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CNO Financial Group, Inc.

CNO Financial Group, Inc.CNOEarnings & Financial Report

NYSE · Financials · Accident & Health Insurance

CNO Financial Group, Inc., formerly Conseco, Inc., is an American financial services holding company based in Carmel, Indiana. Its insurance subsidiaries provide life insurance, annuity and supplemental health insurance products to more than four million customers in the United States. These products are distributed through independent agents, career agents and direct to customers through television advertising and direct mail.

What changed in CNO Financial Group, Inc.'s 10-K — 2023 vs 2024

Top changes in CNO Financial Group, Inc.'s 2024 10-K

553 paragraphs added · 529 removed · 439 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

162 edited+41 added−25 removed159 unchanged
Our main competitors for agent-sold long-term care insurance products include Northwestern Mutual, Mutual of Omaha and New York Life. Our main competitors for agent-sold Medicare supplement insurance products include Blue Cross and Blue Shield Plans, United HealthCare and Mutual of Omaha.
Our main competitors for agent-sold long-term care insurance products include Northwestern Mutual, Mutual of Omaha and New York Life. Our main competitors for agent-sold Medicare supplement insurance products include United HealthCare, Blue Cross and Blue Shield Plans, and Mutual of Omaha.
Accordingly, with respect to our deferred tax assets, we assess the need for a valuation allowance on an ongoing basis. On August 16, 2022, President Biden signed the Inflation Reduction Act into law which introduces a 15% minimum tax based on financial statement income which is not currently expected to have a significant impact on CNO.
Accordingly, with respect to our deferred tax assets, we assess the need for a valuation allowance on an ongoing basis. On August 16, 2022, President Biden signed the Inflation Reduction Act into law which introduces a 15 percent minimum tax based on financial statement income which is not currently expected to have a significant impact on CNO.
Federal Initiatives The U.S. federal government does not directly regulate the business of insurance, although the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") generally provides for enhanced federal supervision of financial institutions, including insurance companies in certain circumstances, and financial activities that represent a systemic risk to financial stability or the U.S. economy.
The U.S. federal government does not directly regulate the business of insurance, although the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") generally provides for enhanced federal supervision of financial institutions, including insurance companies in certain circumstances, and financial activities that represent a systemic risk to financial stability or the U.S. economy.
Our insurance subsidiaries are domiciled in Illinois, Indiana, New York, Pennsylvania and Texas, and are collectively licensed in all 50 states of the United States, the District of Columbia and in four U.S. territories. The extent of regulation by jurisdiction varies, but most jurisdictions have laws and regulations governing the financial aspects and business conduct of insurers.
Our insurance subsidiaries are domiciled in Illinois, Indiana, New York, Pennsylvania, Texas and Bermuda, and are collectively licensed in all 50 states of the United States, the District of Columbia, in four U.S. territories and Bermuda. The extent of regulation by jurisdiction varies, but most jurisdictions have laws and regulations governing the financial aspects and business conduct of insurers.
Diversity and Corporate Governance Insurance regulators are also focused on the topic of race, diversity and inclusion. In New York, the NYDFS issued a circular letter in 2021 stating that it expects the insurers it regulates, such as Bankers Conseco Life Insurance Company, to make diversity of their leadership a business priority and a key element of their corporate governance.
Diversity Insurance regulators and the NAIC are also focused on the topic of race, diversity and inclusion. In New York, the NYDFS issued a circular letter in 2021 stating that it expects the insurers it regulates, such as Bankers Conseco Life Insurance Company, to make diversity of their leadership a business priority and a key element of their corporate governance.
(c) A portion of the long-term care business of Bankers Life has been ceded to RGA Reinsurance Company on a coinsurance basis. (d) No other single reinsurer represents more than 1 percent of the reinsurance receivables balance or has assumed greater than 2 percent of the total ceded life insurance business inforce.
(c) A portion of the long-term care business of Bankers Life has been ceded to RGA Reinsurance Company on a coinsurance basis. (d) No other single reinsurer represents more than 1 percent of the reinsurance receivables balance or has assumed greater than 1 percent of the total ceded life insurance business inforce.
The Inflation Reduction Act also introduces a 1% excise tax on share buybacks, effective for tax years beginning in 2023. We continue to monitor developments and regulations associated with the Inflation Reduction Act for any potential future impacts on our business, results of operations and financial condition.
The Inflation Reduction Act also introduces a 1 percent excise tax on share buybacks, effective for tax years beginning in 2023. We continue to monitor developments and regulations associated with the Inflation Reduction Act for any potential future impacts on our business, results of operations and financial condition.
Graded benefit life insurance products are offered on an individual basis primarily to persons age 50 to 85, principally in face amounts of $400 to $30,000, with limited or no medical examination or evidence of insurability. Premiums are paid as frequently as monthly.
Graded benefit life insurance products are offered on an individual basis primarily to persons age 50 to 85, principally in face amounts of $400 to $50,000, with limited or no medical examination or evidence of insurability. Premiums are paid as frequently as monthly.
CCPA provides for enhanced privacy rights for consumers in California, including the right to know what personal information a business has collected and/or shared with third parties, the right to delete personal information held by a business, and the right to limit certain processing or use of such information.
CCPA provides for enhanced privacy rights for California consumers, including the right to know what personal information a business has collected and/or shared with third parties, the right to delete personal information held by a business, and the right to limit certain processing or use of such information.
Such a designation which would subject a non-bank SIFI to supervision and heightened prudential standards by the Federal Reserve. In November 2023, the FSOC adopted guidance that establishes a new process for designating certain non-bank financial companies as non-bank SIFIs.
Such a designation would subject a non-bank SIFI to supervision and heightened prudential standards by the Federal Reserve. In November 2023, the FSOC adopted guidance that establishes a new process for designating certain non-bank financial companies as non-bank SIFIs.
The model law imposes significant regulatory burdens intended to protect the confidentiality, integrity and availability of information systems and the non-public information stored thereon. Several states have adopted the model law (or a form thereof), including Indiana and Pennsylvania.
The model law imposes significant regulatory burdens intended to protect the confidentiality, integrity and availability of information systems and the non-public information stored thereon. Several states have adopted the model law (or a form thereof), including Illinois, Indiana and Pennsylvania.
In addition, the new Form CRS Relationship Summary requires registered investment advisers and broker/dealers to provide retail investors with simple, easy-to-understand information about the nature of their relationship with their financial professional.
In addition, the Form CRS Relationship Summary requires registered investment advisers and broker-dealers to provide retail investors with simple, easy-to-understand information about the nature of their relationship with their financial professional.
In New York, the NYDFS expects foreign authorized insurers to integrate financial risks related to climate change into their governance frameworks, risk management processes and business strategies.
In New York, the NYDFS expects authorized insurers to integrate financial risks related to climate change into their governance frameworks, risk management processes and business strategies.
Copies of these documents are available free of charge on our website at CNOinc.com or from CNO Investor Relations at the address shown above.
Copies of these documents are available free of charge on our website at www.CNOinc.com or from CNO Investor Relations at the address shown above.
Failure to comply with these laws and regulations would cause investments exceeding regulatory limitations to be treated as non-admitted assets for purposes of measuring statutory surplus, and, in some instances, would require divestiture of such non-qualifying investments. The investments made by our insurance subsidiaries complied in all material respects with such investment regulations as of December 31, 2023.
Failure to comply with these laws and regulations would cause investments exceeding regulatory limitations to be treated as non-admitted assets for purposes of measuring statutory surplus, and, in some instances, would require divestiture of such non-qualifying investments. The investments made by our insurance subsidiaries complied in all material respects with such investment regulations as of December 31, 2024.
Under the new guidance, the FSOC is no longer required to conduct a cost-benefit analysis and an assessment of the likelihood of a non-bank financial company’s material financial distress before considering the designation of the company. The revised process could have the effect of simplifying and shortening FSOC's procedures for designating certain financial companies as non-bank SIFIs.
Under such guidance, the FSOC is no longer required to conduct a cost-benefit analysis and an assessment of the likelihood of a non-bank financial company’s material financial distress before considering the designation of the company. The revised process could have the effect of simplifying and shortening FSOC's procedures for designating certain financial companies as non-bank SIFIs.
HUMAN CAPITAL As of December 31, 2023, we employed approximately 3,500 full-time associates, nearly all of whom are located in the United States. Currently, none of our associates are represented under collective bargaining agreements and we enjoy generally favorable employee relations. CNO associates are among our most important resources.
HUMAN CAPITAL As of December 31, 2024, we employed approximately 3,500 full-time associates, nearly all of whom are located in the United States. Currently, none of our associates are represented under collective bargaining agreements and we enjoy generally favorable employee relations. CNO associates are among our most important resources.
The policyholder may also choose to surrender the policy and receive the accumulated cash value rather than continuing the insurance protection. Term life products offer pure insurance protection for life with a guaranteed level premium for a specified period of time - typically five, 10, 15 or 20 years.
The policyholder may also choose to surrender the policy and receive the accumulated cash value rather than continuing the insurance protection. Term life products offer pure insurance protection for life with a guaranteed level premium for a specified period of time - typically five, 10, 20, or 30 years.
The NAIC is the U.S. standard-setting and regulatory support organization governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories to coordinate the regulation of multistate insurers. The NAIC assists state insurance regulators in their mission to serve the public interest and achieve their regulatory goals.
The NAIC is the U.S. standard-setting and regulatory support organization governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories to coordinate the regulation of multi-state insurers. The NAIC assists state insurance regulators in their mission to serve the public interest and achieve their regulatory goals.
The Dodd-Frank Act also established the Financial Stability Oversight Council ("FSOC"), which has the ability to designate certain non-bank financial institutions, including insurers, as systemically significant (a "SIFI") if the FSOC determines that financial distress at the company could pose a threat to U.S. financial stability.
The Dodd-Frank Act also established the Financial Stability Oversight Council ("FSOC"), which has the ability to designate certain non-bank financial institutions, including insurers, as systemically important (a "SIFI") if the FSOC determines that financial distress at the company could pose a threat to U.S. financial stability.
