CNO Financial's (CNO) Q3 Earnings Beat Estimates, Up Y/Y

CNO Financial Group, Inc.’s (NYSE:CNO) third-quarter 2018 adjusted earnings of 53 cents per share slightly beat the Zacks Consensus Estimate of 52 cents. Also, the bottom line improved 17.8% year over year, mainly driven by a lower Federal income tax rate related to the Tax Cuts and Jobs Act.

CNO Financial’s total revenues surged 37.2% year over year to $1.5 billion in the reported quarter. Moreover, the top line surpassed the Zacks Consensus Estimate by nearly 50%, driven by sales growth in Bankers Life segment as well as various growth initiatives implemented by the company.

Quarterly Operational Update

Total collected premiums were $922.1 million, up 4% from the prior-year quarter’s level, mainly driven by Bankers Life segment.

New annualized premiums for life and health products amounted to $81.7 million, up 6% from the year-ago period.

First-year collected premiums totaled $349.1 million, up 9% from the year-earlier quarter’s tally, primarily owing to contribution by the Bankers Life segment.

Quarterly Segment Update

Bankers Life

Total collected premiums were $635.7 million, up 7% year over year, attributed to solid sales and persistency.

New annualized premiums for life and health products inched up 2% year over year to $37.3 million.

Washington National

Total collected premiums of $167.5 million were up 2% year over year.

New Annualized premiums from life and health products were $25.3 million, up 2% from the year-ago quarter’s figure.

Pre-tax operating earnings were up 10% compared with the prior-year quarter’s count, reflecting higher margins on the supplemental health block.

Colonial Penn

Total collected premiums were $74 million, up 2% year over year.

New annualized premiums were $19.1 million, up 19% from the amount registered in the comparable quarter last year.

Pre-tax earnings were $6.1 million, down 32.2% from $9 million a year ago, mainly due to a $3-million adjustment and refinement to liabilities for insurance products.

Long-Term Care in Run-Off

Total collected premiums were $44.9 million, down 7.8% year over year.

The long-term care business was recaptured in September 2016 and the segment recognized pre-tax earnings of $2.1 million in the quarter under review. Moreover, the figure soared 80.2% year over year.

The company expects this segment to report normalized earnings before net realized investment gains (losses) of approximately breakeven over the long term. However, this segment’s quarterly results can be volatile.

Corporate Operations

The segment includes performance of the investment advisory subsidiary and corporate expenses.

Pre-tax loss of $11.8 million in the third quarter was narrower than $14.9 million incurred in the year-ago period, mainly owing to lower expenses.

Financial Update

Unrestricted cash and investments held by CNO Financial’s holding company were $166 million as of Sep 30, 2018, down 58.2% from the level at year-end 2017.

Debt-to-capital ratio was 20.2% as of Sep 30, 2018 compared with 15.9% at the end of 2017.

Securities Repurchase and Dividend Update

During the third quarter, the company did not buy back any shares.

Dividends paid on common stock totaled $16.5 million in the same period.

Zacks Rank and Performance of Other Multiline Insurers

CNO Financial carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other players from the insurance industry having reported third-quarter earnings so far, the bottom line of The Progressive Corporation (NYSE:PGR) and MGIC Investment Corporation (NYSE:MTG) outpaced the respective Zacks Consensus Estimate while the metric of RLI Corp. (NYSE:RLI) missed the same.

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