CARMEL, Ind., Nov. 3, 2025 /PRNewswire/ -- CNO Financial Group, Inc. (NYSE:CNO) today reported net income of $23.1 million, or $0.24 per diluted share, in 3Q25 compared to $9.3 million or $0.09 per diluted share, in 3Q24. Non-economic accounting impacts due to market volatility decreased net income in both 3Q25 and 3Q24. Net operating income,(1) which excludes these non-economic accounting impacts as well as other non-operating items, principally a goodwill and intangible impairment, was $127.2 million, or $1.29 per diluted share, in 3Q25 compared to $119.2 million, or $1.11 per diluted share, in 3Q24.
Significant items(6) positively impacted both net income and net operating income(1) by $32.2 million, or $0.33 per diluted share, in 3Q25 compared to $21.9 million, or $0.19 per diluted share, in 3Q24.
"Results in the quarter demonstrate the strength of the CNO business model," said Gary C. Bhojwani, chief executive officer. "Continued sales growth and expanding underwriting margins underscore our momentum. We're generating consistent, repeatable results across both our Consumer and Worksite Divisions, with record Direct-to-Consumer and Worksite insurance sales in the third quarter."
"We continue to advance our strategic roadmap, highlighted by executing our second reinsurance transaction with our Bermuda affiliate. In October, we also made the decision to streamline our Worksite Division operations by exiting the fee services side of this business. This step enables us to sharpen our focus on our high-growth insurance offerings. We expect these actions will accelerate ROE improvement through 2027. CNO enters the fourth quarter with considerable momentum and a strong financial position."
Third Quarter 2025 Highlights (as compared to the corresponding period in the prior year unless otherwise stated)
Total new annualized premiums ("NAP")(4) up 26%; Total Life NAP up 32%; Total Health NAP up 20%
Consumer Division NAP up 27%; Worksite Division NAP up 20%
Annuity account value up 8%; Client assets in brokerage and advisory up 28%
Increasing run rate operating return on equity ("ROE") target by 50 basis points for 200 basis points of total improvement through 2027 (off 2024 run rate of 10%)
Returned $76.4 million to shareholders
Book value per share was $27.24; Book value per diluted share, excluding accumulated other comprehensive loss,(2) was $38.10, up 6%
ROE of 12.5%; Operating ROE(5) of 12.1%
Other Announcements
The company recognized third quarter non-cash goodwill and other asset impairments in non-operating income that relate to the acquisitions of Web Benefits Design and DirectPath in 2019 and 2021, respectively.
CNO's wholly-owned Bermuda reinsurance company executed its second transaction, reinsuring $1.8 billion of inforce supplemental health statutory reserves from Washington National Insurance Company ("Washington National"), a CNO subsidiary, effective October 1, 2025. Additionally, 50% of new supplemental health business written by Washington National will be ceded to the Bermuda company as part of the agreement.
In October 2025, the company decided to streamline its Worksite Division operations and sharpen its focus on the Division's core insurance business by exiting the fee services side of the Worksite business, which includes services acquired in the Web Benefits Design and DirectPath acquisitions. The exit is expected to be substantially complete in the first half of 2026. Once complete, the company expects the exit from this business to reduce annual fee revenue by roughly $30 million (<1% of total revenue) and increase annual pre-tax income by roughly $20 million.
FINANCIAL SUMMARYQuarter End(Amounts in millions, except per share data)(Unaudited)
Net operating income, a non-GAAP(a) financial measure, is used consistently by CNO's management to evaluate the operating performance of the Company and is a measure commonly used in the life insurance industry. It differs from net income primarily because it excludes certain non-operating items as defined in note (1). Management believes an analysis of net operating income is important in understanding the profitability and operating trends of the Company's business. Net income is the most directly comparable GAAP measure.