We expect big data to remain an important issue for the NAIC and state insurance regulators. We cannot predict which regulators will adopt the AI Bulletin, or what, if any, changes to laws or regulations may be enacted with regard to "big data" or artificial intelligence technologies.
We expect big data to remain an important issue for the NAIC and state insurance regulators. We cannot predict which regulators will adopt the AI Bulletin, or what, if any, changes to laws or regulations may be enacted with regard to "big data" or AI technologies.
In accordance with an order from the Florida Office of Insurance Regulation, Washington National Insurance Company ("Washington National") may not distribute funds to any affiliate or shareholder, except pursuant to agreements with affiliates that have been approved, without prior notice to the Florida Office of Insurance Regulation.
In accordance with an order from the Florida Office of Insurance Regulation, Washington National Insurance Company ("Washington National") may not distribute funds to any affiliate or shareholder without prior notice to the Florida Office of Insurance Regulation, except pursuant to agreements with affiliates that have been approved by the insurance regulator.
A Class C insurer is also required to maintain available statutory economic capital and surplus at a level equal to or in excess of its ECR, which is established by reference to either the BSCR model or a Bermuda-approved internal capital model.
A Class C insurer is also required to maintain available statutory economic capital and surplus at a level equal to or in excess of its ECR, which is established by reference to either the Bermuda Solvency Capital Requirement ("BSCR") model or a Bermuda-approved internal capital model.
In May 2023, we filed with the New York Stock Exchange the Annual CEO Certification regarding the Company's compliance with their Corporate Governance listing standards as required by Section 303A.12(a) of the New York Stock Exchange Listed Company Manual.
In May 2024, we filed with the New York Stock Exchange the Annual CEO Certification regarding the Company's compliance with their Corporate Governance listing standards as required by Section 303A.12(a) of the New York Stock Exchange Listed Company Manual.
Our main competitors for life insurance sold through direct marketing channels include Mutual of Omaha, TruStage, Gerber Life, AAA Life Insurance, New York Life and Globe Life Inc. Our main competitors for supplemental health products sold through our Worksite Division include AFLAC, subsidiaries of Unum, MetLife and subsidiaries of Globe Life Inc.
Our main competitors for life insurance sold through direct marketing channels include Mutual of Omaha, Globe Life, Inc., TruStage, Gerber Life, and AAA Life Insurance. Our main competitors for supplemental health products sold through our Worksite Division include AFLAC, subsidiaries of Unum, MetLife and subsidiaries of Globe Life Inc.
We reward overall and individual performance that drives long-term success for the company and our associates. 16 Table of Contents • Health and Well-being Supporting our associates' physical, emotional and financial well-being is at the center of how we engage our workforce. Our comprehensive associate benefits include medical, dental and vision insurance coverage as well as an extensive well-being program.
We reward overall and individual performance that drives long-term success for the company and our associates. • Health and Well-being Supporting our associates' physical, emotional and financial well-being is at the center of how we engage our workforce. Our comprehensive associate benefits include medical, dental and vision insurance coverage as well as an extensive well-being program.
In addition to competing with the products of other insurance companies, commercial banks, mutual funds and broker/dealers, our insurance products compete with health 13 Table of Contents maintenance organizations, preferred provider organizations and other health care-related institutions which provide medical benefits based on contractual agreements. Our principal competitors vary by product line.
In addition to competing with the products of other insurance companies, commercial banks, mutual funds and broker-dealers, our insurance products compete with health maintenance organizations, preferred provider organizations and other health care-related institutions which provide medical benefits based on contractual agreements. Our principal competitors vary by product line.
We understand healthcare affordability is fundamental and have introduced tiered premiums for CNO's health plan that align with an associate's salary level. CNO's well-being program encourages associates and their families to engage in healthy lifestyle choices, including completing preventive exams and screenings and taking care of their mental well-being.
We understand healthcare affordability is fundamental and we provide tiered premiums for CNO's health plan that align with an associate's salary level. CNO's well-being program encourages associates and their families to engage in healthy lifestyle choices, including completing preventive exams and screenings and taking care of their mental well-being.
CNO's and the 25 Table of Contents insurance subsidiaries' AML programs also establish and enforce customer identification programs and provide for the monitoring and the reporting to the Department of the Treasury of certain suspicious transactions. Federal legislation and administrative policies in other areas, including employee benefit plan and individual retirement account ("IRA") regulation, could also impact the insurance industry.
CNO's and the insurance subsidiaries' AML programs also establish and enforce customer identification programs and provide for the monitoring and the reporting to the Department of the Treasury of certain suspicious transactions. Federal legislation and administrative policies in other areas, including employee benefit plan and individual retirement account ("IRA") regulation, could also impact the insurance industry.
REINSURANCE Consistent with the general practice of the life insurance industry, our subsidiaries enter into indemnity reinsurance agreements with other insurance companies in order to reinsure portions of the coverage provided by our insurance products. Indemnity reinsurance agreements are intended to limit a life insurer's maximum loss on a large or unusually hazardous risk or to diversify its risk.
THIRD-PARTY REINSURANCE Consistent with the general practice of the life insurance industry, our subsidiaries enter into indemnity reinsurance agreements with third-party insurance companies in order to reinsure portions of the coverage provided by our insurance products. Indemnity reinsurance agreements are intended to limit a life insurer's maximum loss on a large or unusually hazardous risk or to diversify its risk.
To support pay transparency, we provide education to associates on how pay decisions are made and share competitive ranges for roles across the enterprise. Our compensation philosophy is focused on pay-for-performance. In 2023, we continued to offer annual cash incentives to eligible associates reflecting our performance philosophy at all levels of the organization.
To support pay transparency, we provide education to associates on how pay decisions are made and share competitive market ranges for roles across the enterprise. Our compensation philosophy is focused on pay-for-performance. In 2024, we continued to offer annual cash incentives to eligible associates reflecting our performance philosophy at all levels of the organization.
Various other U.S. states have enacted or are considering comprehensive privacy laws that adopt similar approaches to the collection, use, and sharing of personal information from state residents, but many include broader, entity-wide exemptions for organizations that conduct data processing subject to GLBA.
Various other U.S. states have enacted or are considering comprehensive privacy laws that adopt similar approaches to the collection, use, and sharing of personal information from state residents, but many include broader, entity-wide exemptions for organizations that process data subject to GLBA.
The BSCR formula establishes capital requirements for certain categories of risk, including: fixed income investment risk, equity investment risk, long-term interest rate/liquidity risk, currency risk, concentration risk, credit risk, catastrophe risk, and operational risk.
The BSCR formula establishes capital requirements for certain categories of risk, including: fixed income investment risk, equity investment risk, long-term interest rate/liquidity risk, currency risk, concentration risk, certain insurance risks, credit risk, catastrophe risk, and operational risk.
Changes to the marketing requirements for registered investment advisers were adopted in December 2020 and became effective in November 2022. The changes amend existing Rule 206(4)-1 under the Investment Advisers Act and incorporate 26 Table of Contents aspects of Investment Advisers Act Rule 206(4)-3, which the SEC simultaneously rescinded in its entirety.
Changes to the marketing requirements for registered investment advisers were adopted in December 2020 and became effective in November 2022. The changes amend existing Rule 206(4)-1 under the Investment Advisers Act and incorporate aspects of Investment Advisers Act Rule 206(4)-3, which the SEC simultaneously rescinded in its entirety.
Federal and state laws and regulations regulate the ability of financial institutions to make telemarketing calls and to send unsolicited e-mail, or fax messages to consumers and customers.
Federal and state laws and regulations regulate the ability of financial institutions to make telemarketing calls and to send unsolicited e-mail, fax messages, or SMS/text messages to consumers and customers.
The United States Department of Health and Human Services has issued regulations under the Health Insurance Portability and Accountability Act, as amended, relating to standardized electronic transaction 23 Table of Contents formats, code sets, the privacy of member health information, and the implementation of data security controls to safeguard electronic protected health information.
The United States Department of Health and Human Services has issued regulations under the Health Insurance Portability and Accountability Act, as amended, relating to standardized electronic transaction formats, code sets, the privacy of member health information, and the implementation of data security controls to safeguard electronic protected health information.
In marketing these products, we currently concentrate on individuals who have recently become eligible for Medicare by reaching the age of 65. Approximately 56 percent of new sales of Medicare supplement policies in 2023 were within the seven month open enrollment period that begins three months before an individual reaches age 65. Long-Term Care.
In marketing these products, we currently concentrate on individuals who have recently become eligible for Medicare by reaching the age of 65. Approximately 58 percent of new sales of Medicare supplement policies in 2024 were within the seven month open enrollment period that begins three months before an individual reaches age 65. Long-Term Care.
Furthermore, changes in federal law have narrowed the historical separation between banks and insurance companies, enabling traditional banking institutions to enter the insurance and annuity markets and further increase competition. This increased competition may harm our ability to maintain or improve our profitability.
Furthermore, changes in federal law have narrowed the historical separation between financial institutions and insurance companies, enabling traditional financial institutions to enter the insurance and annuity markets and further increase competition. This increased competition may harm our ability to maintain or improve our profitability.
Through our Optavise brand, we guide employers and their employees through their healthcare choices with a suite of voluntary benefits, benefits administration technology and year-round advocacy services to reduce costs and increase benefits engagement. Exclusive Agents. At December 31, 2023, we had approximately 350 exclusive producing agents working across the United States.
Through our Optavise brand, we guide employers and their employees through their healthcare choices with a suite of voluntary benefits, benefits administration technology and year-round advocacy services to reduce costs and increase benefits engagement. Exclusive Agents. At December 31, 2024, we had approximately 370 exclusive producing agents working across the United States.
For other prospective Medicare supplement policyholders, such as 14 Table of Contents senior citizens who are transferring to our products, the underwriting procedures are relatively limited, except for policies providing prescription drug coverage. Before issuing long-term care products, we generally apply detailed underwriting procedures to assess and quantify the insurance risks.
