CNO Financial Group Inc (CNO) 2023 Q4 法說會逐字稿

Hello, and welcome to today's CNO Financial Group fourth-quarter 2023 earnings conference call. My name is Baily, and I'll be your moderator for today. (Operator Instructions) I would now like to pass the conference over to today's host, Adam Auvil, to begin. Please begin.

大家好，歡迎參加今天的 CNO 金融集團 2023 年第四季財報電話會議。我叫貝利，我將擔任今天的主持人。（操作員指示）我現在想將會議交給今天的主持人 Adam Auvil 開始。請開始。

Good afternoon and thank you for joining us on CNO Financial Group's fourth-quarter 2023 earnings conference call. Today's presentation will include remarks from Gary Bhojwani, Chief Executive Officer; and Paul McDonough, Chief Financial Officer. Following the presentation, we will also have other business leaders available for the question-and-answer period.

下午好，感謝您參加 CNO 金融集團 2023 年第四季財報電話會議。今天的演講將包括執行長加里·博瓦尼 (Gary Bhojwani) 的演講；和財務長保羅·麥克唐納。演講結束後，我們也將邀請其他商界領袖參與問答環節。

During this conference call, we will be referring to information contained in yesterday's press release. You can obtain the release by visiting the Media section of our website at cnoinc.com. This morning's presentation is also available in the Investors section of our website and was filed in a Form 8-K yesterday. We expect to file our Form 10-K and post it on our website on or before February 23.

在本次電話會議中，我們將參考昨天新聞稿中包含的資訊。您可以透過造訪我們網站 cnoinc.com 的媒體部分來取得該新聞稿。今天早上的簡報也可以在我們網站的投資者部分找到，並在昨天以 8-K 表格形式提交。我們預計在 2 月 23 日或之前提交 10-K 表格並將其發佈在我們的網站上。

Let me remind you that any forward-looking statements we make today are subject to a number of factors, which may cause actual results to be materially different than those contemplated by the forward-looking statements. Today's presentation contains a number of non-GAAP measures, which should not be considered as substitutes for the most directly comparable GAAP measures. You'll find a reconciliation of non-GAAP measures to the corresponding GAAP measures in the appendix. Throughout the presentation, we will be making performance comparisons, and unless otherwise specified, any comparisons made will be referring to changes between full year 2023 and full year 2022.

讓我提醒您，我們今天所做的任何前瞻性陳述都受到許多因素的影響，這些因素可能導致實際結果與前瞻性陳述預期的結果有重大差異。今天的演示包含許多非公認會計準則衡量標準，不應將其視為最直接可比較的公認會計準則衡量標準的替代品。您將在附錄中找到非 GAAP 衡量標準與對應 GAAP 衡量標準的調整表。在整個演示過程中，我們將進行效能比較，除非另有說明，否則所做的任何比較都將指 2023 年全年與 2022 年全年之間的變化。

And with that, I'll turn the call over to Gary.

然後，我會將電話轉給加里。

Thanks, Adam. Good afternoon, everyone, and thank you for joining us. CNO delivered strong earnings growth in the quarter and exceptional operating performance for the full year. Our results underscore the health and strength of our business model and laid a foundation for sustained profitable growth.

謝謝，亞當。大家下午好，感謝您加入我們。CNO 在本季度實現了強勁的盈利增長，並在全年實現了出色的經營業績。我們的業績凸顯了我們業務模式的健康和實力，並為持續獲利成長奠定了基礎。

Highlights of our full year performance include four quarters of sustained sales momentum. Total new annualized premium up 9%, improvement in virtually all agent metrics across both divisions, strong net investment income results, continued strong capital position and free cash flow generation, and our share price reached an all-time high.

我們全年業績的亮點包括四個季度的持續銷售動能。新的年化保費總額成長了 9%，兩個部門的幾乎所有代理指標均有所改善，淨投資收入業績強勁，資本狀況持續強勁，自由現金流產生，我們的股價達到了歷史新高。

We delivered a solid earnings performance for the full year with operating earnings per diluted share of $3.9. Stable underlying insurance product margins were bolstered by our diversified product suite. New money rates exceeded 6% for all four quarters, which drove an inflection point in our investment portfolio yield and reversed several years of decline. Fee income improved as we grew fee revenue and expanded margin. Paul will go into greater detail on our financial performance for the quarter and full year.

我們全年獲利表現穩健，攤薄後每股營業收益為 3.9 美元。多元化的產品組合支撐了穩定的基礎保險產品利潤率。四個季度的新貨幣利率均超過 6%，這推動了我們的投資組合收益率出現轉折點，扭轉了多年來的下降趨勢。隨著我們增加費用收入和擴大利潤率，費用收入也有所改善。保羅將更詳細地介紹我們本季和全年的財務表現。

Sales production and agent force results were strong in both divisions as we posted record sales levels in multiple product categories. A robust calendar of successful product launches in 2023 accelerated our growth. Producing agent counts were up sharply, driven by recruiting and retention initiatives.

由於我們在多個產品類別中創下了創紀錄的銷售水平，兩個部門的銷售生產和代理隊伍業績均強勁。2023 年一系列成功的產品發布加速了我們的發展。在招募和保留計畫的推動下，製作經紀人數量急劇增加。

Total health NAP was up 11% and total life NAP was up 7%, with nearly all of our product lines posting sales growth. Fee revenue was also up for the year and remains an important component in our diversification approach. Our portfolio includes both manufactured and distributed products, which enables us to offer customers a broad selection of solutions to meet their needs.

總健康 NAP 成長了 11%，總生命 NAP 成長了 7%，我們幾乎所有產品線的銷售額都實現了成長。今年的費用收入也有所成長，並且仍然是我們多元化策略的重要組成部分。我們的產品組合包括製造和分銷產品，這使我們能夠為客戶提供廣泛的解決方案選擇，以滿足他們的需求。

Our strong capital position remains a differentiator for CNO. Notable highlights of our year include our capital and liquidity ended the year well above target levels. We established our Bermuda affiliate and executed its first reinsurance transaction, and Fitch upgraded our financial strength rating from A minus to A.

