8-K: CNO Financial Group Reports Record 2025 Results

CNO Financial Group achieved record sales and strong earnings growth in 2025, exceeding all guidance metrics and returning $386 million to shareholders.

Summary

• Operating EPS was $4.40 for the full year 2025, an 11% increase from 2024, or $4.02 (up 6%) excluding significant items.
• Total new annualized premiums (NAP) grew 15% for the full year 2025, setting a new company record.
• The company returned $386 million to shareholders in 2025, an 11% increase compared to 2024.
• Operating return on equity (ROE) was 11.4% excluding significant items for the full year 2025.
• Net income for the full year 2025 was $229 million ($2.30 per diluted share), a decrease from $420.8 million ($3.89 per diluted share) in 2024.
• Book value per diluted share excluding accumulated other comprehensive loss (AOCI) was $38.81 at December 31, 2025, up 3.9% from $37.35 at December 31, 2024.
• A goodwill and other asset impairment charge of $101.9 million was recognized for the full year 2025.
• Expenses related to the TechMod (technology modernization) initiative totaled $20.3 million for the full year 2025.
• The Worksite Division's fee services revenue will be reported as non-operating starting in 4Q25 due to the previously announced exit of the business, resulting in a $17.3 million net loss related to divested business in 4Q25.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance, with the company exceeding guidance, demonstrating robust sales growth, and maintaining a healthy capital position, despite some non-operating impairments.

Positives

• Achieved and in most cases exceeded all 2025 guidance metrics.
• Delivered the 14th consecutive quarter of strong insurance sales.
• Total new annualized premiums (NAP) grew 15% for the year, setting a new full-year record.
• Operating EPS increased by 11% to $4.40 for the full year 2025.
• Achieved an operating ROE of 11.4% excluding significant items.
• Returned $386 million to shareholders, an 11% increase from 2024, reflecting healthy free cash flow generation.
• Maintained a robust total capital position, bolstered by a second reinsurance transaction with a Bermuda affiliate.
• Book value per diluted share excluding AOCI increased by 3.9% to $38.81.
• Consumer Division NAP was up 15%, with record Life and Health NAP up 15% (20% vs 4Q24).
• Medicare Supplement NAP surged 49% (92% vs 4Q24), marking the best quarter since 2009.
• Record Annuity collected premiums were up 9%, with 4Q25 being the second highest quarter of all time.
• Client assets in brokerage and advisory reached a record high, up 24%.
• Producing agent count (PAC) grew for the 12th consecutive quarter, up 1%.
• Worksite Division NAP increased by 15%, with record Life and Health NAP up 15% (13% vs 4Q24).
• Worksite Life NAP was up 36% (46% vs 4Q24), and Hospital Indemnity NAP was up 41% (105% vs 4Q24).
• Worksite PAC grew for the 14th consecutive quarter, up 7%.
• The new money rate was 6.11% in 4Q25, marking the 12th consecutive quarter above 6%.
• Average book value of invested assets increased by 3.5%.
• The consolidated statutory risk-based capital ratio was estimated at 380% at December 31, 2025, within the target range of 360%-390%.
• Holding company liquidity stood at $351.4 million at December 31, 2025, exceeding the target minimum of $150 million.

Negatives

• Net income decreased to $229 million ($2.30 per diluted share) in 2025 from $420.8 million ($3.89 per diluted share) in 2024, primarily due to non-economic accounting impacts from market volatility and a goodwill and intangible asset impairment.
• A goodwill and other asset impairment charge of $101.9 million was recognized for the full year 2025.
• A net loss related to divested business of $17.3 million was incurred in 4Q25 due to the exit from the Worksite fee services business.
• Fee revenue decreased by 2.8% for the full year 2025.
• Expenses not allocated to product lines increased by 22% for the full year 2025.
• Net change in market value of investments recognized in earnings resulted in a decrease of $1.3 million in 4Q25 and $14.3 million for FY2025.
• Changes in fair value of embedded derivative liabilities and market risk benefits led to a decrease of $1.5 million in 4Q25 and $64.0 million for FY2025.
• Expenses related to the TechMod initiative totaled $20.3 million for the full year 2025.
• Net unrealized losses on the available-for-sale fixed maturity portfolio were $1,890.1 million ($235.3 million gross unrealized gains vs $2,088.9 million gross unrealized losses) as of December 31, 2025.

Risks

• Forward-looking statements are not guarantees of future performance, and actual results may differ materially due to important risks and uncertainties, including those detailed in SEC filings.
• Consolidated Risk Based Capital (RBC) ratio variability is expected in periods of market volatility.
• Net income can be affected by non-economic accounting impacts resulting from market volatility.
• Changes in market interest rates and equity impacts influence the estimated fair values of embedded derivative liabilities and market risk benefits.
• The Long-Term Care (LTC) insurance block, while prudently managed, still constitutes 12% of overall CNO insurance liabilities.