For other prospective Medicare supplement policyholders, such as senior citizens who are transferring to our products, the underwriting procedures are relatively limited, except for policies providing prescription drug coverage. Before issuing long-term care products, we generally apply detailed underwriting procedures to assess and quantify the insurance risks.
The general agency and insurance brokerage distribution system is comprised of independent licensed agents doing business in all fifty states, the District of Columbia, and certain protectorates of the United States. Marketing organizations typically recruit agents by advertising our products and commission structure through direct mail advertising or through seminars for agents and brokers.
The general agency and insurance brokerage distribution system is comprised of independent agents licensed to sell our products in all fifty states, the District of Columbia, and certain protectorates of the United States. Marketing organizations typically recruit agents by advertising our products and commission structure through direct mail advertising or through seminars for agents and brokers.
Approximately 65 percent of the total number of our supplemental health policies inforce were sold with return of premium or cash value riders.
Approximately 66 percent of the total number of our supplemental health policies inforce were sold with return of premium or cash value riders.
On August 13, 2023, the NAIC adopted a short-term solution related to the accounting treatment of an insurer’s negative interest maintenance reserve ("IMR") balance, which may occur when a rising interest rate environment causes an insurer’s IMR balance to become negative as a result of bond sales executed at a capital loss.
In 2023, the NAIC adopted a short-term solution related to the accounting treatment of an insurer’s negative interest maintenance reserve ("IMR") balance, which may occur when a rising interest rate environment causes an insurer’s IMR balance to become negative as a result of bond sales executed at a capital loss.
Our segments are aligned based on their common characteristics, comparability of profit margins and the way management makes operating decisions and assesses the performance of the business. We market our products through the Consumer and Worksite Divisions that reflect the customers served by the Company.
Our segments are aligned based on their common characteristics, comparability of profit margins and the way the chief operating decision maker makes operating decisions and assesses the performance of the business. We market our products through the Consumer and Worksite Divisions that reflect the customers served by the Company.
This regulation and supervision is primarily for the benefit and protection of customers, and not for the benefit of our investors or creditors.
This regulation and supervision is primarily for the benefit and protection of customers, and not for the benefit of our investors or creditors. U.S.
The top two writers of individual long-term care insurance had new annualized premiums with a combined market share of approximately 56 percent during the period. Many of our major competitors have higher financial strength ratings than we do. Industry consolidation, including business combinations among insurance and other financial services companies, has resulted in larger competitors with even greater financial resources.
The top writer of individual long-term care insurance had new annualized premiums with a market share of approximately 38 percent during the period. Many of our major competitors have higher financial strength ratings than we do. Industry consolidation, including business combinations among insurance and other financial services companies, has resulted in larger competitors with even greater financial resources.
Long-term care collected premiums were $261.8 million during 2023, or 6 percent of our total collected premiums. Long-term care products provide coverage, within prescribed limits, for nursing homes, home healthcare, or a combination of both. We sell long-term care plans primarily to retirees and, to a lesser degree, to older self-employed individuals in the middle-income market.
Long-term care collected premiums were $276.2 million during 2024, or 6 percent of our total collected premiums. Long-term care products provide coverage, within prescribed limits, for nursing homes, home healthcare, or a combination of both. We sell long-term care plans primarily to retirees and, to a lesser degree, to older self-employed individuals in the middle-income market.
State laws generally establish supervisory agencies that have broad regulatory authority, including the power to: 17 Table of Contents • grant and revoke business licenses; • define acceptable accounting principles; • prescribe the form and content of required financial statements and reports; • establish reserve requirements; • determine the reasonableness and adequacy of statutory capital and surplus; • regulate the types and amounts of permitted investments; • regulate and supervise sales practices; • approve policy forms; • approve premium rates and premium rate increases for some lines of business, such as long-term care and Medicare supplement insurance; • perform financial, market conduct and other examinations; • establish guaranty associations; and • license agents.
Insurance Companies State laws generally establish supervisory agencies that have broad regulatory authority, including the power to: • grant and revoke business licenses; • define acceptable accounting principles; • prescribe the form and content of required financial statements and reports; • establish reserve requirements; • determine the reasonableness and adequacy of statutory capital and surplus; • regulate the types and amounts of permitted investments; • regulate and supervise sales practices; • approve policy forms; • restrict the payment of dividends and other transactions between affiliates; • approve premium rates and premium rate increases for some lines of business, such as long-term care and Medicare supplement insurance; • perform financial, market conduct and other examinations; • establish guaranty associations; and • license agents.
These examinations are generally coordinated under the 18 Table of Contents direction of the lead state regulator and typically include all insurers operating in a holding company system pursuant to guidelines promulgated by the NAIC. Existing and future changes to accounting rules may also impact our results of operations or financial condition.
These examinations are generally 18 Table of Co n t e n t s coordinated under the direction of the lead state regulator and typically include all insurers operating in a holding company system pursuant to guidelines promulgated by the NAIC. Existing and future changes to accounting rules may also impact our results of operations or financial condition.
Our general account investment strategies are to: • provide largely stable investment income from a diversified high quality fixed income portfolio; • maximize and maintain a stable spread between our investment income and the yields we pay on insurance products; • sustain adequate liquidity levels to meet operating cash requirements, including a margin for potential adverse developments; 12 Table of Contents • continually monitor and manage the relationship between our investment portfolio and the financial characteristics of our insurance liabilities such as durations and cash flows; • maximize total return through active strategic asset allocation and investment management, while managing the capital efficiency of the portfolio; and • use outside managers in specialized investment classes to add value to our overall strategy.
Our general account investment strategies are to: • provide largely stable investment income from a diversified high quality fixed income portfolio; 12 Table of Co n t e n t s • maximize and maintain a stable spread between our investment income and the yields we pay on insurance products; • sustain adequate liquidity levels to meet operating cash requirements, including a margin for potential adverse developments; • continually monitor and manage the relationship between our investment portfolio and the financial characteristics of our insurance liabilities such as durations and cash flows; • manage the capital efficiency of our investments through active strategic asset allocation and investment management; and • use outside managers in specialized investment classes to add value to our overall strategy.
We primarily market our insurance products under our three primary brands: Bankers Life, Washington National and Colonial Penn. OTHER INFORMATION Our executive offices are located at 11825 N. Pennsylvania Street, Carmel, Indiana 46032, and our telephone number is (317) 817-6100.
We primarily market our insurance products under our three primary brands: Bankers Life, Washington National and Colonial Penn. OTHER INFORMATION Our executive offices are located at 11299 Illinois Street, Carmel, Indiana 46032, and our telephone number is (317) 817-6100.
General compliance is required within 180 days (or April 29, 2024), with certain provisions subject to other transition dates. We cannot predict what effect the amended regulation will have on our business or compliance efforts. We are required to file an annual Certification of Compliance with the NYDFS regarding our cybersecurity program.
General compliance was required by April 29, 2024, with certain provisions subject to other transition dates. We cannot predict what effect the amended regulation will have on our business or compliance efforts. We are required to file an annual Certification of Compliance with the NYDFS regarding our cybersecurity program.
The current guaranteed rate on annuities being issued is 2.85 percent, and the guaranteed rates on all policies inforce range from 1.0 percent to 5.5 percent. As of December 31, 2023, the average crediting rate on our outstanding traditional annuities was 3 percent.
The current guaranteed rate on annuities being issued is 3 percent, and the guaranteed rates on all policies inforce range from 1.0 percent to 5.5 percent. As of December 31, 2024, the average crediting rate on our outstanding traditional annuities was 3.13 percent.
The NAIC's amendments to the Model Holding Company System Act and Regulation in 2020 adopted the Group Capital Calculation Template and Instructions and the amendments implement the GCC's annual filing requirement with an insurance group's lead state regulator.
The NAIC's amendments to the Model Holding Company System Act and Regulation in 2020 adopted the Group Capital Calculation Template and Instructions, and the amendments implement the GCC's annual filing requirement with an insurance group's lead state regulator, who adopted the Holding Company Amendments, effective January 1, 2026.
They are not directed toward the protection of investors, and such ratings are not recommendations to buy, sell or hold securities. The current financial strength ratings of our primary insurance subsidiaries from Fitch, S&P, Moody's and AM Best are "A", "A-", "A3" and "A", respectively.
They are not directed toward the protection of investors, and such ratings are not recommendations to buy, sell or hold securities. The 14 Table of Co n t e n t s current financial strength ratings of our primary insurance subsidiaries from Fitch, S&P, Moody's and AM Best are "A", "A-", "A3" and "A", respectively.
We are also required to file an annual Certificate of Compliance with the Indiana Department of Insurance, unless any of the exemption criteria in the model law are met. In addition, certain state legislatures have adopted or are actively considering general consumer privacy legislation that may apply to us.
We are also required 25 Table of Co n t e n t s to file an annual Certificate of Compliance with the Indiana Department of Insurance, unless any of the exemption criteria in the model law are met. In addition, certain state legislatures have adopted or are actively considering general consumer privacy legislation that may apply to us.
The NAIC's Insurance Data Security Model Law applies to entities licensed under the relevant state's insurance laws. The model law requires such entities to establish standards for data security and the investigation of and notification to insurance commissioners of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information.
Where enacted in a given state, the NAIC's Insurance Data Security Model Law applies to entities licensed under the relevant state's insurance laws. The model law requires such entities to establish standards for data security and the investigation of and notification to insurance commissioners of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information.
In the event that we fail to maintain minimum mandated benefit ratios, our insurance subsidiaries could be required to provide retrospective refunds and/or prospective rate reductions. As of December 31, 2023, we believe that our insurance subsidiaries have provided retrospective refunds and/or prospective rate reductions when the mandated minimum benefit ratios have not been maintained.
In the event that we fail to maintain minimum mandated benefit ratios, our insurance subsidiaries could be required to provide retrospective refunds and/or prospective rate reductions. As of December 31, 2024, we believe that our insurance subsidiaries have provided retrospective refunds, prospective rate reductions, and/or benefit increases when required.
