Yahoo Finance CNO Financial Group Inc (CNO) (Q1 2024) Earnings Call Transcript Highlights: Robust Growth and ...
Total New Annualized Premium: Up 8%
Operating Earnings Per Share: $0.52
Net Investment Income: Increased, with new money rate exceeding 6% for a fifth consecutive quarter
Shareholder Book Value Per Diluted Share: $34.97, up 10%
Life and Health NAP: Up 7%
Health NAP: Up 22%
Medicare Supplement NAP: Up 24%
Medicare Advantage Sales: Up 38%
Long-term Care NAP: Up 71%
Annuity Collected Premiums: Up 6%
Client Assets in Brokerage and Advisory: Up 32% to $3.4 billion
Producing Agent Count: Up 8%
Life and Health Insurance Sales (Worksite Division): Up 19%
Services Fee Sales: Up 9%
Producing Agent Count (Worksite Division): Up 28%
Free Cash Flow: Solid performance noted
Net Investment Income Allocated to Products: Grew 4%
New Money Rate: 6.17%
Operating Return on Equity: 9.7% as reported, 8.5% excluding significant items
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the impact of the election cycle on advertising costs and how it might affect your spending throughout the year? A: Gary Bhojwani, CEO of CNO Financial Group Inc, noted that advertising costs tend to increase during election cycles, leading to reduced advertising yields. The company carefully monitors these costs and adjusts spending accordingly, often reducing expenditures when costs are too high, as seen in past election cycles.
Q: Could you provide more details on the long-term care claims and margins observed this quarter? A: Paul McDonough, CFO, explained that the long-term care claims and margins were in line with expectations, reflecting business growth and a favorable new run rate post-assumption unlocking in the previous quarter.
Q: How are annuity surrender trends affecting your business, and what is your outlook for these trends? A: Gary Bhojwani mentioned that given the current interest rate environment, higher surrender rates are expected compared to previous years. However, due to CNO's unique position with a captive distribution network and policies that discourage churning, the impact is mitigated compared to industry peers.
Q: What are the main drivers behind the strong growth trends in Medicare Advantage and Medicare Supplement products? A: Gary Bhojwani attributed the success to several factors including favorable demographics, significant investments in online platforms, a unique model that combines technology with agent interaction, and recent repricing of Medicare Supplement policies. These factors have positioned CNO favorably against competitors, especially amidst regulatory pressures on Medicare Advantage.
Q: Can you discuss the expected impact of the new fiduciary rule on your business? A: Gary Bhojwani assured that CNO does not anticipate any significant adverse effects from the new fiduciary rule, despite broader industry concerns. The company's robust compliance programs and the structure of its agent network provide a strong foundation for managing distribution risks effectively.
Q: What are your strategies for improving ROE, and what steps are being taken to achieve this? A: Paul McDonough highlighted several areas of focus, including expense management, influencing policyholder behavior, and pricing strategies. Gary Bhojwani added that improving sales efficiency and effectiveness is a priority, following the stabilization of sales momentum post-COVID.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
