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CNO Financial (CNO) Down 15% as Q1 Earnings & Revenue Miss

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CNO Financial Group, Inc.’s CNO shares have declined 14.5% since it reported first-quarter 2022 earnings on May 2, wherein both earnings and revenues lagged the Zacks Consensus Estimate. Investor sentiments might have been hurt by the year-over-year decline in both the metrics.

The bottom line was negatively impacted by market volatility impacting fixed income annuity margin. Elevated non-deferrable advertising expenses also dampened CNO’s margins. Meanwhile, the top line was hampered by reduced insurance policy income and general account assets coupled with the unfavorable policyholder and other special-purpose portfolios, partly mitigated by better fee revenues and other income.

CNO Financial Group, Inc. Price, Consensus and EPS Surprise

CNO Financial Group, Inc. Price, Consensus and EPS Surprise
CNO Financial Group, Inc. Price, Consensus and EPS Surprise

CNO Financial Group, Inc. price-consensus-eps-surprise-chart | CNO Financial Group, Inc. Quote

Q1 Update

CNO Financial reported first-quarter 2022 adjusted earnings per share of 42 cents, which lagged the Zacks Consensus Estimate by 26.3%. The bottom line declined 23.6% year over year.

Total revenues of $842.9 million slumped 16.2% year over year in the first quarter. The top line missed the consensus mark by 8%.

Total insurance policy income decreased 1% year over year to $625 million in the quarter under review.

Net investment income of $208.2 million plunged 38% year over year.

Annuity collected premiums improved 13% year over year to $368.6 million in the first quarter.

New annualized premiums for health and life products amounted to $90.6 million, up 2% year over year.

Total benefits and expenses of $693.6 million decreased 15% year over year, thanks to lower insurance policy benefits, interest expenses, and other operating costs and expenses.

Financial Update (as of Mar 31, 2022)

CNO Financial exited the first quarter with unrestricted cash and cash equivalents of $546 million, which declined 17.6% year over year.

Total assets of $35.5 billion increased 2.3% year over year.

Total shareholders’ equity slashed 24.1% year over year to $3.7 billion.

Book value per share was $31.48, down 14% year over year.

Adjusted operating return on equity of 11.2% deteriorated 110 basis points (bps) year over year during the first quarter.

Debt-to-capital ratio deteriorated 460 bps year over year to 23.6%.

Share Repurchase and Dividend Update

In the quarter under review, CNO Financial rewarded $116.1 million to shareholders to the tune of share buybacks worth $100 million and dividends of $16.1 million.

2022 Outlook

Management anticipates consistent positive momentum in sales figure this year.

Investment income, allocated to products, is expected to stay relatively flat. Meanwhile, investment income, not allocated to products, is likely to remain lower than the 2021 figure.

Fee income is predicted to witness an uptrend in 2022, with the metric remaining seasonally softer in the second and third quarters of 2022 ( on a sequential basis) and gradually picking up in the fourth quarter.

Expenses (excluding significant items) are estimated to be decently higher than the 2021 figure.

Free cash flow is expected to be lower than the 2021 level.

Zacks Rank

CNO Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Multiline Insurers

Of the multiline insurance industry players that have reported first-quarter results so far, the bottom line of The Hartford Financial Services Group, Inc. HIG, American International Group, Inc. AIG and MGIC Investment Corporation MTG beat the Zacks Consensus Estimate.

Hartford Financial reported first-quarter 2022 adjusted operating earnings of $1.66 per share, which beat the Zacks Consensus Estimate by 6.4%. The bottom line increased nearly three-fold year over year. HIG’s operating revenues amounted to $3.6 billion, which improved 7.2% year over year in the first quarter. However, the top line missed the consensus mark by 1.6%. Total benefits and expenses of Hartford Financial decreased nearly 3% year over year to $4.9 billion in the quarter under review.

American International reported first-quarter 2022 adjusted operating earnings of $1.30 per share, which beat the Zacks Consensus Estimate by 4.8%. AIG’s bottom line climbed 23.8% year over year. Total operating revenues of American International amounted to $11 billion, which improved 3.5% year over year in the first quarter. However, the top line missed the consensus mark by 1.6%. Total net investment income of $3.2 billion declined 11% year over year in the quarter under review.

MGIC Investment reported first-quarter 2022 operating net income per share of 60 cents, which beat the Zacks Consensus Estimate by 3.4%. The reported figure increased 42.8% year over year. MGIC Investment recorded total operating revenues of $294.6 million, which decreased 1.1% year over year. Insurance in force of MTG increased 10.2% from the prior-year quarter to $277.3 billion.


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