Our associates are required to be familiar with, and to act in accordance with, this code. • Inclusion and Belonging Doing what's right for our associates, agents, customers and communities is embedded in CNO's business operations and corporate values.
Our associates are required to be familiar with, and to act in accordance with, this code. • Our People-Focused Commitment Doing what's right for our associates, agents, customers and communities is embedded in CNO's business operations and corporate values.
Long-Term Care Regulation The NAIC has adopted model long-term care policy language providing nonforfeiture benefits, and in April 2022, the NAIC adopted the Long-Term Care Insurance Multistate Rate Review Framework.
Long-Term Care Regulation The NAIC has adopted model long-term care policy language providing nonforfeiture benefits, and in April 2022, the NAIC adopted the Long-Term Care Insurance Multi-state Rate Review Framework (the "LTC Framework").
Universal life products include fixed indexed universal life products. The account value of these policies is credited with interest at a guaranteed rate, plus additional interest credits based on changes in a particular index during a specified time period. Traditional Life . These products accounted for $700.0 million, or 17 percent, of our total collected premiums in 2023.
Universal life products include fixed indexed universal life products. The account value of these policies is credited with interest at a guaranteed rate, plus additional interest credits based on changes in a particular index during a specified time period. Traditional Life . These products accounted for $716.4 million, or 16 percent, of our total collected premiums in 2024.
Our major source of income from fixed rate annuities is the spread between the investment income earned on the underlying general account assets and the interest credited to contractholders' accounts. The following describes our major annuity products: Fixed Indexed Annuities . These products accounted for $1,373.9 million, or 34 percent, of our total premium collections during 2023.
Our major source of income from fixed rate annuities is the spread between the investment income earned on the underlying general account assets and the interest credited to contractholders' accounts. The following describes our major annuity products: Fixed Indexed Annuities . These products accounted for $1,542.7 million, or 35 percent, of our total premium collections during 2024.
Supplemental health collected premiums were $706.6 million during 2023, or 17 percent of our total collected premiums. These policies generally provide fixed or limited benefits. Cancer insurance and heart/stroke products are guaranteed renewable individual accident and health insurance policies.
Health Supplemental Health . Supplemental health collected premiums were $725.7 million during 2024, or 17 percent of our total collected premiums. These policies generally provide fixed or limited benefits. Cancer insurance and heart/stroke products are guaranteed renewable individual accident and health insurance policies.
When looking at the 2022 Individual Long-Term Care Insurance Survey, one of our subsidiaries (Bankers Life and Casualty Company ("Bankers Life")) is ranked third in new annualized premiums of individual long-term care insurance in 2022 with a market share of approximately 17 percent.
When looking at the 2023 Individual Long-Term Care Insurance Survey, one of our subsidiaries (Bankers Life and Casualty Company ("Bankers Life")) is ranked second in new annualized premiums of individual long-term care insurance with a market share of approximately 21 percent.
The AI Bulletin sets forth insurance regulators' expectations as to how insurers should govern the development, acquisition and use of artificial intelligence technologies, as well as the types of information that regulators may request during an investigation or examination of an insurer in regard to artificial intelligence systems.
States have started to adopt the AI Bulletin, which sets forth insurance regulators' expectations as to how insurers should govern the development, acquisition and use of AI technologies, as well as the types of information that regulators may request during an investigation or examination of an insurer in regard to AI systems.
These filings are also available on the SEC's website at www.sec.gov . Copies of these filings are also available, without charge, from CNO Investor Relations, 11825 N. Pennsylvania Street, Carmel, IN 46032.
These filings are also available on the SEC's website at www.sec.gov . Copies of these filings are also available, without charge, from CNO Investor Relations, 11299 Illinois Street, Carmel, IN 46032.
Our commitment to our associates is demonstrated through several areas of focus: • Associate Development and Engagement CNO provides a supportive environment designed to encourage all associates to pursue their professional goals and career objectives through one-to-one coaching, mentoring, continuing education, professional education and training.
Our commitment to our associates is demonstrated through several areas of focus: • Associate Development and Engagement CNO provides a supportive environment designed to encourage all associates to pursue their professional goals and career objectives through one-to-one coaching, mentoring, continuing education, professional education and 16 Table of Co n t e n t s training.
Based on a 2022 Medicare Supplement Earned Premium report, we ranked seventh in direct premiums earned for Medicare supplement insurance with a market share of 1.9 percent. The top writer of Medicare supplement insurance had direct premiums with a market share of 33 percent during the period.
Based on a 2023 Medicare Supplement Earned Premium report, we ranked seventh in direct premiums earned for Medicare supplement insurance with a market share of 1.7 percent. The top writer of Medicare supplement insurance had direct premiums with a market share of 34 percent during the period.
All other factors held constant, the prices of the options generally increase with increases in the volatility of the applicable indices, which may reduce the profitability of the fixed indexed products, cause us to lower participation rates, or both. Accordingly, volatility of the indices is one factor in the uncertainty regarding the profitability of our fixed indexed products.
All other factors held constant, the prices of the options generally increase with increases in the volatility of the applicable indices, which may reduce the profitability of the fixed indexed products, cause us to lower participation rates, or both.
The general agency and insurance brokerage distribution system is comprised of independent licensed agents doing business in all fifty states, the District of Columbia, and certain protectorates of the United States. 7 Table of Contents Worksite Division: The Worksite Division focuses on the sale of voluntary benefit life and health insurance products in the workplace for businesses, associations, and other membership groups, interacting with customers at their place of employment and virtually.
The general agency and insurance brokerage distribution system is comprised of independent agents licensed to sell our products in all fifty states, the District of Columbia, and certain protectorates of the United States. 7 Table of Co n t e n t s Worksite Division: The Worksite Division focuses on the sale of voluntary benefit life and health insurance products in the workplace for businesses, associations, and other membership groups, interacting with customers at their place of employment and virtually.
The NAIC adopted a new, principles-based definition of a bond that will be effective in certain statutory accounting guidance as of January 1, 2025. This will result in new reporting and disclosure requirements and may lead to categorical changes in the regulatory reporting and RBC charges associated with these investments.
The NAIC adopted a new, principles-based definition of a bond that is effective in certain statutory accounting guidance as of January 1, 2025. This will 23 Table of Co n t e n t s result in new reporting and disclosure requirements and may lead to categorical changes in the regulatory reporting and RBC charges associated with these investments.
Companies subject to the regulation must also implement and maintain written policies approved by a senior officer of the company to protect its information systems and nonpublic information, appoint a chief information security officer and perform periodic risk assessments.
Companies subject to the New York regulation must also implement and maintain written policies approved by a senior officer of the company to protect its information systems and nonpublic information, appoint a chief information security officer, perform periodic risk assessments, and annually certify compliance with the regulation to NYDFS.
("40|86 Advisors", a registered investment advisor and wholly owned subsidiary of CNO) manages the investment portfolios of our insurance subsidiaries. 40|86 Advisors had approximately $26.7 billion of assets (at fair value) under management at December 31, 2023, of which $26.5 billion were our assets (including investments held by variable interest entities ("VIEs") that are included on our consolidated balance sheet) and $0.2 billion were assets managed for third parties.
("40|86 Advisors", a registered investment advisor and wholly owned subsidiary of CNO) manages the investment portfolios of our insurance subsidiaries. 40|86 Advisors had approximately $29.0 billion of assets (at fair value) under management at December 31, 2024, which were primarily our assets, including investments held by variable interest entities ("VIEs") that are included on our consolidated balance sheet.
The NYDFS also amended the regulation that governs enterprise risk management, effective as of August 13, 2021, to require an insurance group's enterprise risk management function to address certain additional risks, including climate change risk. In our most recent ORSA report filed with the NYDFS and our lead state regulator, we included enhanced disclosure on the management of climate risk.
The NYDFS also amended the regulation that governs enterprise risk management, effective as of August 13, 2021, to require an insurance group's enterprise risk management function to address certain additional risks, including climate change risk. Our ORSA reports, which are filed with the NYDFS and our lead state regulator, include enhanced disclosure on the management of climate risk.
Graded benefit life insurance policies are issued without medical examination or evidence of insurability. There is minimal underwriting on annuities. LIABILITIES FOR INSURANCE PRODUCTS At December 31, 2023, the total balance of our liabilities for insurance products was $27.9 billion. These liabilities are generally payable over an extended period of time.
Guaranteed acceptance life insurance policies are issued without medical examination or evidence of insurability. There is minimal underwriting on annuities. LIABILITIES FOR INSURANCE PRODUCTS At December 31, 2024, the total balance of our liabilities for insurance products was $29.7 billion. These liabilities are generally payable over an extended period of time.
Pursuant to federal regulations, the Medicare supplement products offered by all companies have standardized policy features. This increases the comparability of such policies and intensifies competition based on other factors. See "Insurance Underwriting" and "Governmental Regulation" for additional information.
In the individual health insurance business, companies compete primarily on the basis of marketing, service and price. Pursuant to federal regulations, the Medicare supplement products offered by all companies have standardized policy features. This increases the comparability of such policies and intensifies competition based on other factors. See "Insurance Underwriting" and "Governmental Regulation" for additional information.
The Company and its insurance subsidiaries are registered as a holding company system pursuant to the laws and regulations in our domiciliary states. 20 Table of Contents In addition, the insurance holding company system laws and regulations regulate the acquisition (or sale) of control of insurance companies.
The Company and its insurance subsidiaries are registered as a holding company system pursuant to the laws and regulations in our domiciliary states. 21 Table of Co n t e n t s In addition, the insurance holding company system laws and regulations regulate the acquisition (or sale) of control of insurance companies.
Such business had total insurance policy liabilities of $2.3 billion at December 31, 2023. (b) In addition to life insurance, certain annuity business has been ceded to Jackson through a coinsurance agreement. Such business had total insurance policy liabilities of $0.8 billion at December 31, 2023.
Such business had total insurance policy liabilities of $2.2 billion at December 31, 2024. (b) In addition to life insurance, certain annuity business has been ceded to Jackson through a coinsurance agreement. Such business had total insurance policy liabilities of $686.6 million at December 31, 2024.
