CNO Financial Group Files Q2 2024 10-Q

TL;DR

CNO Financial Group's Q2 2024 10-Q is in. Check financials.

AI Summary

CNO Financial Group, Inc. filed its 10-Q for the period ending June 30, 2024. The filing covers the second quarter of 2024 and provides financial details for the company. Key financial data and disclosures relevant to investors and stakeholders are included in this report.

Why It Matters

This 10-Q filing provides crucial financial performance data for CNO Financial Group, allowing investors to assess the company's health and make informed decisions.

Risk Assessment

Risk Level: medium — As a financial services company, CNO Financial Group is subject to market, regulatory, and economic risks inherent in the insurance and investment sectors.

Key Numbers

• 20240630 — Reporting Period End Date (Indicates the end of the fiscal quarter being reported.)
• 20240809 — Filing Date (The date the 10-Q was officially submitted to the SEC.)
• 2023-12-31 — Prior Year End Date (Provides a point of comparison for financial performance.)

Key Players & Entities

• CNO Financial Group, Inc. (company) — Filer of the 10-Q
• 20240630 (date) — End of the reporting period
• 20240809 (date) — Filing date
• CONSECO INC (company) — Former company name

FAQ

Key Financial Figures

• $0.01 — ich registered Common Stock, par value $0.01 per share CNO New York Stock Exchange

Filing Documents

• cno-20240630.htm (10-Q) — 4557KB
• exhibit32-byxlaws.htm (EX-3.2) — 178KB
• cno06302024ex311.htm (EX-31.1) — 9KB
• cno06302024ex312.htm (EX-31.2) — 9KB
• cno06302024ex321.htm (EX-32.1) — 4KB
• cno06302024ex322.htm (EX-32.2) — 4KB
• 0001224608-24-000050.txt ( ) — 23396KB
• cno-20240630.xsd (EX-101.SCH) — 116KB
• cno-20240630_cal.xml (EX-101.CAL) — 172KB
• cno-20240630_def.xml (EX-101.DEF) — 596KB
• cno-20240630_lab.xml (EX-101.LAB) — 1158KB
• cno-20240630_pre.xml (EX-101.PRE) — 894KB
• cno-20240630_htm.xml (XML) — 5946KB

- FINANCIAL INFORMATION Page

PART I - FINANCIAL INFORMATION Page

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) Consolidated Balance Sheet as of June 30 , 2024 and December 31, 2023 3 Consolidated Statement of Operations for the three and six months ended Jun e 30 , 2024 and 2023 5 Consolidated Statement of Comprehensive Income for the three and six months ended June 30 , 2024 and 2023 6 Consolidated Statement of Shareholders' Equity for the three and six months ended June 30 , 2024 and 2023 7 Consolidated Statement of Cash Flows for the six months ended June 30 , 2024 and 2023 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9

Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations 70 Cautionary Statement Regarding Forward-Looking Statements 70 Overview 72 Critical Accounting Estimates 75 Results of Operations 76 Liquidity and Capital Resources 87 Investments 93 Investments in Variable Interest Entities 99 New Accounting Standards 102

