CNO Financial Group Reports First Quarter 2026 Results

Per diluted share

Quarter ended

Quarter ended

March 31,

March 31,

2026

2025

%

change

2026

2025

%

change

Income from insurance products ^(b)

$       1.01

$        0.85

19 %

$    97.0

$    87.7

11 %

Fee income

0.11

(0.01)

n/m

10.6

(0.8)

n/m

Investment income not allocated to product lines ^(c)

0.43

0.37

16

41.7

38.0

10

Expenses not allocated to product lines

(0.20)

(0.20)

—

(19.4)

(20.3)

(4)

Operating earnings before taxes

1.35

1.01

129.9

104.6

Income tax expense on operating income

(0.30)

(0.23)

30

(28.6)

(23.5)

22

Net operating income (1)

1.05

0.79

33

101.3

81.1

25

Net realized investment losses from disposals,

impairments and change in allowance for credit losses

(0.16)

(0.13)

(15.2)

(13.2)

Net change in market value of investments

recognized in earnings

(0.08)

0.06

(7.5)

6.4

Changes in fair value of embedded derivative

liabilities and market risk benefits

(0.44)

(0.68)

(42.4)

(69.6)

Expenses related to TechMod initiative

(0.14)

—

(13.7)

—

Net loss related to divested business

(0.02)

—

(1.9)

—

Other

(0.01)

—

(0.8)

(0.4)

Non-operating income before taxes

(0.85)

(0.75)

(81.5)

(76.8)

Income tax expense on non-operating income

0.19

0.17

17.9

17.2

Net non-operating income

(0.66)

(0.58)

(63.6)

(59.6)

Net income

$       0.39

$        0.21

$    37.7

$    21.5

Weighted average diluted shares outstanding

96.1

103.1

(a)

GAAP is defined as accounting principles generally accepted in the United States of America.

(b)

Income from insurance products is the sum of the insurance product margins of the annuity, health and life product lines, less expenses allocated to the insurance product lines.  It excludes the income from our fee income business, investment income not allocated to product lines, net expenses not allocated to product lines (primarily holding company expenses) and income taxes.  Insurance product margin is management's measure of the profitability of its annuity, health and life product lines' performance and consists of insurance policy income plus allocated investment income less insurance policy benefits, interest credited, commissions, advertising expense and amortization of acquisition costs.

(c)

Investment income not allocated to product lines represents net investment income less: (i) equity returns credited to policyholder account balances; (ii) the investment income allocated to our product lines; (iii) interest expense on notes payable, investment borrowings and financing arrangements; (iv) expenses related to the funding agreement-backed notes ("FABN")  program; and (v) certain expenses related to benefit plans that are offset by special-purpose investment income; plus (vi) the impact of annual option forfeitures related to fixed indexed annuity surrenders.  Investment income not allocated to product lines includes investment income on investments in excess of amounts allocated to product lines, investments held by our holding companies, the spread we earn from our federal home loan bank ("FHLB") investment borrowing and FABN programs and variable components of investment income (including call and prepayment income, adjustments to returns on structured securities due to cash flow changes, income (loss) from company-owned life insurance ("COLI") and alternative investment income not allocated to product lines), net of interest expense on corporate debt and financing arrangements. The spread earned from our FHLB investment borrowing and FABN programs includes the investment income on the matched assets less: (i) interest on investment borrowings related to the FHLB investment borrowing program; (ii) interest credited on funding agreements; and (iii) amortization of deferred acquisition costs related to the FABN program.

Quarter ended

March 31,

2025

Trailing four quarters:

Net Income

$        245.5

$        330.0

Net operating income (a non-GAAP financial measure)

459.4

452.9

Net operating income, excluding significant items

427.2

428.8

Average of each of the trailing four quarters average:

Shareholders' equity

$     2,574.7

$     2,523.3

Accumulated other comprehensive loss

1,178.7

1,327.9

Shareholders' equity, excluding accumulated other comprehensive loss

3,753.4

3,851.2

Net operating loss carryforwards

(258.9)

(237.6)

Shareholders' equity, excluding accumulated other comprehensive loss and net operating loss

carryforwards

$     3,494.5

$     3,613.6

Ratios:

Return on equity

9.5 %

13.1 %

Operating return on equity (a non-GAAP financial measure) ⁽⁵⁾

13.1 %

12.5 %

Operating return on equity, excluding significant items (a non-GAAP financial measure) ⁽⁵⁾