我們強大的資本實力仍然是 CNO 的優勢所在。今年的顯著亮點包括我們的資本和流動性在年底遠高於目標水準。我們建立了百慕達附屬公司並執行了第一筆再保險交易，惠譽將我們的財務實力評級從 A 減至 A。

We returned more than $230 million to shareholders in the year, including $165 million in share buybacks. We again raised our quarterly common stock dividend, marking 11 straight years with an increase. Book value per diluted share, excluding AOCI, was $33.94, up 6%.

這一年，我們向股東返還了超過 2.3 億美元，其中包括 1.65 億美元的股票回購。我們再次提高了季度普通股股息，連續 11 年提高。稀釋後每股帳面價值（不包括 AOCI）為 33.94 美元，成長 6%。

Turning to slide 5 and our growth scorecard. Our growth scorecard metrics for the quarter and the full year reflect our continued focus on and investment in our strategic growth priorities. We expect to build on this momentum in 2024. I'll discuss each division in the next few slides.

轉向投影片 5 和我們的成長記分卡。我們本季和全年的成長記分卡指標反映了我們對策略成長優先事項的持續關注和投資。我們預計到 2024 年將繼續保持這一勢頭。我將在接下來的幾張投影片中討論每個部門。

Beginning with the consumer division on slide 6, we delivered a strong production year, illustrating the value and attractiveness of our business model and approach to serving our market. Our unique capability to marry a virtual connection with our established in-person agent force, who complete the critical last mile of sales and service delivery, remains a key differentiator.

從幻燈片 6 中的消費者部門開始，我們實現了強勁的生產年，說明了我們的業務模式和服務市場的方法的價值和吸引力。我們獨特的能力將虛擬連結與我們已建立的面對面代理隊伍結合起來，完成銷售和服務交付的關鍵最後一英里，這仍然是一個關鍵的差異化因素。

Total NAP was up 6% for the full year, led by 16% sales growth in field agent NAP. Total life sales were up 6%, with balanced production for our agent and direct-to-consumer distribution. Field sold life was up 9%. Direct-to-consumer life was up 3%, reflecting six consecutive years of growth and record results in 2023.

全年 NAP 總額成長 6%，其中現場代理 NAP 銷售額成長 16%。總生命週期銷售額成長了 6%，我們的代理商生產和直接面向消費者的分銷實現了平衡。現場銷售壽命延長了 9%。直接面向消費者的生活成長了 3%，反映出連續六年的成長和 2023 年創紀錄的表現。

Health NAP was up 8% for the full year. Long-term care NAP was up 27% on the strength of our new long-term care fundamental plus product. As mentioned last quarter, this product is part of our strategy to offer plans to the middle market that cover essential costs for one to two years of care. 99% of the policies we sell have benefit periods of two years or less. Our long-term care product policies provide a balanced, affordable approach to funding care. We are pleased to see consumers embrace these plans and the protection that they provide.

健康 NAP 全年成長 8%。由於我們新的長期照護基礎加產品，長期照護 NAP 上漲了 27%。正如上季度所提到的，該產品是我們向中間市場提供計劃的策略的一部分，該計劃涵蓋一到兩年的護理基本費用。我們銷售的 99% 保單的受益期為兩年或更短。我們的長期照護產品政策提供了一種平衡、負擔得起的照護資金資助方式。我們很高興看到消費者接受這些計劃及其提供的保護。

We were also pleased with the performance of our Medicare business and how we're growing this portfolio. Total Medicare policies sold were up 5% over prior year. The balanced diversification of our Medicare portfolio is central to how we serve our market. As a reminder, we offer two types of Medicare products, Medicare supplement products that we manufacture and third-party Medicare Advantage and Part D prescription drug plans for which we collect fees and bear no underwriting risk. Medicare supplement NAP was up 16% and Medicare advantage fee revenue was up 14%.

我們也對醫療保險業務的表現以及我們如何發展該業務組合感到滿意。醫療保險保單銷售總額比上年增長 5%。我們的醫療保險投資組合的均衡多元化是我們服務市場的核心。謹此提醒，我們提供兩種類型的 Medicare 產品：我們生產的 Medicare 補充產品以及我們收取費用且不承擔承保風險的第三方 Medicare Advantage 和 D 部分處方藥計劃。醫療保險補充 NAP 成長 16%，醫療保險優惠費用收入成長 14%。

In the fourth quarter, we completed another successful Medicare annual enrollment period with a strong go-to-market approach. We expanded our MA carriers to 14 and increase the number of MA certified agents by 14%.

在第四季度，我們透過強而有力的市場進入方式，成功完成了醫療保險年度投保期。我們將 MA 業者擴大到 14 家，並將 MA 認證代理商數量增加 14%。

Our agents bring local knowledge and experience to every customer they assist. The personal sales and service provided by agents reduces churn and builds relationships for potential cross sales. As I've mentioned before, our local agents represent the unique strength of our last mile distribution capabilities.

我們的代理商為他們協助的每一位客戶帶來當地的知識和經驗。代理商提供的個人銷售和服務減少了客戶流失並為潛在的交叉銷售建立了關係。正如我之前提到的，我們的本地代理商代表了我們最後一哩配送能力的獨特優勢。

Annuity account values were up 4%, and we reported record annuity collected premiums in the quarter. Consistent with previous quarters, our captive agent distribution model lends stability to this block and persistency remains within expected levels. Client assets and brokerage and advisory were up 20% to a record of $3.2 billion. Total accounts were up 7% for the full year. When combined with our annuity account values, our clients now entrust us with nearly $15 billion of their assets.

