CNO Financial (CNO) Q2 Earnings & Revenues Beat; Up Y/Y

CNO Financial Group, Inc.’s (NYSE:CNO) second-quarter 2016 net operating earnings of 35 cents per share beat the Zacks Consensus Estimate of 34 cents by 2.9%. The bottom line also improved roughly by 13% year over year.

/> Including the impact of one-time items, CNO Financial reported net income of 33 cents per share, up 37.5% year over year.

CNO Financial’s second-quarter revenues increased 4.6% year over year to $1 billion. The top line also beat the Zacks Consensus Estimate of $969 million by 3.6%.

Total new annualized premiums dipped 3.4% year over year to $101.9 million. However, collected premiums came in at $863 million, up 4% year over year.

Total benefits and expenses increased 3.8% year over year to $921.2 million.

Segment Update

Pre-tax operating earnings at the Bankers Life segment declined 8% year over year. In the reported quarter, pre-tax operating earnings included a $4.5 million release of long-term care reserves because of the impact of policyholder actions following rate increases.

WashingtonNational’s pre-tax operating earnings in 2Q16 compared to 2Q15 were up by 7 percent. This reflected $5 million of persistency impacts and higher claims.

Pre-tax operating earnings of Colonial Penn in the reported quarter were $3.0 million as against $4.2 million in the prior-year quarter. This was primarily due to investments in new business and higher marketing costs.

The Corporate Operations segment includes investment advisory subsidiary and corporate expenses. Pre-tax operating loss in this segment was $7 million, wider than the year-ago loss of $5 million. Higher expenses were mainly responsible for the wider loss incurred in the quarter, partially offset by favorable investment returns.

Financial Update

As of Jun 30, 2016, the consolidated statutory risk-based capital ratio of CNO Financial was 448%. This reflects statutory operating earnings of $94 million and dividend of $41.9 million paid to the holding company during the second quarter.

Additionally, unrestricted cash and investments of CNO Financial’s holding company was $376 million as of Jun 30, 2016, down 1.8% from $382 million as of Dec 31, 2015. This included dividends from subsidiaries, share repurchases and dividend payments.

As of Jun 30, 2016, CNO Financial’s debt-to-total capital ratio, excluding accumulated other comprehensive income (loss), was 19.9% compared with 19.6% as of Dec 31, 2015.

Book value per common share, excluding accumulated other comprehensive income (loss), increased 3% to $20.67 as of Jun 30, 2016 from $20.05 as of Dec 31, 2015.

As of Jun 30, 2016, CNO Financial had total assets worth $32 billion, up 2.9% from $31.1 billion as of Dec 31, 2015. Shareholder equity of $4.4 billion increased 7.3% from $4.1 billion as of Dec 31, 2015.

Securities Repurchase Update

CNO Financial repurchased 3.3 million of common stock for $61 million, under the Securities Repurchase Program. During the first six months of 2016, the company repurchased 8.6 million common shares for $151.0 million. As of Jun 30, 2016, CNO Financial had 176.2 million shares outstanding. Moreover, the company is authorized to repurchase up to an additional $304.7 million of common stock.

CNO Financial estimates to buyback $275 million to $375 million shares in 2016,

Dividend Update

CNO Financial paid a quarterly dividend $14.3 million cents per share.

Zacks Rank and Performance of Other Multiline Insurers

CNO Financial currently carries a Zacks Rank #4 (Sell). Among other insurers that recently released their second-quarter earnings results the bottom line at RLI Corp. (NYSE:RLI) and Progressive Corp. (NYSE:PGR) missed their respective Zacks Consensus Estimates, while First American Financial Corporation’s (NYSE:FAF) earnings beat the same.