will be provided with call details and a registrant ID used to track attendance on the conference call Reminders will also be sent to registered participants via email

For those investors who prefer to listen to the call online we will be broadcasting the call live via webcast  The event can be accessed through the Investors section of the company's website: irCNOinccom  Participants should go to the website at least 15 minutes before the event to register and download any necessary audio software

ABOUT CNO FINANCIAL GROUP

CNO Financial Group Inc (NYSE: CNO) secures the future of middle-income America  CNO provides life and health insurance annuities financial services and workforce benefits solutions through our family of brands including Bankers Life Colonial Penn and Washington National  Our customers work hard to save for the future and we help protect their health income and retirement needs with 32 million policies and $34 billion in total assets Our 3400 associates 4400 exclusive agents and 4700 independent partner agents guide individuals families and businesses through a lifetime of financial decisions For more information visit CNOinccom

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