年金帳戶價值成長了 4%，我們報告本季年金收取的保費創歷史新高。與前幾季一致，我們的專屬代理分銷模式為該區塊提供了穩定性，並且持久性保持在預期水平內。客戶資產以及經紀和諮詢業務成長了 20%，達到創紀錄的 32 億美元。全年帳戶總數增加 7%。與我們的年金帳戶價值相結合，我們的客戶現在將其近 150 億美元的資產委託給我們。

Our consumer division had a very strong recruiting year, up 23%. We consistently grown agent recruiting for six consecutive quarters, and we credit this growth to ongoing investments in agent referrals, productivity, and retention. Producing agent count was up 9% and continues to build on our four consecutive quarters of year-over-year growth. These results contributed to the meaningful growth we reported for the year and positioned us well for a strong 2024.

我們的消費者部門今年的招募表現非常強勁，成長了 23%。我們連續六個季度持續增加代理商招聘，我們將這一成長歸功於對代理商推薦、生產力和留任率的持續投資。製作代理數量增加了 9%，並且在連續四個季度同比增長的基礎上繼續發展。這些結果促進了我們今年報告的有意義的成長，並為我們在 2024 年的強勁表現奠定了良好的基礎。

Three notable investments in 2023 contributed to our sales momentum and illustrate how our approach to technology can improve operational efficiency. First, we enhanced our life, health, and annuity product lines, which bolstered sales growth. Second, we expanded the scale and capabilities of our Medicare health insurance technology platform. Nearly 9 out of 10 Medicare advantage policies sold during the AEP were processed through our myhealthpolicy.com portal. This represents a 14% increase from 2022. Lastly, by introducing accelerated underwriting on a portion of our simplified life products, approximately 75% of those applicants received an instant decision.

2023 年的三項值得注意的投資促進了我們的銷售勢頭，並說明了我們的技術方法如何提高營運效率。首先，我們增強了人壽、健康和年金產品線，促進了銷售成長。其次，我們擴大了Medicare健康保險技術平台的規模與能力。在 AEP 期間出售的 10 份 Medicare 優惠保單中，近 9 份是透過我們的 myhealthpolicy.com 入口網站進行處理的。這比 2022 年增加了 14%。最後，透過對我們的部分簡化人壽產品引入加速承保，大約 75% 的申請人立即收到了決定。

Next, slide 7 and our worksite division performance. Our worksite division finished the year strong with continued insurance sales momentum and a successful fourth quarter benefits enrollment fee. Life and health insurance sales were up 29% for the full year and up 20% for the quarter.

接下來是投影片 7 和我們的工地分工表現。我們的工地部門憑藉持續的保險銷售勢頭和成功的第四季度福利登記費，以強勁的勢頭結束了這一年。人壽和健康保險銷售額全年成長 29%，本季成長 20%。

In five of the past six quarters, insurance sales have delivered 20% growth. This level of sustained incremental growth is exceptional and underscores the significant value that our worksite insurance offerings bring to employers and their employees. Initiatives to grow our worksite agent force generated significant gains in 2023.

過去 6 個季度中有 5 個季度，保險銷售額實現了 20% 的成長。這種持續增量成長的水平是非凡的，突顯了我們的工地保險產品為雇主及其員工帶來的巨大價值。擴大我們的現場代理隊伍的舉措在 2023 年取得了顯著成果。

For the full year, recruiting was up 15% and agent productivity was up 4%. Improving agent productivity while onboarding new agents is not easy. It takes time and training to grow these metrics simultaneously. Having both of these measures up is a testament to the strength of our field leadership to attract and develop career agent talent.

全年招募人數增加了 15%，座席生產力提高了 4%。在引進新客服人員的同時提高客服人員的工作效率並不容易。同時提高這些指標需要時間和培訓。這兩項指標都達到要求，證明了我們在吸引和培養職業經紀人人才方面的現場領導。

Producing agent count was up 27%, our seventh consecutive quarter of year-over-year growth, and partially driven by agent retention, which was up 20%. Enhanced agent referral and onboarding programs also delivered double digit growth in first year agent count, which was up 43%- and first-year agent productivity, which was up 40%.

製作經紀人數量增加了 27%，這是我們連續第七個季度同比增長，部分原因是經紀人保留率增加了 20%。增強的座席推薦和入職計劃也使第一年座席人數實現了兩位數增長，增長了 43%，第一年座席生產力增長了 40%。

Multiple investments in product development, geographic expansion and sales enablement created a foundation for accelerated worksite growth in 2023 and beyond. Our accident insurance product, which was refreshed in June, was up 34% for the full year. And our updated critical illness product launched in the fourth quarter has already received positive early reception.

在產品開發、地理擴張和銷售支援方面的多項投資為 2023 年及以後的工地加速成長奠定了基礎。我們的意外保險產品在6月更新，全年成長34%。我們在第四季推出的更新版重疾產品已經獲得了正面的早期反應。

Our geographic expansion initiative generated approximately one-fourth of worksite's total sales growth for the year. We are pleased with this early result. As a reminder, this program targets key markets where we've identified strategic opportunities to grow our market share and footprint.

我們的地域擴張計劃約佔該年度工作場所總銷售額成長的四分之一。我們對這個早期結果感到滿意。提醒一下，該計劃針對的是我們已經確定了擴大市場份額和足跡的策略機會的關鍵市場。

We'll also continue to be opportunistic in engaging third-party technology partnerships that enhance the tech-enabled services in our benefits enrollment offerings. I am pleased with our worksite insurance sales momentum and recognize that there is still a sizable opportunity for us to get more value out of our worksite fee business.

我們也將繼續抓住機會與第三方技術合作夥伴合作，以增強我們福利登記產品中的技術支援服務。我對我們的工地保險銷售勢頭感到滿意，並認識到我們仍然有很大的機會從工地收費業務中獲得更多價值。

We're focused on continuing to deepen the integration across our sales channels to improve our client service capabilities and cross sale opportunities. As we enter 2024, we remain bullish on our worksite business and confident in our strategic path forward.

