CNO Financial Group Files Q3 2024 10-Q

TL;DR

CNO Financial Group's Q3 2024 10-Q is in. Check financials.

AI Summary

CNO Financial Group, Inc. filed its 10-Q for the period ending September 30, 2024. The filing details financial performance and operational updates for the third quarter of 2024. Key financial data and disclosures relevant to investors and stakeholders are presented.

Why It Matters

This filing provides crucial insights into CNO Financial Group's financial health and operational performance during the third quarter of 2024, impacting investor decisions.

Risk Assessment

Risk Level: medium — 10-Q filings are standard financial reports, but the specific details within can reveal risks related to market conditions, company performance, or regulatory changes.

Key Numbers

• 2024-09-30 — Reporting Period End Date (Indicates the end of the fiscal quarter for which financial information is reported.)
• 2024-11-07 — Filing Date (The date the 10-Q was officially submitted to the SEC.)
• 2023-12-31 — Previous Fiscal Year End (Provides a comparison point for year-end financial data.)

Key Players & Entities

• CNO Financial Group, Inc. (company) — Filer of the 10-Q
• 2024-09-30 (date) — End of the reporting period
• 2024-11-07 (date) — Filing date
• 11299 ILLINOIS STREET, SUITE 200 (address) — Company's business and mailing address
• CARMEL, IN 46032 (address) — Company's business and mailing address

FAQ

Key Financial Figures

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

Filing Documents

• cno-20240930.htm (10-Q) — 4559KB
• cno09302024ex311.htm (EX-31.1) — 9KB
• cno09302024ex312.htm (EX-31.2) — 9KB
• cno09302024ex321.htm (EX-32.1) — 4KB
• cno09302024ex322.htm (EX-32.2) — 4KB
• 0001224608-24-000061.txt ( ) — 23107KB
• cno-20240930.xsd (EX-101.SCH) — 115KB
• cno-20240930_cal.xml (EX-101.CAL) — 171KB
• cno-20240930_def.xml (EX-101.DEF) — 588KB
• cno-20240930_lab.xml (EX-101.LAB) — 1152KB
• cno-20240930_pre.xml (EX-101.PRE) — 886KB
• cno-20240930_htm.xml (XML) — 5922KB

- FINANCIAL INFORMATION Page

PART I - FINANCIAL INFORMATION Page

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) Consolidated Balance Sheet as of September 30, 2024 and December 31, 2023 3 Consolidated Statement of Operations for the three and nine months ended September 30, 2024 and 2023 5 Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2024 and 2023 6 Consolidated Statement of Shareholders' Equity for the three and nine months ended September 30, 2024 and 2023 7 Consolidated Statement of Cash Flows for the nine months ended September 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 72 Cautionary Statement Regarding Forward-Looking Statements 72 Overview 74 Critical Accounting Estimates 77 Results of Operations 78 Liquidity and Capital Resources 90 Investments 97 Investments in Variable Interest Entities 104 New Accounting Standards 107

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 107

Controls and Procedures

Item 4. Controls and Procedures 107

- OTHER INFORMATION

PART II - OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 108

Risk Factors

Item 1A. Risk Factors 108

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 108

Other Information

Item 5. Other Information 109

Exhibits

Item 6. Exhibits 110 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 September 30, 2024 December 31, 2023 Investments: Fixed maturities, available for sale, at fair value (net of allowance for credit losses: September 30, 2024 - $ 25.9 and December 31, 2023 - $ 42.9 ; amortized cost: September 30, 2024 - $ 25,246.4 and December 31, 2023 - $ 23,699.2 ) $ 23,724.7 $ 21,506.2 Equity securities at fair value 120.5 96.9 Mortgage loans (net of allowance for credit losses: September 30, 2024 - $ 16.5 and December 31, 2023 - $ 15.4 ) 2,372.7 2,064.1 Policy loans 133.3 128.5 Trading securities 217.4 222.7 Investments held by variable interest entities (net of allowance for credit losses: September 30, 2024 - $ 1.8 and December 31, 2023 - $ 3.1 ; amortized cost: September 30, 2024 - $ 258.8 and December 31, 2023 - $ 787.6 ) 250.1 768.6 Other invested assets 1,595.5 1,353.4 Total investments 28,414.2 26,140.4 Cash and cash equivalents - unrestricted 1,164.7 774.5 Cash and cash equivalents held by variable interest entities 80.6 114.5 Accrued investment income 276.2 251.5 Present value of future profits 165.7 180.7 Deferred acquisition costs 2,100.9 1,944.4 Reinsurance receivables (net of allowance for credit losses: September 30, 2024 - $ 3.0 and December 31, 2023 - $ 3.0 ) 3,906.7 4,040.7 Market risk benefit asset 96.4 75.4 Income tax assets, net 788.7 936.2 Assets held in separate accounts 3.3 3.1 Other assets 648.0 641.1 Total assets $ 37,645.4 $ 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 September 30, 2024 December 31, 2023 Liabilities: Liabilities for insurance products: Policyholder account balances $

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. During the performance of the comprehensive annual actuarial review, the Company identified out of period adjustments that were necessary related to the calculation of reserves for supplemental health and traditional life products. These adjustments decreased third quarter-to-date income before income taxes by $ 14.8 million in the th

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 September 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 $ 13,725.2 $ 159.0 $ ( 1,131.0 ) $ ( 24.5 ) $ 12,728.7 Certificates of deposit 470.0 13.1 — — 483.1 United States Treasury securities and obligations of United States government corporations and agencies 210.8 .1 ( 11.6 ) — 199.3 Foreign governments 103.2 1.6 ( 9.6 ) ( .5 ) 94.7 Asset-backed securities 1,578.5 13.7 ( 57.1 ) ( .1 ) 1,535.0 Agency residential mortgage-backed securities 812.5 14.5 ( .1 ) — 826.9 Non-agency residential mortgage-backed securities 1,670.0 42.8 ( 104.1 ) — 1,608.7 Collateralized loan obligations 1,083.2 4.5 ( 5.5 ) — 1,082.2 Commercial mortgage-backed securities 2,369.8 4.7 ( 176.1 ) — 2,198.4 Total fixed maturities, available for sale $ 25,246.4 $ 300.3 $ ( 1,796.1 ) $ ( 25.9 ) $ 23,724.7 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 m

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 September 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 $ 760.5 $ 772.8 Due after one year through five years 2,285.7 2,249.1 Due after five years through ten years 1,991.4 1,991.7 Due after ten years 12,694.8 11,459.9 Subtotal 17,732.4 16,473.5 Structured securities 7,514.0 7,251.2 Total fixed maturities, available for sale $ 25,246.4 $ 23,724.7 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) ________

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