Future Outlook

CNO Financial Group provides 2026 guidance, targeting operating EPS between $4.25 and $4.45, an expense ratio of 18.8% to 19.2%, and free cash flow of $200 million to $250 million. The company aims to improve its run rate operating ROE by 200 basis points through 2027, off a 2024 run rate of 10%.

Management Comments

• "CNO once again delivered an excellent quarter and full-year performance, demonstrating the consistent, repeatable results that continue to drive our momentum." Gary C. Bhojwani, CEO.
• "We posted our 14th consecutive quarter of strong insurance sales, with total new annualized premiums up 15% for the year, and set multiple production records that underscore the strength of our business model." Gary C. Bhojwani, CEO.
• "Operating earnings per share grew 11%, supported by strong insurance product margin and investment results, growth in the business, and disciplined expense and capital management." Gary C. Bhojwani, CEO.
• "For the year, we returned $386 million to shareholders, an 11% increase from 2024. This reflects the healthy free cash flow generation of the business, bolstered by our second reinsurance transaction with our Bermuda affiliate." Gary C. Bhojwani, CEO.
• "Our associates and agents continued to execute with focus and dedication, enabling us to grow the franchise while improving profitability and advancing our long-term strategic roadmap. We enter 2026 with a strong capital position and a path to achieving our 2027 ROE target." Gary C. Bhojwani, CEO.

Industry Context

StockSavvy.ai notes that CNO Financial Group's focus on middle-income America and its captive distribution model provide a durable competitive moat, allowing it to achieve consistent sales momentum and earnings growth despite broader market volatility. The strong performance in Medicare Supplement NAP, up 49%, indicates effective penetration in a growing demographic segment. The strategic exit from the Worksite fee services business aligns with industry trends of optimizing portfolios for higher profitability and efficiency.

Comparison to Industry Standards

• The company's operating ROE of 11.4% (excluding significant items) is a solid performance within the life and health insurance sector, indicating efficient use of capital. While specific comparable companies are not named in the filing, this ROE suggests CNO is performing competitively, especially given its middle-market focus.
• The 15% growth in total new annualized premiums (NAP) is robust, outpacing many established insurance providers who often see single-digit growth in mature markets.
• The 12th consecutive quarter of new money rate over 6% demonstrates effective investment management in a fluctuating interest rate environment, potentially outperforming peers with less agile or lower-yielding portfolios.

Related Party Transactions

• Executed a second reinsurance transaction with a Bermuda affiliate, bolstering capital position and free cash flow generation.

Stakeholder Impact

• Shareholders: Benefited from increased returns ($386 million, up 11%), strong operating EPS growth, and a clear path to higher ROE.
• Customers (middle-income America): Continued provision of insurance and financial services to protect health, income, and retirement needs.
• Agents: Experienced growth in producing agent count (PAC) and increased productivity for Bankers Life and Optavise captive agencies.
• Employees (associates): Engaged in the execution of the strategic roadmap and business growth initiatives.

Next Steps

• Continue to execute on the long-term strategic roadmap.
• Achieve 2026 guidance metrics: $4.25 $4.45 operating EPS, 18.8% 19.2% expense ratio, ~22.5% effective tax rate, $200 $250 million free cash flow, 360% 390% RBC Ratio, $150 million minimum holding company liquidity, 25% 28% debt to total capital ratio.
• Improve run rate operating ROE by 200 basis points through 2027 (off 2024 run rate of 10%).
• Modernize certain elements of technology through the three-year TechMod initiative (began 2Q25).
• Pursue Worksite Division geographic expansion and focus on new group development.
• Seek selective new independent distribution partnerships.
• Optimize capital structure, strategic asset allocation, and reinsurance (including Bermuda captive).
• Divest under-performing assets (e.g., Worksite fee business).

Key Dates

Recommendation

The company delivered exceptional full-year 2025 results, exceeding all guidance metrics with record sales growth and an 11% increase in operating EPS. Strong capital management, significant shareholder returns, and a clear strategic roadmap for continued ROE improvement through 2027 position CNO Financial Group for sustained positive performance. Despite some non-operating impairments, the core business strength and positive outlook make it a compelling investment.

Keywords

CNO Financial Group, Insurance, Annuities, Life Insurance, Health Insurance, Operating EPS, ROE, Shareholder Returns, Capital Management, Risk-Based Capital, Investment Portfolio, New Annualized Premiums, Brokerage, Advisory, Agent Count, Goodwill Impairment, TechMod, Middle-Income America