CNO Financial Q2 Earnings Beat Estimates, '24 EPS View Up

CNO Financial Group, Inc. CNO reported second-quarter 2024 adjusted earnings per share of $1.05, which beat the Zacks Consensus Estimate by 45.8%. Moreover, the bottom line rose 94.4% year over year.

Total revenues increased 4.2% year over year to $1.07 billion in the second quarter. The top line beat the consensus mark by 16.4%.

The strong second-quarter results benefited from improved insurance product margin, premiums, and general account assets. However, the decline of the policyholder and other special-purpose portfolios partially offset the results.

Second-Quarter Performance

Total insurance policy income of $641.5 million improved 2.1% year over year and beat the Zacks Consensus Estimate by 1.2% due to a rise in annuity, health and life insurance policy incomes.

CNO's net investment income increased 2.4% year over year to $409.1 million in the second quarter. General account assets grew 8.3% year over year to $351.7 million and beat the consensus mark by 14.1%. However, the policyholder and other special-purpose portfolios declined 37.3% year over year to $57.4 million.

Annuity collected premiums of $439.1 million increased 9.3% year over year. New annualized premiums for health and life products improved 4.3% year over year to $102.9 million. Annuity, Health and Life products accounted for 27.7%, 49.4% and 22.9%, respectively, of CNO's insurance margin.

Total benefits and expenses were $915.6 million, which declined 1.2% year over year. The decline in the metric was due to liability for future policy benefits remeasurement gain and a decline in other operating costs and expenses.

Financial Update (as of Jun 30, 2024)

CNO Financial exited the second quarter with unrestricted cash and cash equivalents of $878.8 million, which increased from the 2023-end level of $774.5 million. Total assets of $36.3 billion increased from $35.1 billion at 2023-end.

The debt-to-capital ratio was 43% at the end of the second quarter. It has no outstanding debt maturities till 2025.

Total shareholders' equity jumped to $2.4 billion from $2.2 billion as of Dec 31, 2023.

Book value per diluted share increased to $36 in the second quarter from $33.94 at 2023-end. Adjusted operating return on equity came in at 11.2%, which improved from 8% a year ago.

Share Repurchase and Dividend Update

CNO Financial rewarded its shareholders with $60 million in the form of share buybacks and dividends of $17.2 million.

As of Jun 30, 2024, the company had remaining repurchase funds of $421.8 million.

2024 Guidance

New Update

CNO Financial now expects 2024 EPS in the range of $3.30-$3.50, indicating an increase of 10% from the 2023 figure of $3.09. The company expects the expense ratio to be in the range of 19%-19.2% for 2024, improving from the 2023 level of 19.4%. It expects $200-$250 million excess cash flow to the holding company.

Previous View

The company continues to anticipate the effective tax rate for 2024 to be around 23%. It is also aiming at a leverage of 25%-28% for this year.

Zacks Rank

CNO Financial currently carries a Zacks Rank #3 (Hold).

Performances of Other Insurers

Of the insurance industry players that have reported second-quarter 2024 results so far, the bottom-line results of Marsh & McLennan Companies, Inc. MMC, Brown & Brown, Inc. BRO and Kinsale Capital Group, Inc. KNSL beat the Zacks Consensus Estimate.

Marsh & McLennan reported second-quarter 2024 adjusted earnings per share of $2.41, which beat the Zacks Consensus Estimate by 0.8%. The bottom line advanced 10% year over year.  Consolidated revenues rose 6% year over year to $6.2 billion. The figure also improved 6% on an underlying basis.  The top line, however, fell short of the consensus mark by 1%. MMC's adjusted operating income was $1.72 billion, which grew 11% year over year. Adjusted operating margin improved 130 bps year over year to 29%.

The Risk and Insurance Services segment's revenues were $4.02 billion, which advanced 8% year over year and 7% on an underlying basis. Adjusted operating income advanced 12% year over year to $1.34 billion. Revenues of Marsh, a unit within the segment, improved 8% year over year and 7% on an underlying basis to $3.27 billion. In the United States/Canada, underlying revenues grew 6% year over year. International operations also witnessed underlying revenue growth of 7%.  

Brown & Brown's second-quarter adjusted earnings of 93 cents per share beat the Zacks Consensus Estimate by 6.8%. The bottom line increased 17.7% year over year. Total revenues of $1.2 billion beat the consensus estimate by 3.3%. The top line improved 12.5% year over year. The upside can be primarily attributed to commission and fees, which grew 11.4% year over year to $1.1 billion. 

Organic revenues improved 10% to $1 billion. Investment income more than doubled year over year to $22 million. Adjusted EBITDAC was $420 million, up 17.3% year over year. EBITDAC margin expanded 150 bps year over year to 35.7%. 

Kinsale Capital delivered second-quarter net operating earnings of $3.75 per share, which outpaced the Zacks Consensus Estimate by 6.5%. The bottom line increased 30.4% year over year.  Operating revenues jumped 45.1% year over year to $378 million. Revenues beat the consensus estimate of $377 million. Gross written premiums of $529.8 million rose 20.9% year over year. Net written premiums climbed 17.9% year over year to $430.2 million. 

Net investment income increased 48.3% year over year to $35.8 million. Kinsale Capital's underwriting income was $76.1 million, which grew 23.6% year over year. The combined ratio deteriorated 100 bps to 77.7% in the quarter under review. The expense ratio deteriorated 10 bps to 21.1, while the loss ratio deteriorated 60 bps to 56.6.

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