12.2 %

11.9 %

Shareholders' equity

$     2,498.4

$     2,555.1

Accumulated other comprehensive loss

1,217.6

1,239.1

Shareholders' equity, excluding accumulated other comprehensive loss

$     3,716.0

$     3,794.2

Basic shares outstanding

93,795,306

99,893,923

Diluted shares outstanding

95,323,466

101,796,131

Book value per share

$        26.64

$        25.58

Book value per diluted share

$        26.21

$        25.10

Accumulated other comprehensive loss per diluted share

12.77

12.17

Book value per diluted share, excluding accumulated other comprehensive loss (a non-GAAP financial

measure) ⁽²⁾

$        38.98

$        37.27

Investment

grade

Below

investment

grade

Total

Corporate securities

$   13,878.7

$       679.9

$   14,558.6

United States Treasury securities and obligations of the United States government and

agencies

208.9

—

208.9

States and political subdivisions

3,228.4

22.4

3,250.8

Foreign governments

134.8

—

134.8

Asset-backed securities

1,800.3

43.8

1,844.1

Agency residential mortgage-backed securities

810.6

—

810.6

Non-agency residential mortgage-backed securities

1,332.5

223.7

(a)

1,556.2

Collateralized loan obligations

1,466.5

—

1,466.5

Commercial mortgage-backed securities

2,162.4

88.5

2,250.9

Total

$   25,023.1

$     1,058.3

$   26,081.4

(a)

Certain structured securities rated below investment grade by Nationally Recognized Statistical Rating Organizations may be assigned a NAIC 1 or NAIC 2 designation based on the cost basis of the security relative to estimated recoverable amounts as determined by the National Association of Insurance Commissioners (NAIC).

CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(Dollars in millions, except per share data)

(unaudited)

Three months ended

March 31,

Revenues:

Insurance policy income

$        673.4

$         650.7

Net investment income:

  General account assets

395.0

375.1

  Policyholder and other special-purpose portfolios

(64.9)

(63.6)

Investment gains (losses):

  Realized investment losses

(7.8)

(3.8)

  Other investment losses

(14.9)

(3.0)

Total investment losses

(22.7)

(6.8)

Fee revenue and other income

48.8

48.7

 Total revenues

1,029.6

1,004.1

Benefits and expenses:

Insurance policy benefits

576.6

570.0

Liability for future policy benefits remeasurement gain

(6.5)

(12.2)

Change in fair value of market risk benefits

10.7

15.3

Interest expense

50.9

62.0

Amortization of deferred acquisition costs and present value of future

profits 

74.2

67.4

Gain on extinguishment of borrowings related to variable interest

entities

—

(1.5)

Other operating costs and expenses

275.3

275.3

Total benefits and expenses

981.2

976.3

Income before income taxes

48.4

27.8

Income tax expense

10.7

6.3

Net income

$          37.7

$           21.5

Earnings per common share:

Basic:

Weighted average shares outstanding

94,078,000

100,743,000

Net income

$          0.40

$           0.21

Diluted:

Weighted average shares outstanding

96,139,000

103,070,000

Net income

$          0.39

$           0.21

NOTES

(1)

Management believes that an analysis of net income applicable to common stock before: (i) net realized investment gains or losses from disposals, impairments and the change in allowance for credit losses, net of taxes; (ii) net change in market value of investments recognized in earnings, net of taxes; (iii) changes in fair value of embedded derivative liabilities and market risk benefits related to our fixed indexed annuities, net of taxes; (iv) fair value changes related to the agent deferred compensation plan, net of taxes; (v) gains or losses related to material reinsurance transactions, net of taxes; (vi) loss on extinguishment of debt, net of taxes; (vii) changes in the valuation allowance for deferred tax assets and other tax items; (viii) costs related to our three-year project to modernize certain elements of our technology ("TechMod") that are incremental to normal spend and will not recur following implementation, net of taxes; (ix) goodwill and other asset impairment expenses, net of taxes; (x) gains or losses related to divested business, net of taxes; and (xi) other non-operating items including earnings attributable to variable interest entities, net of taxes ("net operating income," a non-GAAP financial measure) is important to evaluate the financial performance of the company, and is a key measure commonly used in the life insurance industry.  The income tax expense or benefit allocated to the items included in net non-operating income (loss) represents the current and deferred income tax expense or benefit allocated to the items included in non-operating earnings.  Management believes this information provides a better understanding of the business and a more meaningful analysis of results of our insurance product lines.  A reconciliation of net operating income to net income applicable to common stock is provided in the table on page 2.  Additional information concerning this non-GAAP measure is included in our periodic filings with the Securities and Exchange Commission that are available on CNO's website, CNOinc.com, in the Investors section under SEC Filings.