我們致力於持續深化銷售管道的整合，以提高我們的客戶服務能力和交叉銷售機會。進入 2024 年，我們仍然看好我們的工地業務，並對我們的策略前進道路充滿信心。

And with that, I'll turn it over to Paul.

有了這個，我會把它交給保羅。

Thanks, Gary, and good afternoon, everyone. Turning to the financial highlights on slide 8. We finished the year strong with operating earnings excluding significant items up 34% year over year. This reflects an improvement in every major component of operating income, including insurance product margin, net investment income, fee income and expenses.

謝謝加里，大家下午好。轉向投影片 8 上的財務要點。我們以強勁的業績結束了這一年，不計重要項目的營業利潤年增 34%。這反映了營業收入的各個主要組成部分的改善，包括保險產品利潤率、淨投資收入、費用收入和支出。

Fee income in the quarter was up 31% with solid growth in net advantage sales, despite reduced advertising and lead spend. Expenses were down year over year, and we posted a full year expense ratio excluding significant items of 19.4%, in line with our prior guidance. The significant items in the quarter relate to the impact of our annual actuarial review, which I'll summarize on the next slide.

儘管廣告和潛在客戶支出減少，但本季的費用收入成長了 31%，淨優勢銷售額穩步增長。費用年減，我們公佈的不包括重要項目的全年費用率為 19.4%，與我們先前的指導一致。本季的重要事項與我們年度精算審查的影響有關，我將在下一張投影片中進行總結。

For the full year, operating earnings per share were $2.72 excluding significant items as compared to $2.91 in the prior year period with variance driven by two things. Number one, lower alternative investment income, which is volatile by definition. And second, elevated health claims during the second quarter, which moderated as expected during the second half of the year. The underlying trends evident in our strong third and fourth quarter results position us well for solid earnings growth going forward.

全年每股營業利潤為 2.72 美元（不包括重要項目），而去年同期為 2.91 美元，差異由兩件事驅動。第一，另類投資收入較低，從定義上來說，這種投資收入是不穩定的。其次，第二季的健康索賠有所增加，而下半年的情況如預期有所放緩。我們強勁的第三季和第四季業績中明顯的基本趨勢為我們未來的獲利穩健成長奠定了良好的基礎。

We're also well positioned from a capital perspective with the recent formation of CNO Bermuda Re, and the initial treaty between our Illinois based operating company and the new Bermuda company, which settled on November 30 with an October 1 effective date. This structure materially enhances capital efficiency, which is reflected in our year end capital and holding company liquidity metrics.

從資本角度來看，我們也處於有利地位，最近成立了CNO Bermuda Re，以及我們位於伊利諾伊州的營運公司與新的百慕達公司之間簽訂了初步協議，該協議於11 月30 日達成，10 月1 日生效。這種結構極大地提高了資本效率，這反映在我們的年末資本和控股公司流動性指標中。

Turning to slide 9, our annual actuarial review resulted in a $33.9 million favorable impact driven by favorable morbidity and persistency assumption updates in our supplemental health business with smaller, mostly offsetting impacts across the remaining product lines. As mentioned, we're calling this out as a significant item in the quarter and presenting the margin on this slide X significant items.

轉向幻燈片9，我們的年度精算審查產生了3390 萬美元的有利影響，這是由於我們的補充健康業務中有利的發病率和持續性假設更新所致，而對其餘產品線的影響較小，大部分是抵消的。如前所述，我們將其稱為本季的重要項目，並在此投影片 X 重要項目上顯示利潤。

On that basis, total insurance product margin posted another strong quarter with some puts and takes across products, highlighting the value of our diverse product mix. It's worth noting that the assumption unlocking related to the annual actuarial review creates new go-forward income patterns beginning with the fourth quarter results, separate from and in addition to the $33.9 million impact reported in the quarter. In particular, supp health was favorably impacted by $4 million, and FIA and med supp were unfavorably impacted by $2 million and $1 million, respectively.

在此基礎上，保險產品總利潤率再次表現強勁，其中包括一些看跌期權和認購期權產品，凸顯了我們多元化產品組合的價值。值得注意的是，與年度精算審查相關的假設解鎖從第四季度業績開始創造了新的未來收入模式，獨立於本季度報告的 3,390 萬美元的影響。特別是，健康供應受到 400 萬美元的有利影響，國際汽聯和醫療供應分別受到 200 萬美元和 100 萬美元的不利影響。

Turning to slide 10, the new money rate in the quarter was 6.92%, up from 5.96% in the prior year period and 6.03% in the third quarter of this year. This is the fourth consecutive quarter of new money rates above 6% and set the high watermark for the year. The average yield on allocated investments was 4.68% in the quarter, up 8 basis points year over year. The increase in yield, along with strong production driving growth in net insurance liabilities and the assets supporting them contributed to 4% growth in net investment income allocated to products for the quarter and up 5% for the year.

轉向投影片 10，本季的新貨幣利率為 6.92%，高於去年同期的 5.96% 和今年第三季的 6.03%。這是新貨幣利率連續第四個季度超過6%，創下年內高點。本季配置投資平均報酬率為4.68%，較去年同期上升8個基點。收益率的成長，加上強勁的生產推動了淨保險負債及其支持資產的成長，導致分配給產品的淨投資收益在本季度增長了 4%，全年增長了 5%。

Investment income not allocated to products increased 52% in the quarter, primarily driven by an improvement in income from alternative investments. Our new investments in the quarter comprised approximately $350 million of assets with an average rating of single A minus and an average duration of 7.5 years. Our new investments are summarized in more detail on slides 22 and 23 of the presentation.

本季未分配給產品的投資收入成長了 52%，這主要是由於另類投資收入的改善。我們本季的新投資包括約 3.5 億美元的資產，平均評級為 A 減，平均期限為 7.5 年。我們的新投資在簡報的投影片 22 和 23 中進行了更詳細的總結。

Turning to Slide 11, approximately 97% of our fixed maturity portfolio at quarter end was investment grade rated with an average rating of single A, reflecting our up in quality actions over the past several years. In the last 12 months, the allocation to single A rated or higher securities is up 310 basis points, the BBB allocation is down 290 basis points and the high yield allocation is down 20 basis points.

