Shares of CNO Financial Group, Inc. CNO gained 15.4% since it reported better-than-expected third-quarter 2024 results on Oct. 31. The quarterly results were driven by increased premiums in annuity, life and health products, as well as a notable rise in net investment income. A hiked operating earnings per share (EPS) guidance may also have intrigued investors. However, the upside was partly offset by an elevated benefits and expense level. 

CNO reported third-quarter adjusted EPS of $1.11, which outpaced the Zacks Consensus Estimate by 32.1%. The bottom line improved 26% year over year.

Total operating revenues of $1.1 billion advanced 19% year over year. The top line surpassed the consensus mark by 21.7%.

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CNO’s Q3 Performance

Total insurance policy income grew 3% year over year to $645 million, higher than the Zacks Consensus Estimate of $637.4 million. The metric benefited on the back of growing premiums in annuity, life and health products. 

Net investment income was $453.9 million, which climbed 55.6% year over year. General account assets rose 12.8% year over year to $366.3 million, which beat the consensus mark of $319.8 million. The policyholder and other special-purpose portfolios totaled $87.6 million. 

Fee revenue and other income, however, dropped 50% year over year. 

Annuity collected premiums advanced 25% year over year to $465.1 million. New annualized premiums for health products grew 7.9% year over year, while the same for life products tumbled 5.4% year over year. Annuity, Health and Life products accounted for 32.3%, 45.3% and 22.4%, respectively, of CNO’s insurance margin.

Total benefits and expenses escalated 52.8% year over year to $1.1 billion due to higher insurance policy benefits, interest expenses, and other operating costs and expenses.

CNO’s Financial Update (As of Sept. 30, 2024)

CNO Financial exited the third quarter with unrestricted cash and cash equivalents of $1.2 billion, which surged 50.4% from the 2023-end level. Total assets of $37.6 billion increased 7.2% from the figure at 2023-end.

The debt-to-capital ratio was 40.5% at the third-quarter end, which deteriorated 650 basis points (bps) from the 2023-end figure. 

Total shareholders’ equity of $2.7 billion advanced 21.3% from the 2023-end level. 

Book value per common share was $25.86, which improved 27.6% from the figure at 2023-end.  Adjusted operating return on equity, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards, improved 320 bps year over year to 11.7%.

CNO Financial’s Share Repurchase & Dividend Update

CNO Financial rewarded its shareholders with $90 million in the form of share buybacks and $16.9 million in dividends during the third quarter.

As of Sept. 30, 2024, the company had a leftover repurchase capacity of $331.8 million.

CNO’s 2024 Guidance Updated

CNO Financial presently expects 2024 operating EPS to be in the range of $3.50-$3.60, higher than the previous view of $3.30-$3.50. The mid-point of the revised guidance implies a nearly 15% rise from the 2023 figure. 

Management estimates excess cash flow of $250-$275 million to the holding company, up from the earlier guided range of $200-$250 million.

The company continues to expect expense ratio to be in the band of 19-19.2% for 2024. It also continues to anticipate the effective tax rate to be around 23%. Management has also reiterated its aim to achieve a leverage in the band of 25-28%.

CNO’s Zacks Rank

CNO Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Of the insurance industry players that have reported third-quarter 2024 results so far, the bottom-line results of American International Group, Inc. AIG, Unum Group UNM and Assurant, Inc. AIZ beat the Zacks Consensus Estimate.

AIG reported third-quarter adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 8.9%. The bottom line improved 18.3% year over year. Adjusted operating revenues amounted to $6.84 billion, which declined 5.9% year over year. However, the top line beat the consensus mark by 3.3%. Premiums of $5.9 billion declined 9.1% year over year . Total net investment income increased 13.7% year over year to $973 million. 

Adjusted return on equity of AIG was 6.8%, which improved 150 bps year over year. The General Insurance segment recorded net premiums written of $6.38 billion, which declined 1% year over year on a reported basis and rose 6% on a comparable basis. Underwriting income of $437 million declined 28% on a reported basis and 21% on a comparable basis. Adjusted pre-tax income declined 11% year over year to $1.21 billion. 

Unum’s third-quarter 2024 operating net income of $2.13 per share beat the Zacks Consensus Estimate by 1.9%. The bottom line increased 9.8% year over year. Total operating revenues of were $3.2 billion, up 3.4% year over year. Premium increased 4% from the prior-year quarter to $2.6 billion.  In the Unum U.S. segment, premium income was $1.7 billion, up 4% year over year. Adjusted operating income rose 1.5% year over year to $363.3 million. 

The Unum International unit’s premium income of $246.6 million increased 17.1% year over year.  Adjusted operating income was $40.3 million, up 9.5% year over year. The Unum U.K. line of business premium income was £158.9 million, up 11.7% from the year-ago quarter due to in-force block growth. In the Colonial Life segment, premium income increased 2.5% from the prior-year figure to $441.9 million. Sales decreased 0.3% from the year-ago figure to $120.9 million. 

Assurant reported third-quarter net operating income of $3.00 per share, which beat the Zacks Consensus Estimate by 20%. However, the bottom line declined 30.7% year over year. Total revenues increased 7.6% year over year to nearly $3 billion. The top line beat the Zacks Consensus Estimate by 2.6%. Net earned premiums, fees and other income increased 7% year over year to $2.9 billion. Net investment income was down 10.9% year over year to $129.7 million. 

Revenues at Global Housing increased 9.7% year over year to $635.5 million. Net earned premiums, fees and other income increased 9% year over year. Adjusted EBITDA, excluding catastrophes, increased 10.2% year over year to $229.2 million. Revenues at Global Lifestyle declined 3% year over year to $2.3 billion. Adjusted EBITDA, excluding catastrophes, of $184.3 million decreased 10% year over year.

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