As of December 31, 2023, we had total assets of $35.1 billion and shareholders' equity of $2.2 billion (which included an accumulated other comprehensive loss of $1.6 billion). For the year ended December 31, 2023, we had revenues of $4.1 billion and net income of $276.5 million.
As of December 31, 2024, we had total assets of $37.9 billion and shareholders' equity of $2.5 billion (which included an accumulated other comprehensive loss of $1.4 billion). For the year ended December 31, 2024, we had revenues of $4.4 billion and net income of $404.0 million.
Such review could result in the DOL's imposition of new or different requirements on plan sponsors or on annuity providers or could make such selection process more difficult for the parties involved. 28 Table of Contents
Such review could result in the DOL's imposition of new or different requirements on plan sponsors or on annuity providers or could make such selection process more difficult for the parties involved. 30 Table of Co n t e n t s

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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ITEM 1A. RISK FACTORS. CNO and its businesses are subject to a number of risks including general business and financial risk. Any or all of such risks could have a material adverse effect on the business, financial condition or results of operations of CNO. In addition, please refer to the "Cautionary Statement Regarding Forward-Looking Statements" section of this Form 10-K.
ITEM 1A. RISK FACTORS. CNO and its businesses are subject to a number of risks including general business and financial risks. Any or all of such risks could have a material adverse effect on the business, financial condition or results of operations of CNO. In addition, please refer to the "Cautionary Statement Regarding Forward-Looking Statements" section of this Form 10-K.
The manner in which debt and equity market performance and changes in interest rates have affected, and will continue to affect, our business, financial condition, growth and profitability include, but are not limited to, the following: • The value of our investment portfolio has been materially affected in the past by changes in market conditions which resulted in substantial changes in realized and/or unrealized losses.
The manner in which debt and equity market performance and changes in interest rates have affected, and will continue to affect, our business, financial condition, growth and profitability include, but are not limited to, the following: • The value of our investment portfolio has been materially affected in the past by changes in market conditions which resulted in substantial realized and/or unrealized losses.
In addition, Washington National may not distribute funds to any affiliate or shareholder, except pursuant to agreements with affiliates that have been approved, without prior notice to the Florida Office of Insurance Regulation, in accordance with an order from the Florida Office of Insurance Regulation.
In addition, Washington National may not distribute funds to any affiliate or shareholder, without prior notice to the Florida Office of Insurance Regulation, except pursuant to agreements with affiliates that have been approved in accordance with an order from the Florida Office of Insurance Regulation.
There may be certain asset classes that were in active markets with significant observable data that become illiquid due to the current financial environment. In such cases, the valuation process may require more subjectivity and management judgment. Rapidly changing market conditions could materially impact the valuation of securities and the period-to-period changes in value could vary significantly.
There may be certain asset classes that were in active markets with significant observable data that become illiquid due to the changing financial environment. In such cases, the valuation process may require more subjectivity and management judgment. Rapidly changing market conditions could materially impact the valuation of securities and the period-to-period changes in value could vary significantly.
In addition, interest rates impact the liability for the benefits we provide under our agent deferred compensation plan (as it is our policy to immediately recognize changes in assumptions used to determine this liability). Interest rates in 2023 and 2022 were higher than the historically low interest rates experienced prior to 2022.
In addition, interest rates impact the liability for the benefits we provide under our agent deferred compensation plan (as it is our policy to immediately recognize changes in assumptions used to determine this liability). Interest rates in 2024 and 2023 were higher than the historically low interest rates experienced prior to 2022.
The performance of our investment portfolio depends in part upon the level of and changes in interest rates, risk spreads, real estate values, equity market values, market volatility, the performance of the economy in general, the policies adopted by the Federal Reserve, the performance of the specific obligors included in our portfolio and other factors that are beyond our control.
The performance of our investment portfolio depends in part upon the level of and changes in interest rates, risk spreads, real estate values, equity market values, interest rate and equity market volatility, the performance of the economy in general, the policies adopted by the Federal Reserve, the performance of the specific obligors included in our portfolio and other factors that are beyond our control.
Our expectation of future investment income is an important consideration in determining the adequacy of our liabilities for insurance products. Expectations of lower future investment earnings may require us to establish additional liabilities for insurance products, thereby reducing net income in future periods.
Our expectation of future investment income is an important consideration in determining the adequacy of our liabilities for insurance products. Expectations of lower future investment earnings may require us to establish additional liabilities for certain insurance products, thereby reducing net income in future periods.
There can be no assurance that inflation rates will not continue to escalate in the future or that measures adopted or that may be adopted by the U.S. government or the Federal Reserve to control inflation will be effective or successful.
There can be no assurance that inflation rates will not escalate in the future or that measures adopted or that may be adopted by the U.S. government or the Federal Reserve to control inflation will be effective or successful.
All fifty states, as well as a growing number of regulatory bodies have adopted consumer notification requirements in the event of the actual or reasonably suspected unauthorized access to, or acquisition of, certain types of personal data. Such breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another.
All fifty states, as well as a growing number of regulatory bodies have adopted consumer notification requirements in the event of the actual or reasonably suspected unauthorized access to, or acquisition of, certain types of personal information. Such breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another.
These regulators have the discretionary authority, in connection with the continual licensing of the Company's insurance subsidiaries, to limit or prohibit writing new business within its jurisdiction when, in the regulator's judgment, the insurance subsidiary is not maintaining adequate statutory surplus or capital or the insurance subsidiary's further transaction of business would be hazardous to policyholders.
These regulators have the discretionary authority, in connection with the continual licensing of our insurance subsidiaries, to limit or prohibit writing new business within its jurisdiction when, in the regulator's judgment, the insurance subsidiary is not maintaining adequate statutory surplus or capital or the insurance subsidiary's further transaction of business would be hazardous to policyholders.
Generally, if an insurer's RBC ratio falls below specified levels, the insurer is subject to different degrees of regulatory action depending upon the magnitude of the deficiency. The 2023 statutory annual statements of each of our U.S. based insurance subsidiaries reflect RBC ratios in excess of the levels that would subject our insurance subsidiaries to any regulatory action.
Generally, if an insurer's RBC ratio falls below specified levels, the insurer is subject to different degrees of regulatory action depending upon the magnitude of the deficiency. The 2024 statutory annual statements of each of our U.S. based insurance subsidiaries reflect RBC ratios in excess of the levels that would subject our insurance subsidiaries to any regulatory action.
Insurance regulations generally permit our U.S. based insurance subsidiaries to pay dividends from statutory earned surplus without regulatory approval if the amount of the dividend, together with other dividends made within the preceding 12-month period, does not exceed the greater of (or in some states, the lesser of): (i) statutory net gain from operations of such 34 Table of Contents insurer for the prior calendar year; or (ii) 10 percent of such insurer's surplus as regards to policyholders at the end of the preceding calendar year.
Insurance regulations generally permit our U.S. based insurance subsidiaries to pay dividends from statutory earned surplus without regulatory approval if the amount of the dividend, together with other dividends made within the preceding 12-month period, does not exceed the greater of (or in some states, the lesser of): (i) statutory net gain from operations of such insurer for the prior calendar year; or (ii) 10 percent of such insurer's surplus as regards to policyholders at the end of the preceding calendar year.
Furthermore, as described above under "Business of CNO-Governmental Regulation," the SEC has adopted new regulations relating to the standard of conduct applicable to broker/dealers when making certain recommendations involving securities to retail customers and requiring registered investment advisors and broker/dealers to provide new disclosures to retail investors.
Furthermore, as described above under "Business of CNO-Governmental Regulation," the SEC has adopted regulations relating to the standard of conduct applicable to broker-dealers when making certain recommendations involving securities to retail customers and requiring registered investment advisors and broker-dealers to provide certain standardized disclosures to retail investors.
Future regulatory changes made by the BMA may impact the capital efficiency of the reinsurance structure between CNO Bermuda Re and Bankers Life and could require the holding company to contribute additional capital to CNO Bermuda Re or Bankers Life to recapture the ceded business.
Future regulatory changes made by the BMA or other events may impact the capital efficiency of the reinsurance structure between CNO Bermuda Re and Bankers Life and could require the holding company to contribute additional capital to CNO Bermuda Re or Bankers Life to recapture the ceded business.
The Dodd-Frank Act of 2010 made extensive changes to the laws regulating financial services firms and required various federal agencies to adopt a broad range of implementation rules and regulations, including those pertaining to the use of derivatives.
The Dodd-Frank Act of 2010 made extensive changes to the laws regulating financial services firms and required various federal agencies to adopt a broad range of implementing rules and regulations, including those pertaining to the use of derivatives.
The continued threat of terrorism and ongoing military 39 Table of Contents actions may cause significant volatility in global financial markets, and a natural or man-made disaster could trigger an economic downturn in the areas directly or indirectly affected by the disaster. These consequences could, among other things, result in a decline in business and increased claims from those areas.
The continued threat of terrorism and ongoing military actions may cause significant volatility in global financial markets, and a natural or man-made disaster could trigger an economic downturn in the areas directly or indirectly affected by the disaster. These consequences could, among other things, result in a decline in business and increased claims from those areas.
In addition, CNO may elect to contribute additional capital to certain insurance subsidiaries to strengthen their surplus for covenant compliance or regulatory purposes (including, for example, maintaining adequate RBC level) or to provide the capital necessary for growth, in which case it is less likely that its insurance subsidiaries would pay dividends to the holding company.
In addition, CNO may elect to contribute additional capital to certain insurance subsidiaries to strengthen their surplus for covenant compliance or regulatory purposes (including, for example, maintaining adequate RBC or BSCR levels) or to provide the capital necessary for growth, in which case it is less likely that its insurance subsidiaries would pay dividends to the holding company.
Our operating results may suffer if policyholder surrender levels differ significantly from our assumptions. Surrenders of our annuities and life insurance products can result in losses and decreased revenues if surrender levels differ significantly from assumed levels. At December 31, 2023, approximately $4.4 billion of our total insurance liabilities could be surrendered by the policyholder without penalty.