轉向投影片 11，截至季末，我們約 97% 的固定期限投資組合獲得投資等級評級，平均評級為單 A，反映出我們過去幾年在品質行動方面的進步。在過去12個月中，單一A級或更高評級證券的配置上升了310個基點，BBB配置下降了290個基點，高收益配置下降了20個基點。

With respect to commercial real estate, our commercial mortgage loan and CMBS investments continue to perform well, reflecting conservative underwriting and proactive management. We have again included some summary metrics in slides 24 and 25 of the presentation.

在商業房地產方面，我們的商業抵押貸款和CMBS投資繼續表現良好，反映出保守的核保和積極的管理。我們再次在簡報的投影片 24 和 25 中包含了一些摘要指標。

Turning to slide 12, we ended the quarter with a consolidated RBC ratio of 402%, up 18 points for the year and comfortably above our 375% target. Holdco liquidity was $256 million, above our minimum threshold of $150 million. Again, these metrics reflect the impact of the capital efficiency of our new Bermuda captive reinsurance structure. We generated $311 million in excess cash flow to the holding company for the year, slightly below our guidance, but excess capital relative to our target RBC and holdco liquidity levels was in line with our expectations.

轉向投影片 12，本季結束時，我們的綜合 RBC 比率為 402%，全年上升 18 個百分點，遠高於我們 375% 的目標。Holdco 的流動性為 2.56 億美元，高於我們 1.5 億美元的最低門檻。同樣，這些指標反映了我們新的百慕達自保再保險結構的資本效率的影響。今年我們為控股公司帶來了 3.11 億美元的超額現金流，略低於我們的指導，但相對於我們的目標 RBC 和控股公司流動性水平而言，超額資本符合我們的預期。

Turning to slide 13 and our 2024 guidance. We expect operating earnings per share to be in the range of $3.10 and $3.30 for the year, which at the midpoint represents an 18% increase from full year 2023 excluding significant items. This reflects an expectation of modest improvement in insurance product margin and expense ratio of between 18.8% and 19.2%, a slight improvement from the 19.4% in 2023 and following a quarterly trend similar to 2023, starting on the high-end in the first quarter and then grading down through the year. Significant improvement in net investment income not allocated to product, which assumes that alternative investments generate a return more in line with the long-term run rate assumption of between 9% and 10%.

轉向幻燈片 13 和我們的 2024 年指導。我們預計今年每股營業利潤將在 3.10 美元至 3.30 美元之間，其中數值較 2023 年全年（不包括重要項目）增長 18%。這反映了保險產品利潤率和費用率將小幅改善的預期，將在18.8% 至19.2% 之間，較2023 年的19.4% 略有改善，並遵循與2023 年類似的季度趨勢，從第一季度開始處於高端然後逐年降級。未分配給產品的淨投資收益顯著改善，假設另類投資產生的回報更符合 9% 至 10% 之間的長期運行利率假設。

Fee income to be slightly down year over year with roughly a quarter of the full year earnings coming in the first quarter and the balance coming in the fourth quarter with the second and third quarters roughly breakeven, and no change to our expected effective tax rate of 23%.

費用收入將同比略有下降，全年收益的大約四分之一來自第一季度，餘額將在第四季度實現，第二和第三季度大致實現盈虧平衡，並且我們預期的有效稅率沒有變化23 %。

We expect excess cash flow to the holding company in the range of $140 million to $200 million. The high end of the range assumes status quo, in particular that we maintain the current pace of organic growth, we maintain the current asset mix in our investment portfolio, and there is no change to economic conditions and the related pattern of credit migration in the investment portfolio.

我們預計控股公司的超額現金流將在 1.4 億至 2 億美元之間。該範圍的高端假設維持現狀，特別是我們維持當前的有機增長速度，我們維持投資組合中當前的資產組合，並且經濟狀況和信貸遷移的相關模式沒有變化。投資組合。

The low end of the range assumes a departure from the status quo, in particular that we accelerate organic growth, or we take more risk in our investment portfolio and/or economic conditions deteriorate, prompting adverse credit migration. Certainly, decisions to accelerate organic growth and/or to take more risk with our assets would consume more capital in the near-term, but those decisions would be based on an expectation of enhancing value creation and free cash flow in the long-term.

該範圍的低端假設偏離現狀，特別是我們加速有機成長，或者我們在投資組合中承擔更多風險和/或經濟狀況惡化，從而引發不利的信貸遷移。當然，加速有機成長和/或承擔更多資產風險的決定會在短期內消耗更多資本，但這些決定將基於長期增強價值創造和自由現金流的預期。

Finally, we will continue to manage to a consolidated RBC ratio of 375% in our US-based insurance companies, minimum holdco liquidity of $150 million and target leverage of between 25% and 28%.

最後，我們將繼續將美國保險公司的綜合 RBC 比率控制在 375%，控股公司流動性最低為 1.5 億美元，目標槓桿率控制在 25% 至 28% 之間。

And with that, I'll turn it back over to Gary.

有了這個，我會把它轉回給加里。

Thanks, Paul. Our business continued to perform well in the year and we are proud of how the CNO team executed against our strategic growth priorities. Our sales engine has momentum and our agent force is growing.

謝謝，保羅。我們的業務在這一年中繼續表現良好，我們對 CNO 團隊如何執行我們的策略成長重點感到自豪。我們的銷售引擎勢頭強勁，我們的代理商隊伍不斷壯大。

We enter 2024 well-positioned to build on our strong operating performance. Our capital position, our liquidity and the cash flow generating power of the company remain robust. We remain confident in our profitable growth and shareholder return opportunity.

進入 2024 年，我們已做好充分準備，以鞏固我們強勁的營運表現。我們的資本狀況、流動性和公司的現金流產生能力仍然強勁。我們對獲利成長和股東回報機會仍然充滿信心。

We thank you for your support of and interest in CNO Financial Group. We'll now open it up for questions. Operator?