(2)

Book value per diluted share reflects the potential dilution that could occur if outstanding stock options were exercised and restricted stock and performance units were vested.  The dilution from options, restricted shares and performance units is calculated using the treasury stock method.  Under this method, we assume the proceeds from the exercise of the options (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the closing market price on the last day of the period.  In addition, the calculation of this non-GAAP measure differs from the corresponding GAAP measure because accumulated other comprehensive income (loss) has been excluded from the value of capital used to determine this measure.  Management believes this non-GAAP measure is useful because it removes the volatility that arises from changes in the unrealized appreciation (depreciation) of our investments.

(3)

The calculation of this non-GAAP measure differs from the corresponding GAAP measure because accumulated other comprehensive income (loss) has been excluded from the value of capital used to determine this measure.  Management believes this non-GAAP measure is useful because it removes the volatility that arises from changes in the unrealized appreciation (depreciation) of our investments.

(4)

Measured by new annualized premiums for life and health products, which includes 10% of single premium whole life deposits and 100% of all other premiums (excluding annuities).  Sales of third-party products are excluded.

(5)

Operating return on equity and operating return on equity, excluding significant items are calculated as follows: (i) operating return on equity is equal to the trailing four quarters of net operating income⁽¹⁾ divided by average shareholders' equity, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards; and (ii) operating return on equity, excluding significant items is equal to the trailing four quarters of net operating income⁽¹⁾, excluding significant items, divided by average shareholders' equity, excluding accumulated other comprehensive income (loss) and net operating loss carryforwards, for the trailing four quarters.

Net operating

Net operating

income,

income,

excluding

Net

excluding

significant

income -

Net operating

Significant

significant

items - trailing

Net

trailing

income

items

items (a)

four quarters

income (loss)

four quarters

2Q24

$          114.6

$              —

$          114.6

$          364.0

$          116.3

$          432.2

3Q24

119.2

(21.9)

(b)

97.3

376.9

9.3

274.2

4Q24

138.0

3.1

(c)

141.1

410.5

182.9

420.8

1Q25

81.1

(5.3)

(d)

75.8

428.8

21.5

330.0

2Q25

87.5

—

87.5

401.7

91.8

305.5

3Q25

127.2

(32.2)

(e)

95.0

399.4

23.1

319.3

4Q25

143.4

—

143.4

401.7

92.9

229.3

1Q26

101.3

—

101.3

427.2

37.7

245.5

(a)

See note (6) for additional information.

(b)

Comprised of $31.2 million of the net favorable impact arising from our comprehensive annual actuarial review and $2.9 million of the unfavorable impact related to a fixed asset impairment, net of tax expense of $6.4 million.

(c)

Comprised of $3.9 million of the unfavorable impact arising from our comprehensive annual actuarial review, net of tax expense of $0.8 million.

(d)

Comprised of $6.8 million of the favorable impact of an out-of-period adjustment which decreased reserves, net of tax expense of $1.5 million.

(e)

Comprised of $41.3 million of the net favorable impact arising from our comprehensive annual actuarial review, net of tax expense of $9.1 million.

Trailing four quarters

1Q26

1Q25

Pre-tax operating earnings (a non-GAAP financial measure)

$       578.5

$        580.6

Income tax expense

(119.1)

(127.7)

Net operating income

459.4

452.9

Non-operating items:

Net realized investment losses from disposals, impairments and change in allowance for credit

losses

(71.0)

(81.3)

Net change in market value of investments recognized in earnings

0.4

16.8

Changes in fair value of embedded derivative liabilities and market risk benefits

(36.8)

(87.3)

Fair value changes related to the agent deferred compensation plan

(1.7)

6.6

Expenses related to TechMod initiative

(34.0)

—

Goodwill and other asset impairment

(101.9)

—

Net loss related to divested business

(19.2)

—

Other

(0.3)

(13.9)

Non-operating loss before taxes

(264.5)