Our operating results may suffer if policyholder surrender levels differ significantly from our assumptions. Surrenders of our annuities and life insurance products can result in losses and decreased revenues if surrender levels differ significantly from assumed levels. At December 31, 2024, approximately $3.4 billion of our total insurance liabilities could be surrendered by the policyholder without penalty.
However, failure to maintain a reasonable and effective cybersecurity program, or any compromise of the security, confidentiality, integrity, or availability of our information systems and the sensitive, proprietary, and confidential data on such systems could lead to additional costs and liabilities, as well as damage our reputation or deter people from purchasing our products.
However, failure to maintain a reasonable and effective data protection and cybersecurity program, or any compromise of the security, confidentiality, integrity, or availability of our information systems and the sensitive, proprietary, and confidential data, including personal information, on such systems could lead to additional costs and liabilities, as well as damage our reputation or deter people from purchasing our products.
The final determination of any tax audit, appeal of the decision of a taxing authority, tax litigation or similar proceedings may be materially different from 36 Table of Contents that reflected in our financial statements. The assessment of additional taxes, interest and penalties could be materially adverse to our current and future results of operations and financial condition.
The final determination of any tax audit, appeal of the decision of a taxing authority, tax litigation or similar proceedings may be materially different from that reflected in our financial statements. The assessment of additional taxes, interest and penalties could be materially adverse to our current and future results of operations and financial condition.
In addition, enhanced regulatory and other standards for the oversight of vendors and other service providers could result in higher costs and other potential exposures. In the event that one or more of our third-party 40 Table of Contents service providers becomes unable to continue to provide services, we may suffer financial loss and other negative consequences.
In addition, enhanced regulatory and other standards for the oversight of vendors and other service providers could result in higher costs and other potential exposures. In the event that one or more of our third-party service providers becomes unable to continue to provide services, we may suffer financial loss and other negative consequences.
These examinations or investigations often focus on the activities of the registered representatives and registered investment advisors doing business through such entities and the entities' supervision of those persons.
These examinations or investigations often focus on the activities of the registered representatives and investment adviser representatives doing business through such entities and the entities' supervision of those persons.
Certain of these regulations have imposed additional requirements that may affect both the Company and its derivatives counterparties, including in the areas of reporting, recordkeeping, the mandatory exchange execution and clearing of certain derivatives, position limits with respect to certain derivatives, regulatory initial margin and variation margin 38 Table of Contents requirements, and limitations on the ability to close out certain derivative transactions with certain counterparties upon the bankruptcy of such counterparties.
Certain of these regulations have imposed additional requirements that may affect both the Company and its derivatives counterparties, including in the areas of reporting, recordkeeping, the mandatory exchange execution and clearing of certain derivatives, position limits with respect to certain derivatives, regulatory initial margin and variation margin requirements, and limitations on the ability to close out certain derivatives transactions with certain counterparties upon the bankruptcy of such counterparties.
Currently, approximately 64 percent of our fixed interest annuities and 36 percent of our universal life products with contractually guaranteed minimum rates have crediting rates set at the minimum rate. As a result, in a low interest rate environment, reinvestment risk can place pressure on insurance product margins resulting in lower earnings.
Currently, approximately 54 percent of our fixed interest annuities and 29 percent of our universal life products with contractually guaranteed minimum rates have crediting rates set at the minimum rate. As a result, in a low interest rate environment, reinvestment risk can place pressure on insurance product margins resulting in lower earnings.
As a consequence of these factors, we could experience a decrease in the spread between the returns on our investment portfolio and amounts to be credited to policyholders and contractholders, which could adversely affect our profitability. • The attractiveness of certain of our insurance products may decrease because they are linked to the equity markets and/or assessments of our financial strength, resulting in lower profits.
As a consequence of these factors, we could experience a decrease in the spread between the returns on our investment portfolio and amounts to be credited to policyholders and contract holders, which could adversely affect our profitability. • The attractiveness of some of our insurance products may decrease because they are linked to the equity markets and/or assessments of our financial strength, resulting in lower profits.
Our broker/dealer and investment advisor subsidiaries are subject to regulation and supervision by the SEC, FINRA and certain state regulatory bodies. The SEC, FINRA and other governmental agencies, as well as state securities commissions, may examine or investigate the activities of broker/dealers and investment advisors.
Our broker-dealer and investment adviser subsidiaries are subject to regulation and supervision by the SEC, FINRA and certain state regulatory bodies. The SEC, FINRA and other governmental agencies, as well as state securities commissions, may examine or investigate the activities of broker-dealers and investment advisers.
Our structured securities (as defined below), which comprised 31.7 percent of our available for sale fixed maturity investments at December 31, 2023, are generally subject to variable prepayment on the assets underlying such securities, such as mortgage loans.
Our structured securities (as defined below), which comprised 31.0 percent of our available for sale fixed maturity investments at December 31, 2024, are generally subject to variable prepayment on the assets underlying such securities, such as mortgage loans.
We may also be subject to claims by third parties for breach of copyright, 41 Table of Contents trademark, trade secret or license usage rights.
We may also be subject to claims by third parties for breach of copyright, trademark, trade secret or license usage rights.
In addition, regulatory action or investigations could cause us to suffer significant reputational harm, which could have an adverse effect on our business, financial condition and results of operations. Our U.S. based insurance subsidiaries are required to comply with statutory accounting principles.
In addition, regulatory action or investigations could cause us to suffer significant reputational harm, which could have an adverse effect on our business, financial condition and results of operations. 38 Table of Co n t e n t s Our U.S. based insurance subsidiaries are required to comply with statutory accounting principles.
Any such claims and any resulting litigation could result in significant expense and liability for damages or we could be enjoined from providing certain products or services to our customers or utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses, or alternatively, we could be required to enter into costly licensing arrangements with third parties, all of which could have a material adverse effect on our business, results of operations and financial condition.
Any such claims and any resulting litigation could result in significant expense and liability for damages or we could be enjoined from providing certain products or services to our customers or utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses, or alternatively, we could be required to enter into costly licensing arrangements with third parties, all of which could have a material adverse effect on our business, results of operations and financial condition. 45 Table of Co n t e n t s ITEM 1B.
However, as each of the U.S. based insurance subsidiaries of CDOC has negative earned surplus, any dividend payments from such insurance subsidiaries to CNO would require the prior approval of the director or commissioner of the applicable state insurance department. In 2023, our U.S. based insurance subsidiaries paid dividends of $526.5 million to CDOC.
However, as each of the U.S. based insurance subsidiaries of CDOC has negative earned surplus, any dividend payments from such insurance subsidiaries to CNO would require the prior approval of the director or commissioner of the applicable state insurance department. In 2024, our U.S. based insurance subsidiaries paid dividends of $196.0 million to CDOC.
We regularly monitor ownership changes (as calculated for purposes of Section 382) based on available information and, as of December 31, 2023, our analysis indicated that we were below the 50 percent ownership change threshold that could limit 35 Table of Contents our ability to utilize our NOLs.
We regularly monitor ownership changes (as calculated for purposes of Section 382) based on available information and, as of December 31, 2024, our analysis indicated that we were well below the 50 percent ownership change threshold that could limit our ability to utilize our NOLs.
The loss of intellectual property protection or the inability to secure or enforce the protection of our intellectual property assets could adversely impact our business and its ability to compete effectively. We also may be subject to costly litigation in the event that another party alleges our operations or activities infringe upon that party's intellectual property rights.
The loss of intellectual property protection or the inability to secure or enforce the protection of our intellectual property assets could adversely impact our business and its ability to compete effectively. 44 Table of Co n t e n t s We also may be subject to costly litigation in the event that another party alleges our operations or activities infringe upon that party's intellectual property rights.
Continuing significant inflation could have a prolonged effect on the insurance industry and U.S. economy and could in turn negatively affect our business, financial condition and results of operations. 29 Table of Contents A return to a prolonged low interest rate environment may negatively impact our results of operations, financial position and cash flows.
Continuing significant inflation 31 Table of Co n t e n t s could have a prolonged effect on the insurance industry and U.S. economy and could in turn negatively affect our business, financial condition and results of operations. A return to a prolonged low interest rate environment may negatively impact our results of operations, financial position and cash flows.
Moreover, the use of different valuation assumptions may have a material effect on the fair values of the financial assets and financial liabilities. During periods of market disruption, it may be difficult to value certain securities if trading becomes less frequent and/or market data becomes less observable.
Moreover, the use of different valuation assumptions may have a material effect on the fair values 33 Table of Co n t e n t s of the financial assets and financial liabilities. During periods of market disruption, it may be difficult to value certain securities if trading becomes less frequent and/or market data becomes less observable.
As of December 31, 2023, we had net deferred tax assets of $937.1 million. Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carryforwards and NOLs.
As of December 31, 2024, we had net deferred tax assets of $791.4 million. Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carryforwards and NOLs.
If our future claims are higher than our assumptions, and our reserves prove to be insufficient to cover our actual losses and expenses, we would be required to increase our liabilities, and this could have a material adverse effect on our results of operations and financial condition.
If our future claims are higher than our assumptions, and our reserves prove to be insufficient to cover our actual losses and 34 Table of Co n t e n t s expenses, we would be required to increase our liabilities, and this could have a material adverse effect on our results of operations and financial condition.
We are subject to operational risks including, among other things, fraud, errors, failure to document transactions properly or to obtain proper internal authorization, failure to comply with regulatory requirements or obligations under our agreements, information technology failures including cybersecurity attacks and failure of our service providers (such as investment custodians and information technology and policyholder service providers) to comply with our services agreements.
We are subject to operational risks including, among other things, fraud, errors, failure to document transactions properly or to obtain proper internal authorization, failure to comply with regulatory requirements or obligations under our agreements, information technology failures including cybersecurity attacks, failure of our service providers (such as investment custodians and information technology and policyholder service providers) to comply with our services agreements, and failure to effectively maintain, upgrade or replace the systems and information technology on which we rely.