感謝您對 CNO 金融集團的支持與關注。我們現在將開放提問。操作員？

(Operator Instructions) Ryan Krueger, Stifel.

（操作員說明）Ryan Krueger，Stifel。

My first question was on the ROE. It has been trending in the 9% range I think ex-notables recently. I'm curious where you think that can go over time and what are some of the key opportunities to improve the ROE? And I guess perhaps one of them maybe what you were just mentioning in terms of accelerating growth or repositioning some of the investment portfolio.

我的第一個問題是關於交戰規則。我認為最近的趨勢一直在 9% 的範圍內。我很好奇您認為隨著時間的推移，這種情況會發生什麼變化？提高 ROE 的一些關鍵機會是什麼？我想其中之一可能就是您剛才提到的加速成長或重新定位一些投資組合。

Sure. Good morning, Ryan. It's Paul. So we didn't include ROE in our guidance, and that's primarily because the non-operating income can create some unplanned noise in the ratio. But I would say assuming no impact from non-operating for the year, the guidance that we provided, translates to an ROE around 9.5%. I would characterize that as the current run rate. I certainly think that we have opportunities to expand the ROE, and that's something that we're focused on as a management team over the next couple of years.

當然。早安，瑞安。是保羅。因此，我們沒有將股本回報率納入我們的指導，這主要是因為非營業收入可能會在該比率中產生一些計劃外的噪音。但我想說，假設今年非經營活動沒有影響，我們提供的指導，淨資產收益率約為 9.5%。我將其描述為當前的運行率。我當然認為我們有機會擴大股本報酬率，這是我們管理團隊在未來幾年關注的重點。

Ryan, I would add one other thing to -- Ryan, can you hear me okay?

瑞安，我想補充一件事──瑞安，你聽得到我說話嗎？

Yes.

是的。

I just wanted to remind you and our shareholders, the senior management team, notably myself and Paul, but others -- we have ROE expansion in our targets. Our incentive comp is based on hitting certain ROE targets and so on. So we are very focused on this, and as Paul indicated, we believe there's an opportunity to drive this up.

我只是想提醒你們和我們的股東、高階管理團隊，特別是我自己和保羅，還有其他人——我們的目標是擴大股本回報率。我們的激勵補償是基於達到某些股本回報率目標等。所以我們非常關注這一點，正如保羅所指出的，我們相信有機會推動這一點。

Thanks. And then I guess a question on the non-variable components of unallocated. And it trended up throughout 2023 there's a lot going on with the yield curve and the forward curve. And I'm just hoping to get a little more color on what how that may look as we go into 2024 given alpha the variables at play?

謝謝。然後我猜想一個關於未分配的非可變組件的問題。2023 年全年呈上升趨勢，殖利率曲線和遠期曲線發生了許多變化。我只是希望能對進入 2024 年時的情況有更多的了解，考慮到 alpha 中的變數？

Yes, I can give a very high-level comment. And then Eric, I'd like you to provide some color. So I guess I'd make two points, Ryan. Number one, it's variable by definition. So it's going to be volatile.

是的，我可以給出非常高水準的評論。然後埃里克，我希望你提供一些顏色。所以我想我要提出兩點，瑞安。第一，根據定義它是可變的。所以它會變得不穩定。

And then the second point I'd make is, as I indicated in my earlier comments, our plan for the year and the related guidance that we've provided, assumes that all generate return that's consistent with our long term on average run rate expectation, which is around 9%, 9.5% call it. Is that what we expect in the next three to six months? Probably not. There's probably more downside risk there than upside. But over the course of the next 12 months, I think it's not unrealistic expectation. So I'd leave it there.

然後我要說的第二點是，正如我在之前的評論中指出的那樣，我們的今年計劃和我們提供的相關指導，假設所有產生的回報都與我們的長期平均運行率預期一致，大約是9%，9.5% 稱之為。這是我們對未來三到六個月的預期嗎？可能不會。下行風險可能多於上行風險。但在接下來的 12 個月裡，我認為這並不是不切實際的期望。所以我會把它留在那裡。

Eric, would you -- what would you add?

艾瑞克，你會加什麼嗎？

If I could just add, I was actually thinking more about the non-variable components of the unallocated NII (multiple speakers) net income.

如果我可以補充一下，我實際上更多地考慮了未分配的 NII（多個發言者）淨收入的非可變部分。

Let me jump in on you here, a couple ingredients there. One, higher floating rate, short-term rates in the market flow through there as a benefit. So to the extent that rates stay -- short rates stay higher for longer, that works well there. Second, we extracted higher margins in our Federal Home Loan bank and funding agreement programs just through asset reallocation on an ongoing basis, without really taking on any much greater credit risk and well within the asset liability management boundaries that we targeted when we started doing those things.

讓我在這裡插話一下，那裡有一些成分。一、較高的浮動利率，短期利率在市場上流動有一個好處。因此，只要利率保持不變——短期利率在較長時間內保持較高水平，這種做法就很有效。其次，我們僅透過持續的資產重新分配，就在聯邦住房貸款銀行和融資協議計劃中獲得了更高的利潤，而沒有真正承擔任何更大的信用風險，並且完全在我們開始這樣做時所瞄準的資產負債管理範圍之內。事物。

And then there's just more dollars there as well, like Gary mentioned earlier about the growth of the company and a little more capital in the company. So there's more. So there's a founding effect of more dollars there, and then marginally higher returns on the dollars. So, I agree with that. It's not going to be a steady state. There are going to be puts and takes over time, but those are some of the things that paid some benefits in 2023.

然後還有更多的美元，就像加里之前提到的關於公司的成長和公司的更多資本一樣。所以還有更多。因此，那裡有更多美元的創始效應，然後美元的回報率略有上升。所以，我同意這一點。這不會是一個穩定的狀態。隨著時間的推移，將會有一些看跌期權和看漲期權，但這些都是在 2023 年帶來一些好處的事情。

Thank you.