(159.1)

    Income tax benefit on non-operating loss

50.6

36.2

Net non-operating loss

(213.9)

(122.9)

Net income

$       245.5

$        330.0

1Q24

2Q24

3Q24

4Q24

Consolidated capital, excluding accumulated other comprehensive

income (loss) and net operating loss carryforwards

(a non-GAAP financial measure)

$      3,536.8

$      3,596.7

$      3,529.9

$      3,810.0

Net operating loss carryforwards

311.2

296.5

273.9

76.6

Accumulated other comprehensive loss

(1,480.3)

(1,464.3)

(1,116.0)

(1,371.4)

Common shareholders' equity

$      2,367.7

$      2,428.9

$      2,687.8

$      2,515.2

1Q25

2Q25

3Q25

4Q25

Consolidated capital, excluding accumulated other comprehensive

income (loss) and net operating loss carryforwards

(a non-GAAP financial measure)

$      3,498.9

$      3,504.3

$      3,483.6

$      3,510.2

Net operating loss carryforwards

295.3

271.1

246.3

243.0

Accumulated other comprehensive loss

(1,239.1)

(1,252.7)

(1,118.9)

(1,115.0)

Common shareholders' equity

$      2,555.1

$      2,522.7

$      2,611.0

$      2,638.2

1Q26

Consolidated capital, excluding accumulated other comprehensive

income (loss) and net operating loss carryforwards

(a non-GAAP financial measure)

$      3,461.2

Net operating loss carryforwards

254.8

Accumulated other comprehensive loss

(1,217.6)

Common shareholders' equity

$      2,498.4

Trailing four quarter average

1Q26

1Q25

Consolidated capital, excluding accumulated other comprehensive

income (loss) and net operating loss carryforwards

(a non-GAAP financial measure)

$      3,494.5

$      3,613.6

Net operating loss carryforwards

258.9

237.6

Accumulated other comprehensive loss

(1,178.7)

(1,327.9)

Common shareholders' equity

$      2,574.7

$      2,523.3

(6)

The tables below summarize the financial impact of significant items on our net operating income for the quarters during the year ended December 31, 2025 that had significant items impacting our net operating income. There were no significant items on our net operating income during the three months ended March 31, 2026. Management believes that identifying the impact of these items enhances the understanding of our operating results (dollars in millions, except per share data).

Three months ended

September 30, 2025

Actual

results

Significant

items

Excluding

significant

items

Insurance product margin

Annuity margin

$      72.9

$     (16.6)

(a)

$      56.3

Health margin

157.0

(21.1)

(a)

135.9

Life margin

70.6

(3.6)

(a)

67.0

Total insurance product margin

300.5

(41.3)

259.2

Allocated expenses

(151.0)

—

(151.0)

Income from insurance products

149.5

(41.3)

108.2

Fee income

(3.9)

—

(3.9)

Investment income not allocated to product lines

39.5

—

39.5

Expenses not allocated to product lines

(22.3)

—

(22.3)

Operating earnings before taxes

162.8

(41.3)

121.5

Income tax (expense) benefit on operating income

(35.6)

9.1

(26.5)

Net operating income

$    127.2

$     (32.2)

$      95.0

Net operating income per diluted share

$      1.29

$     (0.33)

$      0.96

(a)

Comprised of $41.3 million of the net favorable impact arising from our comprehensive annual actuarial review.

Three months ended

March 31, 2025

Actual

results

Significant

items

Excluding

significant

items

Insurance product margin

Annuity margin

$      54.5

$          —

$      54.5

Health margin

126.2

—

126.2

Life margin

68.2

(6.8)

(a)

61.4

Total insurance product margin

248.9

(6.8)

242.1

Allocated expenses

(161.2)

—

(161.2)

Income from insurance products

87.7

(6.8)

80.9

Fee income

(0.8)

—

(0.8)

Investment income not allocated to product lines

38.0

—

38.0

Expenses not allocated to product lines

(20.3)

—

(20.3)

Operating earnings before taxes

104.6

(6.8)

97.8

Income tax (expense) benefit on operating income

(23.5)

1.5

(22.0)

Net operating income

$      81.1

$       (5.3)

$      75.8

Net operating income per diluted share

$      0.79

$     (0.05)

$      0.74

(a)

Comprised of $6.8 million of the favorable impact of an out-of-period adjustment, which decreased reserves.