Company Announcements

Per diluted share

Quarter ended

Quarter ended

March 31,

March 31,

2025

2024

%
change

2025

2024

%
change

Income from insurance products ^(b)

0.85

$            0.61

39

$       87.7

$      68.0

29

Fee income

(0.01)

0.10

(110)

(0.8)

11.3

(107)

Investment income not allocated to product lines ^(c)

0.37

0.11

236

38.0

12.3

209

Expenses not allocated to product lines

(0.20)

(0.15)

33

(20.3)

(16.8)

21

Operating earnings before taxes

1.01

0.67

104.6

74.8

Income tax expense on operating income

(0.23)

(0.15)

53

(23.5)

(17.3)

36

Net operating income (1)

0.79

0.52

52

81.1

57.5

41

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

(0.13)

(0.04)

(13.2)

(4.6)

Net change in market value of investments
recognized in earnings

0.06

0.11

6.4

12.4

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

(0.77)

0.57

(79.7)

64.0

Other

—

—

(0.4)

(0.4)

Non-operating income (loss) before taxes

(0.84)

0.64

(86.9)

71.4

Income tax benefit (expense) on non-operating
income

0.19

(0.15)

19.5

(16.6)

Net non-operating income (loss)

(0.65)

0.49

(67.4)

54.8

Net income

$           0.13

$            1.01

$       13.7

$    112.3

Weighted average diluted shares outstanding

103.1

110.8

(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 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 margin is management's measure of the profitability of its annuity, health and life segments' 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 investments income not allocated to product lines), net of interest expense on corporate debt and financing arrangements.

Quarter ended

March 31,

Trailing four quarters:

Net Income

$        305.4

$        389.6

Net operating income (a non-GAAP financial measure)

452.9

355.0

Net operating income, excluding significant items

428.8

311.7

Average of each of the trailing four quarters average:

Shareholders' equity

$     2,516.0

$     2,075.3

Accumulated other comprehensive loss

1,327.9

1,709.8

Shareholders' equity, excluding accumulated other comprehensive loss

3,843.9

3,785.1

Net operating loss carryforwards

(237.6)

(135.1)

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

$     3,606.3

$     3,650.0

Ratios:

Return on equity

12.1 %

18.8 %

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

12.6 %

9.7 %

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

11.9 %

8.5 %

Shareholders' equity

$        2,530.5

$        2,367.7

Accumulated other comprehensive loss

1,239.1

1,480.3

Shareholders' equity, excluding accumulated other comprehensive loss

3,769.6

3,848.0

Basic shares outstanding

99,893,923

108,568,594

Diluted shares outstanding

101,796,131

110,036,495

Book value per share

$           25.33

$           21.81

Book value per diluted share

$           24.86

$           21.52

Accumulated other comprehensive loss per diluted share

12.17

13.45

Book value per diluted share, excluding accumulated other comprehensive loss (a non-GAAP financial
measure) ⁽²⁾

$           37.03

$           34.97

Investment
grade

Below
investment
grade

Total

Corporate securities

13,299.1

$          642.9

$     13,942.0

Certificates of deposit

470.0

—

470.0

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

216.3

—

216.3

States and political subdivisions

3,274.1

23.5

3,297.6

Foreign governments

109.0

—

109.0

Asset-backed securities

1,524.5

101.2

1,625.7

Agency residential mortgage-backed securities

812.1

—

812.1

Non-agency residential mortgage-backed securities

1,296.6

368.4

(a)

1,665.0

Collateralized loan obligations

1,009.2

—

1,009.2

Commercial mortgage-backed securities

2,230.0

94.2

2,324.2

Total

$     24,240.9

$       1,230.2

$     25,471.1

(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,

2024

Revenues:

Insurance policy income

$              650.7

$             628.4

Net investment income:

 General account assets

375.1

301.9

 Policyholder and other special-purpose portfolios

(63.6)

167.3

Investment gains (losses):

 Realized investment losses

(3.8)

(10.0)

 Other investment gains (losses)

(3.0)

17.8

Total investment gains (losses)

(6.8)

7.8

Fee revenue and other income

48.7

51.1

Total revenues

1,004.1

1,156.5

Benefits and expenses:

Insurance policy benefits

580.1

636.6

Liability for future policy benefits remeasurement (gain) loss

(12.2)

(6.4)

Change in fair value of market risk benefits

15.3

(18.9)

Interest expense

62.0

60.2

Amortization of deferred acquisition costs and present value of future profits 

67.4

60.5

Loss on extinguishment of borrowings related to variable interest entities

(1.5)

—

Other operating costs and expenses

275.3

278.3

Total benefits and expenses

986.4

1,010.3

Income before income taxes

17.7

146.2

Income tax expense

4.0

33.9

Net income

$                13.7

$             112.3

Earnings per common share:

Basic:

Weighted average shares outstanding

100,743,000

108,964,000

Net income

$                0.14

$               1.03

Diluted:

Weighted average shares outstanding

103,070,000

110,845,000

Net income

$                0.13

$               1.01

NOTES

(1)

Management believes that an analysis of net income applicable to common stock before: (i) net realized investment gains or losses from sales, 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; and (viii) 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.  Management uses this measure to evaluate performance because the items excluded from net operating income can be affected by events that are unrelated to the company's underlying fundamentals.  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, for the trailing four quarters; 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

2Q23

$                  62.3

$                     —

$                  62.3

$                281.2

$                  73.7

$                286.8

3Q23

101.3

(16.9)

(b)

84.4

287.7

167.3

278.2

4Q23

133.9

(26.4)

(c)

107.5

312.8

36.3

276.5

1Q24

57.5

—

57.5

311.7

112.3

389.6

2Q24

114.6

—

114.6

364.0

116.3

432.2

3Q24

119.2

(21.9)

(d)

97.3

376.9

9.3

274.2

4Q24

138.0

3.1

(e)

141.1

410.5

166.1

404.0

1Q25

81.1

(5.3)

(f)

75.8

428.8

13.7

305.4

(a)

See note (6) for additional information.