謝謝。

You're welcome.

不客氣。

Suneet Kamath, Jefferies.

蘇尼特·卡馬斯，杰弗里斯。

Great, thanks. I just wanted to start with the RBC 402, I guess for the end of the year and you are guiding to 375 for, I guess the plan for 2024, is the idea that you'll see that RBC decline driven largely by sales strain? Or is there an expectation that you may start to take some cash out of the operating subsidiary?

萬分感謝。我只想從 RBC 402 開始，我想在今年年底，你正在指導 375，我想 2024 年的計劃，你會看到 RBC 的下降主要是由銷售壓力驅動的嗎？或者您預計您可能會開始從營運子公司中提取一些現金？

Good morning, Suneet. It's Paul. I wouldn't say we're guiding to a 375. We continue to manage to 375 is called a threshold level. Our practice for the last couple of years has been to manage comfortably to the plus side of that 375. And I expect we'll continue to do that. We do actually have a minimum in our risk appetite that we share with rating agencies and regulators of 350. But as a practical matter, we have been and will continue to manage to the plus side of that 375. So you should expect that 402 to come down, but not necessarily come down all the way to 375. And you should expect that we'll continue to pay dividends out of the APCOs as we manage the RBC.

早安，蘇妮特。是保羅。我不會說我們正在引導 375。我們繼續管理到375稱為閾值水準。過去幾年我們的做法是輕鬆達到 375 的正值。我希望我們將繼續這樣做。事實上，我們與評級機構和監管機構分享的風險偏好最低值是 350。但實際上，我們已經並將繼續努力實現 375 的優勢。因此，您應該預期 402 會下降，但不一定會一路下降到 375。您應該期望我們在管理 RBC 時將繼續從 APCO 支付股息。

And that makes sense. And then I guess, in terms of the Medicare supplement business, we get the question all the time when the managed healthcare companies report and they've been reporting Medicare Advantage claims that have gone up and I know supplement is different. But are you seeing anything that would cause you to think that claims could increase here if -- what we're seeing if the managed care companies persists? Or is it just a completely different exposure and you're not expecting to see any increase in claims?

這是有道理的。然後我想，就醫療保險補充業務而言，當託管醫療保健公司報告時，我們總是會遇到這個問題，他們一直在報告醫療保險優勢索賠的增加，我知道補充是不同的。但是，您是否看到任何讓您認為如果管理式醫療公司堅持下去的話，索賠可能會增加的情況？或者這只是完全不同的曝光，而您預計索賠不會增加？

Well, they are very different as you've pointed out. But we are seeing some pressure on claims. I think you've seen that in our own results, not anywhere to near the same extent as you've seen from some writers of net advantage. But I would emphasize that with Med Supp, we have the opportunity to reprice the business annually. And so to the extent that there's pressure on loss costs, we're able to adjust -- by adjusting the price subject to regulatory approval. But typically, we get something close to what we're asking for because it's based on real experience.

嗯，正如你所指出的，它們非常不同。但我們看到索賠方面存在一些壓力。我想你已經在我們自己的結果中看到了這一點，但與你從一些淨優勢作者那裡看到的程度不同。但我要強調的是，透過 Med Supp，我們有機會每年重新定價業務。因此，如果損失成本有壓力，我們就能夠進行調整——在監管部門批准的情況下調整價格。但通常情況下，我們會得到接近我們要求的東西，因為它是基於真實的經驗。

And the other thing I'd say is that notwithstanding the pressure, we continue to generate returns from that business that are consistent with our target returns. And then the last thing I'd say, and again, you've seen this in the results, the new Med Supp product that we introduced, I think it's been a little over a year now, is not as profitable as the old Med Supp product that's now running off. That creates a little bit of a headwind for us in terms of year-over-year margin comparisons in that product.

我要說的另一件事是，儘管面臨壓力，我們仍繼續從該業務中獲得與我們的目標回報一致的回報。然後我要說的最後一件事，你已經在結果中看到了這一點，我們推出的新 Med Supp 產品，我認為已經一年多了，盈利能力不如舊 Med供應產品現已耗盡。就該產品的同比利潤率比較而言，這給我們帶來了一些阻力。

Okay. That's helpful. Thanks.

好的。這很有幫助。謝謝。

John Barnidge, Piper Sandler.

約翰·巴尼奇，派珀·桑德勒。

Great. Thank you very much. Thank you very much. Appreciate the opportunity. With the completion of the first transaction for the Bermuda platform, can you talk about leveraging that for possibly other actions for your liability profile? Thank you.

偉大的。非常感謝。非常感謝。珍惜這個機會。隨著百慕達平台第一筆交易的完成，您能否談談利用該交易為您的負債狀況採取其他可能的行動？謝謝。

Good morning, John. It's Paul. That is something we're currently in the process of exploring. Now that we've created this platform, certainly, there's an incentive to explore ways to leverage it further. We suspect that we'll ultimately identify specific opportunities to do that, but nothing specific to share at this time.

早安，約翰。是保羅。這是我們目前正在探索的事情。現在我們已經創建了這個平台，當然，我們有動力去探索進一步利用它的方法。我們懷疑我們最終會確定具體的機會來做到這一點，但目前沒有具體的資訊可以分享。

Great. Thank you. And then to the extent we get rate cuts, can you talk about sensitivity of NII to floaters?

偉大的。謝謝。然後，就我們降息而言，您能談談 NII 對流動資金的敏感度嗎？

We don't have a ton of floating rate, but Eric, I'll ask you to comment.

我們沒有太多的浮動利率，但是艾瑞克，我會請你發表評論。

As I described earlier, there is a marginal amount of sensitivity that passes through unallocated NII. But to Paul's comment, the great amount of floating rate securities that we own on the asset side are matched against floating rate liabilities on the liability side, such that what we're taking out is a margin and not a variable income. It will be probably a marginal impact, but I'd say 90%, if not more of the floating rate assets we hold are paired against liabilities of similar duration and index basis.