The litigation and regulatory matters we are, have been, or may become, subject to include matters related to the classification of our exclusive agents as independent contractors, sales, marketing and underwriting practices, payment of contingent or other sales commissions, claim payments and procedures, product design, product disclosure, administration, additional premium charges for premiums paid on a periodic basis, calculation of cost of insurance charges, changes to certain non-guaranteed policy features, denial or delay of benefits, charging excessive or impermissible fees on products, procedures related to canceling policies and recommending unsuitable products to customers.
The litigation and regulatory matters we are, have been, or may become, subject to include matters related to the classification of our exclusive agents as independent contractors, sales, marketing and underwriting practices, payment of contingent or other sales commissions, claim payments and procedures, product design, product disclosure, administration, additional premium charges for premiums paid on a periodic basis, calculation of cost of insurance charges, changes to certain non-guaranteed policy features, denial or delay of benefits, charging excessive or impermissible fees on products, procedures related to canceling policies, recommending unsuitable products to customers and policies from legacy business that we 39 Table of Co n t e n t s acquired or no longer write.
The Revolving Credit Agreement requires the Company to maintain (each as calculated in accordance with the Revolving Credit Agreement): (i) a debt to total capitalization ratio (excluding hybrid securities, except to the extent that the aggregate amount outstanding of all such hybrid securities exceeds an amount equal to 15% of total capitalization) of not more than 35.0 percent (such ratio was 21.5 percent at December 31, 2023); and (ii) a minimum consolidated net worth of not less than the sum of $2,674.0 million plus 25.0% of the net equity proceeds received by the Company from the issuance and sale of equity interests in the Company (the Company's consolidated net worth was $3,792.4 million at December 31, 2023 compared to the minimum requirement of $2,697.0 million).
The Revolving Credit Agreement requires the Company to maintain (each as calculated in accordance with the Revolving Credit Agreement): (i) a debt to total capitalization ratio (excluding hybrid securities, except to the extent that the aggregate amount outstanding of all such hybrid securities exceeds an amount equal to 15% of total capitalization) of not more than 35.0 percent (such ratio was 30.5 percent at December 31, 2024); and (ii) a minimum consolidated net worth of not less than the sum of $2,674.0 million plus 25.0% of the net equity proceeds received by the Company from the 35 Table of Co n t e n t s issuance and sale of equity interests in the Company (the Company's consolidated net worth was $3,869.8 million at December 31, 2024 compared to the minimum requirement of $2,698.8 million).
See the note to the consolidated financial statements entitled "Litigation and Other Legal Proceedings." The ultimate outcome of these lawsuits, regulatory proceedings and investigations cannot be predicted with certainty.
See the note to the consolidated financial statements entitled "Commitments and Contingencies." The ultimate outcome of these lawsuits, regulatory proceedings and investigations cannot be predicted with certainty.
Major public health issues could have an adverse impact on our financial condition, results of operations, liquidity, cash flows and other aspects of our business. Our operations are exposed to the risk of major health pandemics, epidemics or outbreaks.
Losses resulting from these failures may have a material adverse effect on our financial position or results of operations. Major public health issues could have an adverse impact on our financial condition, results of operations, liquidity, cash flows and other aspects of our business. Our operations are exposed to the risk of major health pandemics, epidemics or outbreaks.
Inflation levels could have adverse consequences for us, the insurance industry and the U.S. economy generally . The U.S. economy has been experiencing the persistence of inflation, which creates a heightened level of risk for us, the insurance industry and the U.S. economy generally.
Inflation levels could have adverse consequences for us, the insurance industry and the U.S. economy generally . Persistent inflation within the U.S. economy creates a heightened level of risk for us, the insurance industry and the U.S. economy generally.
In an economic downturn, higher unemployment, lower family income, lower corporate earnings, lower business investment and lower consumer spending may depress the demand for life insurance, annuities and other insurance products. In addition, this type of economic environment may result in higher lapses or surrenders of policies. Our business is exposed to the performance of the debt and equity markets.
In an economic downturn, higher unemployment, lower family income and savings, lower corporate earnings, lower business investment and lower consumer spending may depress the demand for life insurance, annuities and other insurance products. In addition, this type of economic environment may result in higher lapses or surrenders of policies and may negatively impact the value of our assets.
As of December 31, 2023, our reinsurance receivables and ceded life insurance inforce totaled $4.0 billion and $2.8 billion, respectively. Our seven largest reinsurers (which are currently rated "A-" or higher by AM Best) accounted for 97 percent of our ceded life insurance inforce and 98 percent of our reinsurance receivables.
As of December 31, 2024, our third-party reinsurance receivables and ceded life insurance inforce totaled $3.9 billion and $2.8 billion, respectively. Our seven largest reinsurers, which are rated "A-" or higher by AM Best as of December 31, 2024, accounted for 97 percent of our ceded life insurance inforce and 99 percent of our reinsurance receivables.
Any election regarding the contribution of additional capital to our insurance subsidiaries could affect the ability of our top tier insurance subsidiaries to pay dividends.
Contributions of additional capital to our insurance subsidiaries could affect the ability of our top tier insurance subsidiaries to pay dividends.
Agents, insurance brokers and marketing companies who market our products and prospective purchasers of our products use the financial strength ratings of our insurance subsidiaries as an important factor in determining whether to market or purchase. Ratings have the most impact on our annuity, interest-sensitive life insurance and long-term care products.
Agents, insurance brokers and marketing companies who market our products and prospective purchasers of our products use the financial strength ratings of our insurance subsidiaries as an important factor in determining whether to market or purchase.
Treasuries or potentially negatively affect market liquidity. 31 Table of Contents The determination of the allowance for credit losses related to our investments is highly subjective and could have a material adverse effect on our operating results and financial condition.
The determination of the allowance for credit losses related to our investments is highly subjective and could have a material adverse effect on our operating results and financial condition.
At December 31, 2023, $0.7 billion of the indexed account values of the fixed indexed annuities were at contractual minimum participation rates and $0.4 billion of the fixed fund values of the fixed indexed annuities were at contractual minimum guaranteed crediting rates.
At December 31, 2024, $144.0 million of the indexed account values of the fixed indexed annuities were at contractual minimum participation rates and $327.0 million of the fixed fund values of the fixed indexed annuities were at contractual minimum guaranteed crediting rates.
Federal income tax laws could reduce or eliminate the tax advantages of certain of our products, making these products less attractive to our customers. This may lead to a reduction in sales which may adversely impact our profitability.
The insurance and annuity products we issue receive favorable tax treatment under current U.S. federal income tax laws. Changes in U.S. Federal income tax laws could reduce or eliminate the tax advantages of certain of our products, making these products less attractive to our customers. This may lead to a reduction in sales which may adversely impact our profitability.
In addition, we expect to recognize significant non-life NOLs in 2024 as a result of changes related to the tax accounting method for allocating indirect costs (pursuant to the Code) to self-constructed real estate assets. Such NOLs will not be subject to expiration. Our assessment of the realizability of our deferred tax assets requires significant judgment.
In addition, we expect to recognize approximately $800 million of non-life NOLs on our tax return as a result of changes related to the tax accounting method for allocating indirect costs (pursuant to the Code) to self-constructed real estate assets upon approval from the IRS. Such NOLs will not be subject to expiration.
These risks are significantly greater with respect to below-investment grade securities and alternative investments, which comprised 4.7 percent and 2.5 percent of our total investments as of December 31, 2023.
These risks are 32 Table of Co n t e n t s significantly greater with respect to below-investment grade securities and alternative investments, which comprised 4.4 percent and 2.6 percent of our total investments as of December 31, 2024.
The estimated RBC ratio of CLTX was 345 percent at December 31, 2023. CDOC also holds a surplus debenture from Colonial Penn Life Insurance Company ("Colonial Penn") with a principal balance of $160.0 million. Interest payments on that surplus debenture require prior approval by the Pennsylvania Insurance Department.
The estimated RBC ratio of CLTX was 330 percent at December 31, 2024. CDOC also holds a surplus debenture from Colonial Penn Life Insurance Company ("Colonial Penn") with a principal balance of $160.0 million.
Accordingly, if we do not also lower our prices for similar products, we may lose market share to these competitors. If we lower our prices to maintain market share, our profitability would decline. If we are unable to attract and retain agents and marketing organizations, sales of our products may be reduced.
Accordingly, if we do not also lower our prices for similar products, we may lose market share to these competitors. If we lower our prices to maintain market share, our profitability would decline.
Insurance companies historically have been subject to substantial litigation. In addition to the traditional policy claims associated with their businesses, insurance companies like ours face class action suits and derivative suits from policyholders and/or shareholders. We also face significant risks related to regulatory investigations and proceedings.
Litigation and regulatory investigations are inherent in our business, may harm our financial condition and reputation, and may negatively impact our financial results. Insurance companies historically have been subject to substantial litigation. In addition to the traditional policy claims associated with their businesses, insurance companies like ours face class action suits and derivative suits from policyholders and/or shareholders.
Although we use a broad range of measures to protect our intellectual property rights, third parties may infringe or misappropriate our intellectual property.
We rely on a combination of contractual rights and copyright, trademark and trade secret laws to establish and protect our intellectual property. Although we use a broad range of measures to protect our intellectual property rights, third parties may infringe or misappropriate our intellectual property.
The current financial strength ratings of our primary insurance subsidiaries from Fitch, S&P, Moody's and AM Best are "A", "A-", "A3" and "A", respectively. For a description of these ratings, see "Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations-Liquidity and Capital Resources-Financial Strength Ratings of our Insurance Subsidiaries".
For a description of these ratings, see "Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations-Liquidity and Capital Resources-Financial Strength Ratings of our Insurance Subsidiaries".
Market dislocations, decreases in observable market activity or unavailability of information, in each case, arising from major public health issues may impact the key inputs used to derive certain estimates and assumptions made in connection with financial reporting or otherwise. 30 Table of Contents Any uncertainty as a result of any of these events may require us to change our estimates, assumptions, models or reserves.
Market dislocations, decreases in observable market 41 Table of Co n t e n t s activity or unavailability of information, in each case, arising from major public health issues may impact the key inputs used to derive certain estimates and assumptions made in connection with financial reporting or otherwise.