(b)

Comprised of $21.7 million of legal recoveries, net of expenses and increased legal accruals, net of tax expense of $4.8 million.

(c)

Comprised of $33.9 million of the net favorable impact arising from our comprehensive annual actuarial review, net of tax expense of $7.5 million.

(d)

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.

(e)

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

(f)

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.

Trailing four quarters

1Q25

1Q24

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

$           580.6

$            457.9

Income tax expense

(127.7)

(102.9)

Net operating income

452.9

355.0

Non-operating items:

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

(81.3)

(54.6)

Net change in market value of investments recognized in earnings

16.8

8.0

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

(119.0)

99.2

Fair value changes related to the agent deferred compensation plan

6.6

(3.5)

Other

(13.9)

(3.0)

Non-operating loss before taxes

(190.8)

46.1

    Income tax benefit on non-operating loss

43.3

(11.5)

Net non-operating loss

(147.5)

34.6

Net income

$           305.4

$            389.6

1Q23

2Q23

3Q23

4Q23

Consolidated capital, excluding accumulated other comprehensive

income (loss) and net operating loss carryforwards

(a non-GAAP financial measure)

$    3,543.8

$    3,603.0

$    3,744.2

$    3,712.8

Net operating loss carryforwards

152.4

126.3

102.6

79.6

Accumulated other comprehensive loss

(1,664.4)

(1,733.5)

(1,956.7)

(1,576.8)

Common shareholders' equity

$    2,031.8

$    1,995.8

$    1,890.1

$    2,215.6

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

$    3,793.2

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

$    2,498.4

1Q25

Consolidated capital, excluding accumulated other comprehensive

income (loss) and net operating loss carryforwards

(a non-GAAP financial measure)

$    3,474.3

Net operating loss carryforwards

295.3

Accumulated other comprehensive loss

(1,239.1)

Common shareholders' equity

$    2,530.5

Trailing four quarter average

1Q25

1Q24

Consolidated capital, excluding accumulated other comprehensive

income (loss) and net operating loss carryforwards

(a non-GAAP financial measure)

$        3,606.3

$        3,650.0

Net operating loss carryforwards

237.6

135.1

Accumulated other comprehensive loss

(1,327.9)

(1,709.8)

Common shareholders' equity

$        2,516.0

$        2,075.3

(6)

The tables below summarize the financial impact of significant items on our net operating income for the three months ended March 31, 2025 and the quarters during the year ended December 31, 2024 that had significant items impacting our net operating income. 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

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.

Three months ended

December 31, 2024

Actual
results

Significant
items

Excluding
significant

items

Insurance product margin

Annuity margin

$         55.0

$            —

$         55.0

Health margin

130.1

3.9

(a)

134.0

Life margin

68.0

—

68.0

Total insurance product margin

253.1

3.9

257.0

Allocated expenses

(146.1)

—

(146.1)

Income from insurance products

107.0

3.9

110.9

Fee income

20.6

—

20.6

Investment income not allocated to product lines

65.3

—

65.3

Expenses not allocated to product lines

(19.0)

—

(19.0)

Operating earnings before taxes

173.9

3.9

177.8

Income tax (expense) benefit on operating income

(35.9)

(0.8)

(36.7)

Net operating income

$       138.0

$          3.1

$       141.1

Net operating income per diluted share

$         1.31

$        0.03

$         1.34

(a)

Comprised of $3.9 million of the unfavorable impact arising from our comprehensive annual actuarial review.

Three months ended

September 30, 2024

Actual
results

Significant
items (a)

Excluding
significant

items

Insurance product margin

Annuity margin

$         91.1

$       (36.2)

(b)

$         54.9

Health margin

127.8

4.3

(b)

132.1

Life margin

63.3

0.7

(b)

64.0

Total insurance product margin

282.2

(31.2)

251.0

Allocated expenses

(153.0)

—

(153.0)

Income from insurance products

129.2

(31.2)

98.0

Fee income

(2.7)

—

(2.7)

Investment income not allocated to product lines

45.5

—

45.5

Expenses not allocated to product lines

(18.5)

2.9

(c)

(15.6)

Operating earnings before taxes

153.5

(28.3)

125.2

Income tax (expense) benefit on operating income

(34.3)

6.4

(27.9)

Net operating income

$       119.2

$       (21.9)

$         97.3

Net operating income per diluted share

$         1.11

$       (0.19)

$         0.92

(a)

Significant items impacting the health margin were revised from $8.2 million reported in September 30, 2024 to $4.3 million.

(b)

Comprised of $31.2 million of net favorable impact arising from our comprehensive annual actuarial review.

(c)

Comprised of $2.9 million of the unfavorable impact related to a fixed asset impairment.