Per diluted share
Quarter ended
Quarter ended
September 30,
September 30,
2025
2024
%change
2025
2024
% change
Income from insurance products (b)
1.52
$ 1.21
26
$ 149.5
$ 129.2
16
Fee income
(0.04)
(0.03)
33
(3.9)
(2.7)
44
Investment income not allocated to product lines (c)
0.40
0.42
(5)
39.5
45.5
(13)
Expenses not allocated to product lines
(0.23)
(0.17)
35
(22.3)
(18.5)
21
Operating earnings before taxes
1.65
1.43
162.8
153.5
Income tax expense on operating income
(0.36)
(0.32)
13
(35.6)
(34.3)
4
Net operating income (1)
1.29
1.11
16
127.2
119.2
7
Net realized investment losses from disposals, impairments and change in allowance for credit losses
(0.09)
(0.10)
(8.8)
(11.1)
Net change in market value of investmentsrecognized in earnings
0.06
0.11
5.8
12.3
Changes in fair value of embedded derivative liabilities and market risk benefits
(0.18)
(1.19)
(18.1)
(127.1)
Expenses related to TechMod initiative
(0.07)
—
(7.2)
—
Goodwill and other asset impairment
(0.98)
—
(96.7)
—
Other
(0.02)
(0.15)
(1.6)
(16.6)
Non-operating income before taxes
(1.28)
(1.33)
(126.6)
(142.5)
Income tax expense on non-operating income
0.23
0.31
22.5
32.6
Net non-operating income
(1.05)
(1.02)
(104.1)
(109.9)
Net income
$ 0.24
$ 0.09
$ 23.1
$ 9.3
Weighted average diluted shares outstanding
98.6
107.1
(a)
GAAP is defined as accounting principles generally accepted in the United States of America.
(b)
Income from insurance products is the sum of the insurance product margins of the annuity, health and life product lines, less expenses allocated to the insurance product lines. It excludes the income from our fee income business, investment income not allocated to product lines, net expenses not allocated to product lines (primarily holding company expenses) and income taxes. Insurance product margin is management's measure of the profitability of its annuity, health and life segments' performance and consists of insurance policy income plus allocated investment income less insurance policy benefits, interest credited, commissions, advertising expense and amortization of acquisition costs.
(c)
Investment income not allocated to product lines represents net investment income less: (i) equity returns credited to policyholder account balances; (ii) the investment income allocated to our product lines; (iii) interest expense on notes payable, investment borrowings and financing arrangements; (iv) expenses related to the funding agreement-backed notes ("FABN") program; and (v) certain expenses related to benefit plans that are offset by special-purpose investment income; plus (vi) the impact of annual option forfeitures related to fixed indexed annuity surrenders. Investment income not allocated to product lines includes investment income on investments in excess of amounts allocated to product lines, investments held by our holding companies, the spread we earn from our federal home loan bank ("FHLB") investment borrowing and FABN programs and variable components of investment income (including call and prepayment income, adjustments to returns on structured securities due to cash flow changes, income (loss) from company-owned life insurance ("COLI") and alternative investments income not allocated to product lines), net of interest expense on corporate debt and financing arrangements. The spread earned from our FHLB investment borrowing and FABN programs includes the investment income on the matched assets less: (i) interest on investment borrowings related to the FHLB investment borrowing program; (ii) interest credited on funding agreements; and (iii) amortization of deferred acquisition costs related to the FABN program.
FINANCIAL SUMMARY (continued)Management vs. GAAP Measures(Dollars in millions, except per share data)(Unaudited)
Shareholders' equity, excluding accumulated other comprehensive income (loss), and book value per share, excluding accumulated other comprehensive income (loss), are non-GAAP measures that are utilized by management to view the business without the effect of accumulated other comprehensive income (loss) which is primarily attributable to fluctuations in interest rates associated with fixed maturities, available for sale. Management views the business in this manner because the Company has the ability and generally, the intent, to hold investments to maturity and meaningful trends can be more easily identified without the fluctuations. In addition, shareholders' equity excludes net operating loss carryforwards in our non-GAAP return on equity measures as such assets are not discounted and, accordingly, will not provide a return to shareholders until after it is realized as a reduction to taxes that would otherwise be paid. Management believes that excluding this value from the equity component of this measure enhances the understanding of the effect these non-discounted assets have on operating returns.