正如我之前所描述的，未分配的 NII 會傳遞少量的敏感度。但根據保羅的評論，我們在資產方面擁有的大量浮動利率證券與負債方面的浮動利率負債相匹配，因此我們取出的是保證金，而不是可變收入。這可能會產生邊際影響，但我想說，我們持有的浮動利率資產中，90%（如果不是更多的話）都與期限和指數基礎相似的負債配對。

Thank you very much. Appreciate it.

非常感謝。欣賞它。

You're welcome.

不客氣。

(Operator Instructions) Wilma Burdis, Raymond James.

（操作說明）Wilma Burdis、Raymond James。

Good morning. How do you now handle past medication or other healthcare events like Leqembi, which is the new Alzheimer's drug? I guess, I'm talking about your Med Supp line. Could you see pressure on pricing for the first few quarters post approval, but prior to repricing, or do you have the ability to reprice first when you see an event like that coming?

早安.您現在如何處理過去的藥物治療或其他醫療保健事件，例如新的阿茲海默症藥物 Leqembi？我想，我說的是你們的醫療用品系列。您是否會在批准後的前幾季看到定價壓力，但在重新定價之前，或者當您看到類似的事件即將發生時，您是否有能力先重新定價？

Good morning or afternoon, Wilma, I guess, depending on what time zone you're in. We've been tracking Leqembi for a while now, it feels like. We have anticipated an impact from a Leqembi on claims in '24. That was contemplated in the rate increase that we filed. I think it's an example of something that can put pressure on loss costs that we respond to with rate increases. I think, it's evolving in terms of how much pressure it will put, but we've anticipated some and I think we'll be able to manage it as it evolves over the next few years.

早安或下午好，威爾瑪，我想，這取決於你所在的時區。感覺我們追蹤 Leqembi 一段時間了。我們預計 Leqembi 對 24 年索賠的影響。我們在提交的升息申請中就考慮到了這一點。我認為這是一個可以給損失成本帶來壓力的例子，我們透過提高費率來應對。我認為，它會帶來多大的壓力，但我們已經預料到了一些壓力，我認為我們將能夠在未來幾年的發展中對其進行管理。

Thank you. And then could you just give a little bit of color on the recruiting environment in this coming year? I mean, recruiting numbers were pretty good this year. How are you guys seeing that to shift in 2024? Thank you.

謝謝。那麼您能否對來年的招募環境進行一些介紹？我的意思是，今年的招募人數相當不錯。你們認為 2024 年這種情況會發生怎樣的轉變？謝謝。

Wilma, this is Gary. Thanks for the question.

威瑪，這是加里。謝謝你的提問。

So we were obviously very pleased with the recruiting environment and let me start with the short answer. Based on everything we're seeing, we expect that to continue. And so there's a few points I'd make. First of all, historically, conventional wisdom says that when unemployment starts to rise, you see more people willing to try a career change and specifically try out a commission-only based position like this.

所以我們顯然對招募環境非常滿意，讓我從簡短的回答開始。根據我們所看到的一切，我們預計這種情況會持續下去。我想提出幾點。首先，從歷史上看，傳統觀點認為，當失業率開始上升時，你會看到更多的人願意嘗試職業轉變，特別是嘗試像這樣只收取佣金的職位。

So as the labor market tightens a little bit, we're going to see that. But I think what's really happened and why we've had such performance, it's a little bit like Jim Collins analogy of the flywheel. I can't point to one or even two things. I could point to half a dozen or a dozen different things that we've done to make this a more attractive career path and to simultaneously increase both recruiting and productivity.

因此，隨著勞動市場稍微收緊，我們將會看到這一點。但我認為真正發生的事情以及為什麼我們有這樣的表現，這有點像吉姆柯林斯對飛輪的類比。我無法指出一件事甚至兩件事。我可以指出我們已經做了六、六或十幾種不同的事情，使這條道路成為更具吸引力的職業道路，並同時提高招募和生產力。

For us, that's the real trick. And if you asked me to pick, I would actually emphasize productivity. But the trick is doing both, and that's what we're very focused on. As we've built out new products, as we've bettered our sales enablement, as we've made clear the career path for these agents to become financial advisors, as we've done a number of different things, literally dozens of small, small things, I think we've made this an increasingly attractive opportunity. And everything we're seeing in 2024 leads us to believe that we should be able to continue to see good results.

對我們來說，這才是真正的訣竅。如果你讓我選擇，我實際上會強調生產力。但關鍵是兩者兼而有之，這就是我們非常關注的。隨著我們開發出新產品，隨著我們改善了銷售支持，隨著我們為這些代理商明確了成為財務顧問的職業道路，隨著我們做了許多不同的事情，實際上是幾十個小事情， ，小事情，我認為我們已經使它成為一個越來越有吸引力的機會。2024 年我們所看到的一切讓我們相信我們應該能夠繼續看到良好的結果。

Now as the agent population gets bigger, of course, it gets harder to match this type of percentage growth rates. But we feel very good about our opportunity to continue to drive both recruiting and productivity in both divisions.

當然，現在隨著代理人數的增加，要匹配這種百分比成長率也變得越來越困難。但我們對繼續推動兩個部門的招募和生產力的機會感到非常高興。

Thank you.

謝謝。

Thank you.

謝謝。

There were no additional questions waiting at this time. So I'd like to pass the call back over to Adam Auvil for any closing remarks.

此時沒有其他問題等待。因此，我想將電話轉回 Adam Auvil，讓其結束語。

Thank you, operator, and thank you all for participating in today's call. Please reach out to the Investor Relations team if you have any further questions. Have a great rest of your day.

謝謝接線員，也謝謝大家參加今天的電話會議。如果您有任何其他問題，請聯絡投資者關係團隊。祝您有個愉快的一天。

This concludes today's conference call. Thank you for your participation. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。