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 102

Controls and Procedures

Item 4. Controls and Procedures 102

- OTHER INFORMATION

PART II - OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 103

Risk Factors

Item 1A. Risk Factors 103

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 103

Other Information

Item 5. Other Information 104

Exhibits

Item 6. Exhibits 105 2

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS. CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Dollars in millions) (unaudited) ASSETS June 30, 2024 December 31, 2023 Investments: Fixed maturities, available for sale, at fair value (net of allowance for credit losses: June 30, 2024 - $ 39.8 and December 31, 2023 - $ 42.9 ; amortized cost: June 30, 2024 - $ 25,106.1 and December 31, 2023 - $ 23,699.2 ) $ 22,617.9 $ 21,506.2 Equity securities at fair value 117.7 96.9 Mortgage loans (net of allowance for credit losses: June 30, 2024 - $ 13.2 and December 31, 2023 - $ 15.4 ) 2,176.0 2,064.1 Policy loans 131.3 128.5 Trading securities 207.8 222.7 Investments held by variable interest entities (net of allowance for credit losses: June 30, 2024 - $ 2.8 and December 31, 2023 - $ 3.1 ; amortized cost: June 30, 2024 - $ 440.6 and December 31, 2023 - $ 787.6 ) 425.5 768.6 Other invested assets 1,554.0 1,353.4 Total investments 27,230.2 26,140.4 Cash and cash equivalents - unrestricted 878.8 774.5 Cash and cash equivalents held by variable interest entities 113.3 114.5 Accrued investment income 262.5 251.5 Present value of future profits 170.4 180.7 Deferred acquisition costs 2,047.2 1,944.4 Reinsurance receivables (net of allowance for credit losses: June 30, 2024 - $ 3.0 and December 31, 2023 - $ 3.0 ) 3,910.9 4,040.7 Market risk benefit asset 84.5 75.4 Income tax assets, net 882.8 936.2 Assets held in separate accounts 3.2 3.1 Other assets 706.4 641.1 Total assets $ 36,290.2 $ 35,102.5 (continued on next page) The accompanying notes are an integral part of the consolidated financial statements. 3 Table of Contents CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET, continued (Dollars in millions) (unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY June 30, 2024 December 31, 2023 Liabilities: Liabilities for insurance products: Policyholder account balances $ 16,637.9 $ 15,667.8 Future policy benefi

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) ___________________ BUSINESS AND BASIS OF PRESENTATION CNO Financial Group, Inc., a Delaware corporation ("CNO"), is a holding company for a group of insurance companies that develop, market and administer health insurance, annuity, individual life insurance and other insurance products. The terms "CNO Financial Group, Inc.", "CNO", the "Company", "we", "us", and "our" as used in these financial statements refer to CNO and its subsidiaries. Such terms, when used to describe insurance business and products, refer to the insurance business and products of CNO's insurance subsidiaries. We focus on serving middle-income pre-retiree and retired Americans, which we believe are attractive, underserved, high growth markets. We sell our products through exclusive agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing. Our unaudited consolidated financial statements reflect normal recurring adjustments that, in the opinion of management, are necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. As permitted by rules and regulations of the Securities and Exchange Commission (the "SEC") applicable to quarterly reports on Form 10-Q, we have condensed or omitted certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Results for interim periods are not necessarily indicative of the results that may be expected for a full year. The December 31, 2023 consolidated balance sheet data was derived from the audited consolidated financial statements included in our 2023 Annual Report on Form 10-K. Accordingly, these interim consolidated financial statements should be read together with the consolidated financial statements included in our 2023 Annual Report on Form

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) ___________________ RECENTLY ISSUED ACCOUNTING STANDARDS In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. Such requirements include: (i) disclosures on significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss on an annual and interim basis; (ii) disclosures of an amount for other segment items by reportable segment and a description of its composition on an annual and interim basis (the other segment items category is the difference between segment revenues less the segment expenses disclosed pursuant to the new guidance); (iii) providing all annual disclosures on a reportable segment's profit or loss and assets currently required by FASB ASC Topic 280, Segment Reporting in interim periods; and (iv) specifying the title and position of the CODM and an explanation of how the CODM uses the reported measures to assess segment performance and make decisions about allocating resources. ASU 2023-07 is effective for annual periods beginning January 1, 2024 and interim periods beginning January 1, 2025, to be applied on a retrospective basis (with early adoption permitted). The adoption of ASU 2023-07 will expand our disclosures but will not have an impact on our financial position or results of operations. In December 2023, the FASB issued Accounting Standards Update 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 is intended to improve the effectiveness of income tax disclosures by requiring, among other things, the disclosure on an annual

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) ___________________ INVESTMENTS We classify our fixed maturity securities into one of two categories: (i) "available for sale" (which we carry at estimated fair value with any unrealized gain or loss, net of any allowance for credit losses and income taxes, recorded as a component of shareholders' equity); or (ii) "trading" (which we carry at estimated fair value with changes in such value recognized as either net investment income (classified as investment income from policyholder and other special-purpose portfolios) or investment gains (losses)). Trading securities include: (i) investments purchased with the intent of selling in the near term to generate income; and (ii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. The change in fair value of the income generating investments is recognized in income from policyholder and other special-purpose portfolios (a component of net investment income). The change in fair value of securities with embedded derivatives is recognized in other investment gains (losses). We review our available for sale fixed maturity securities with unrealized losses to determine whether such impairments are the result of credit losses. We analyze various factors to make such determinations including, but not limited to: (i) actions taken by rating agencies; (ii) default by the issuer; (iii) the significance of the decline; (iv) an assessment of our intent to sell the security before recovering the security's amortized cost; (v) an economic analysis of the issuer's industry; and (vi) the financial strength, liquidity, and recoverability of the issuer. We perform a security by security review each quarter to evaluate whether a credit loss has occurred. In determining the credit loss component, we discount the estimated cash flows on a security by security basis. We consider the impact of macroeconomic condition