___________________________________________________________________________________________________
Quarter ended
September 30,
2025
2024
Trailing four quarters:
Net Income
$ 319.3
$ 274.2
Net operating income (a non-GAAP financial measure)
433.8
425.2
Net operating income, excluding significant items
399.4
376.9
Average of each of the trailing four quarters average:
Shareholders' equity
$ 2,560.6
$ 2,325.3
Accumulated other comprehensive loss
1,245.2
1,514.4
Shareholders' equity, excluding accumulated other comprehensive loss
3,805.8
3,839.7
Net operating loss carryforwards
(225.8)
(218.9)
Shareholders' equity, excluding accumulated other comprehensive loss and net operating losscarryforwards
$ 3,580.0
$ 3,620.8
Ratios:
Return on equity
12.5 %
11.8 %
Operating return on equity (a non-GAAP financial measure) (5)
12.1 %
11.7 %
Operating return on equity, excluding significant items (a non-GAAP financial measure) (5)
11.2 %
10.4 %
Shareholders' equity
$ 2,611.0
$ 2,687.8
Accumulated other comprehensive loss
1,118.9
1,116.0
Shareholders' equity, excluding accumulated other comprehensive loss
3,729.9
3,803.8
Basic shares outstanding
95,840,989
103,922,954
Diluted shares outstanding
97,902,763
106,141,800
Book value per share
$ 27.24
$ 25.86
Book value per diluted share
$ 26.67
$ 25.32
Accumulated other comprehensive loss per diluted share
11.43
10.52
Book value per diluted share, excluding accumulated other comprehensive loss (a non-GAAP financialmeasure) (2)
$ 38.10
$ 35.84
Non-Operating ItemsNet investment losses in 3Q25 were $8.8 million, including the favorable change in the allowance for credit losses of $8.0 million. Net investment losses in 3Q24 were $11.1 million, including the favorable change in the allowance for credit losses of $11.6 million.
During 3Q25 and 3Q24, we recognized an increase in earnings of $5.8 million and $12.3 million, respectively, due to the net change in market value of investments.
During 3Q25 and 3Q24, we recognized a decrease in earnings of $(18.1) million and $(127.1) million, respectively, resulting from changes in the estimated fair value of embedded derivative liabilities and market risk benefits related to our fixed indexed annuities. Such amounts include the impacts of changes in market interest rates and equity impacts used to determine the estimated fair values of the embedded derivatives and market risk benefits.
During 3Q25, we incurred $7.2 million of expense related to TechMod, a previously announced three-year project beginning in 2025 to modernize certain elements of our technology.
We recognized a $96.7 million non-operating charge for the impairment of goodwill and other assets related to the acquisitions of Web Benefits Design and DirectPath in 2019 and 2021, respectively. This reflects macroeconomic uncertainty and market conditions including the recent decline in the value of comparable publicly traded companies and revised financial projections for the business.
Other non-operating items in 3Q24 included a charge of $8.3 million primarily related to a 5% workforce reduction and transition costs for outsourcing certain operations activities. In addition, other non-operating items included a decrease in earnings of $3.5 million in 3Q24 for the mark-to-market change in the agent deferred compensation plan liability, which was impacted by changes in the underlying actuarial assumptions used to value the liability. We recognize the mark-to-market change in the estimated value of this liability through earnings as assumptions change.
INVESTMENT PORTFOLIO(Dollars in millions)
Fixed maturities, available for sale, at amortized cost by asset class as of September 30, 2025 are as follows:
Investmentgrade
Belowinvestmentgrade
Total
Corporate securities
13,543.9
$ 682.2
$ 14,226.1
United States Treasury securities and obligations of the United States government and agencies
206.2
—
206.2
States and political subdivisions
3,323.3
23.6
3,346.9
Foreign governments
121.9
—
121.9
Asset-backed securities
1,476.5
70.6
1,547.1
Agency residential mortgage-backed securities
896.0
—
896.0
Non-agency residential mortgage-backed securities
1,297.2
