CNO Financial Group (CNO) Q1 2025 earnings summary

Executive summary

• Operating earnings per diluted share rose 52% year-over-year to $0.79, or 42% to $0.74 excluding significant items, reflecting strong business growth and profitability improvements.

• Net operating income increased to $81.1 million from $57.5 million year-over-year, while net income for Q1 2025 was $13.7 million, down from $112.3 million in Q1 2024 due to non-operating losses and market volatility.

• Full-year 2025 and three-year ROE guidance reaffirmed, with a focus on sustained profitable growth and ROE expansion.

• Returned $117 million to shareholders in the quarter through dividends and buybacks.

• Capital and liquidity remain well above target levels, supporting robust free cash flow generation.

Financial highlights

• Book value per diluted share, excluding AOCI, increased 6% to $37.03.

• Net investment income rose 16% year-over-year, with new money rates above 6% for nine consecutive quarters.

• Insurance product margin, excluding significant items, was up 8% across all product categories, with total insurance product margin at $248.9 million.

• Operating ROE (excluding significant items) was 11.9% on a trailing 12-month basis.

• Debt to capital ratio at 32.7% (excluding AOCI), expected to decrease after repayment of 2025 Notes.

Outlook and guidance

• Reaffirmed full-year 2025 operating EPS guidance of $3.70–$3.90 and three-year ROE improvement targets.

• Targeting a 150 basis point improvement in run rate ROE over 2025-2027 from about 10% in 2024.

• Expense ratio targeted at 19.0–19.4%, with effective tax rate near 23%.

• Stress testing indicates the company can absorb a severe recession without falling below target capital and liquidity levels.

• Three-year $170 million technology modernization project to begin in Q2 2025, with $60 million in 2025, mostly excluded from operating earnings.