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) ___________________ At June 30, 2024, the amortized cost, gross unrealized gains, gross unrealized losses, allowance for credit losses and estimated fair value of fixed maturities, available for sale, were as follows (dollars in millions): Amortized cost Gross unrealized gains Gross unrealized losses Allowance for credit losses Estimated fair value Corporate securities $ 13,450.7 $ 43.4 $ ( 1,667.4 ) $ ( 38.6 ) $ 11,788.1 Certificates of deposit 470.2 3.5 — — 473.7 United States Treasury securities and obligations of United States government corporations and agencies 278.6 — ( 22.1 ) — 256.5 Foreign governments 101.1 .4 ( 13.3 ) ( .5 ) 87.7 Asset-backed securities 1,552.2 4.5 ( 87.9 ) ( .1 ) 1,468.7 Agency residential mortgage-backed securities 787.3 6.1 ( 4.0 ) — 789.4 Non-agency residential mortgage-backed securities 1,667.2 30.4 ( 144.8 ) — 1,552.8 Collateralized loan obligations 1,227.6 5.1 ( 7.8 ) — 1,224.9 Commercial mortgage-backed securities 2,378.7 1.2 ( 214.6 ) — 2,165.3 Total fixed maturities, available for sale $ 25,106.1 $ 113.2 $ ( 2,561.6 ) $ ( 39.8 ) $ 22,617.9 At December 31, 2023, the amortized cost, gross unrealized gains, gross unrealized losses, allowance for credit losses and estimated fair value of fixed maturities, available for sale, were as follows (dollars in millions): Amortized cost Gross unrealized gains Gross unrealized losses Allowance for credit losses Estimated fair value Corporate securities $ 13,186.9 $ 74.7 $ ( 1,382.4 ) $ ( 41.7 ) $ 11,837.5 United States Treasury securities and obligations of United States government corporations and agencies 207.6 .1 ( 13.3 ) — 194.4 Foreign governments 92.7 1.2 ( 10.4 ) ( .4 ) 83.1 Asset-backed securities 1,476.2 4.1 ( 107.8 ) ( .1 ) 1,372.4 Agency residential mortgage-b

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) ___________________ The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at June 30, 2024, by contractual maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties. Structured securities (such as asset-backed securities, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, collateralized loan obligations and commercial mortgage-backed securities, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments. Amortized cost Estimated fair value (Dollars in millions) Due in one year or less $ 867.7 $ 860.9 Due after one year through five years 2,272.7 2,178.7 Due after five years through ten years 1,738.0 1,660.6 Due after ten years 12,614.7 10,716.6 Subtotal 17,493.1 15,416.8 Structured securities 7,613.0 7,201.1 Total fixed maturities, available for sale $ 25,106.1 $ 22,617.9 Gross Unrealized Investment Losses Our investment strategy is to maximize, over a sustained period and within acceptable parameters of quality and risk, investment income and total investment return through active strategic asset allocation and investment management. Accordingly, we may sell securities at a gain or a loss to enhance the projected total return of the portfolio as market opportunities change, to reflect changing perceptions of risk, or to better match certain characteristics of our investment portfolio with the corresponding characteristics of our insurance liabilities. 13 Table of Contents CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (unaudited) ___________________ The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at June 30, 2024 (dollars in millions): Less than 12 months 12 months or greater Total

Description of securities Fair

Description of securities Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses Corporate securities $ 687.8 $ ( 13.7 ) $ 4,836.0 $ ( 722.8 ) $ 5,523.8 $ ( 736.5 ) United States Treasury securities and obligations of United States government corporations and agencies 97.6 — 153.4 ( 22.1 ) 251.0 ( 22.1 )

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