Economic Conditions, Market Conditions and Investments: There are risks to our business associated with broad economic conditions. General factors such as the availability of credit, consumer spending, business investment, capital market conditions and inflation affect our business. One threat facing the U.S. economy is the continued disagreement over the federal debt limit and other budget questions.
Economic Conditions, Market Conditions and Investments: There are risks to our business associated with broad economic conditions. General factors such as the availability of credit, consumer spending, business investment, capital market conditions and inflation affect our business.
In addition, although we are under no obligation to do so, we may elect to contribute additional capital to strengthen the surplus of certain insurance subsidiaries for covenant compliance or regulatory purposes or to provide the capital necessary for growth.
Interest payments on that surplus debenture require prior approval by the Pennsylvania Insurance Department. 36 Table of Co n t e n t s In addition, although we are generally under no obligation to do so, we may elect to contribute additional capital to strengthen the surplus of certain insurance subsidiaries for covenant compliance or regulatory purposes or to provide the capital necessary for growth.
We cannot predict the requirements of the regulations ultimately adopted, the effect such regulations will have on financial markets generally, or on our businesses specifically, the additional costs associated with compliance with such regulations, or any changes to our operations that may be necessary to comply with new regulations, any of which could have a material adverse effect on our business, results of operations, cash flows or financial condition.
Changes to these requirements have resulted in an increase to the amount of reserves and capital we are required to hold and may adversely impact the ability of our insurance subsidiaries to pay dividends to the holding company. 40 Table of Co n t e n t s We cannot predict the requirements of the regulations ultimately adopted, the effect such regulations will have on financial markets generally, or on our businesses specifically, the additional costs associated with compliance with such regulations, or any changes to our operations that may be necessary to comply with new regulations, any of which could have a material adverse effect on our business, results of operations, cash flows or financial condition.
In addition, the NAIC and several states have proposed and/or enacted regulations related to required disclosures and/or standards of conduct when insurance producers provide recommendations to clients regarding sales of annuity products.
In addition, the NAIC and several states have proposed and/or enacted regulations related to required disclosures and/or standards of conduct when insurance producers provide recommendations to clients regarding sales of annuity products. These regulations and similar regulatory initiatives could have an impact on Company operations and the manner in which broker-dealers and investment advisers distribute the Company's products.
Refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Comprehensive Annual Actuarial Review" for further information related to changes in certain actuarial assumptions and their impact on our operating results in 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Comprehensive Annual Actuarial Review" for further information related to changes in certain actuarial assumptions and their impact on our operating results in 2024. The occurrence of natural or man-made disasters or climate change could adversely affect our financial condition and results of operations.
Adverse market conditions can affect the liquidity and value of our investments.
Our business is exposed to the performance of the debt and equity markets. Adverse market conditions can affect the liquidity and value of our investments.
Treasury securities by December 31, 2025, and eligible repurchase transactions in U.S. Treasury securities by June 30, 2026. Uncertainty remains regarding potential impact of the rule. However, the rule could increase costs of trading in U.S.
Treasury securities by December 31, 2025, and eligible repurchase transactions in U.S. Treasury securities by June 30, 2026. As a result, certain transactions between such participants and us will be required to be cleared. Uncertainty remains regarding potential impact of the rule. However, the rule could increase costs of trading in U.S. Treasuries or potentially negatively affect market liquidity.
CNO receives dividends and other payments from CDOC and from certain non-insurance subsidiaries. CDOC receives dividends and surplus debenture interest payments from our insurance subsidiaries and payments from certain of our non-insurance subsidiaries. Payments from our non-insurance subsidiaries to CNO or CDOC, and payments from CDOC to CNO, do not require approval by any regulatory authority or other third party.
CNO receives dividends and other payments from CDOC and from certain non-insurance subsidiaries. CDOC receives dividends and surplus debenture interest payments from our insurance subsidiaries and payments from certain of our non-insurance subsidiaries.
The value of our net deferred tax assets as of December 31, 2023 reflects the current Federal corporate income tax rate of 21 percent. Changes in tax laws, including changes regarding the utilization of NOLs, could cause a writedown of our net deferred tax assets, which may have an adverse effect on our results of operations and financial condition.
Changes in tax laws, including changes regarding the utilization of NOLs, could cause a write-down of our net deferred tax assets, which may have an adverse effect on our results of operations and financial condition. Changes in tax laws could increase our tax costs and reduce sales of our insurance and annuity products.
The value of our deferred tax assets may be reduced to the extent our future profits are less than we have projected or the current corporate income tax rate is reduced, and such reductions in value may have a material adverse effect on our results of operations and our financial condition.
The annual restriction would be calculated based upon the value of CNO's equity at the time of such ownership change, multiplied by a federal long-term tax exempt rate (3.43 percent at December 31, 2024). 37 Table of Co n t e n t s The value of our deferred tax assets may be reduced to the extent our future profits are less than we have projected or the current corporate income tax rate is reduced, and such reductions in value may have a material adverse effect on our results of operations and our financial condition.
Such assumptions are based on our experience, and in cases of limited experience, industry experience. Such assumptions also consider future expectations in policyholder behavior that may vary from past experience.
Liabilities for insurance products are calculated based on numerous assumptions including, but not limited to, investment yields, mortality, morbidity, withdrawals, lapses, cash flow assumptions and discount rates. Such assumptions are based on our experience, and in cases of limited experience, industry experience. Such assumptions also consider future expectations in policyholder behavior that may vary from past experience.
If these parties do not perform as anticipated, we may experience operational difficulties, increased costs and other adverse effects on our business. We have implemented, and we require our vendors to implement, a variety of security measures to protect the confidentiality, availability, and integrity of our information systems and data.
We have implemented, and we require our vendors to implement, a variety of security measures to protect the confidentiality, availability, and integrity of our information systems and data.
As of December 31, 2023, we had approximately $367.2 million of federal tax NOLs resulting in deferred tax assets of approximately $77.1 million (which expire in years 2026 through 2035). Section 382 of the Code imposes limitations on a corporation's ability to use its NOLs when it undergoes a 50 percent "ownership change" over a three-year period.
Section 382 of the Code imposes limitations on a corporation's ability to use its NOLs when it undergoes a 50 percent "ownership change" over a three-year period.
These systems may fail to operate properly or become disabled as a result of events or circumstances which may be wholly or partly beyond our control including cyber-attack, denial of service, viruses or other malicious activities. Further, we face the risk of operational and technology failures by others, including financial intermediaries, vendors and parties that provide services to us.
These systems may fail to operate properly or become disabled as a result of events or circumstances which may be wholly or partly beyond our control including cyber-attack, denial of service, viruses or other malicious activities, power outages, hardware or software malfunction, defects or degradation, lack of proper maintenance, human error or misuse, and similar events.
Differences between actual experience and the assumptions in our models could materially and adversely affect our business, financial condition, results of operations, liquidity and cash flows.
Errors in the modeling software we use or differences between actual experience and the assumptions in our models could materially and adversely affect our business, financial condition, results of operations, liquidity and cash flows. Our liabilities for insurance products may prove to be inadequate, requiring us to increase liabilities which results in reduced net income and shareholders' equity.
Absent sufficient liquidity to repay our indebtedness, our management or our independent registered public accounting firm may conclude that there is substantial doubt regarding our ability to continue as a going concern. The Revolving Credit Agreement and the Indentures for the Notes and Debentures contain various restrictive covenants and required financial ratios that could limit our operating flexibility.
Liquidity Risk: The Revolving Credit Agreement and the Indentures for the Notes and Debentures contain various restrictive covenants and required financial ratios that could limit our operating flexibility.
There can be no assurance that a future breach will not occur or, if any does occur, that it can be promptly detected and sufficiently remediated without materially impacting our business or our operations.
While no such cybersecurity event has been material, there can be no assurance that a future breach will not occur or, if any does occur, that it can be promptly detected and sufficiently remediated without materially impacting our business or our operations. 42 Table of Co n t e n t s Moreover, we invest significant time and resources towards ensuring that the capacity and reliability of our information technology systems, and those of third parties on which our operations rely, are sufficient and appropriate to support our business.
Failure to achieve our projections may result in the recognition of a valuation allowance in a future period. Any future increase in the valuation allowance would result in additional income tax expense which could have a material adverse effect upon our earnings in the future, and reduce shareholders' equity.
The recognition of a valuation allowance would increase income tax expense and reduce shareholders' equity, and such an increase could have a significant impact upon our earnings in the future. The value of our net deferred tax assets as of December 31, 2024 reflects the current Federal corporate income tax rate of 21 percent.
Our business could be interrupted or compromised if we experience difficulties arising from outsourcing relationships. We outsource certain information technology and policy administration operations to third-party service providers (both domestic and international).
We utilize third-party vendors to provide certain business support services and functions, which exposes us to risks outside our control that may lead to business interruption or compromise. For example, we outsource certain information technology and policy administration operations to third-party service providers (both domestic and international).
Failure to resolve these issues in a timely manner could result in a government shutdown, an erratic reduction in government spending or a default on government debt, which could impact market liquidity, result in increased market volatility and reduced economic activity.
Threats facing the U.S. economy include the imposition of tariffs, the continued disagreement over the federal debt limit and other federal budget and taxation questions. Failure to resolve these political issues in a timely manner could result in increased costs, market disruption and volatility and impact government spending and economic activity.
Removed
For example, the COVID-19 pandemic significantly impacted the U.S. and global economy, created significant volatility and periods of disruption in the capital markets and resulted in some unfavorable impacts to our business, as well as the overall industry.
Added
In addition, we have, under an intercompany reinsurance agreement initiated in 2023, ceded approximately $7.6 billion of our fixed indexed annuity statutory reserves from Bankers Life to CNO Bermuda Re as of December 31, 2024.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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The AERC regularly briefs the full Board on these matters. One AERC member holds the CERT Certification in Cybersecurity Oversight from Carnegie Mellon University, and a second has significant work experience related to technology and data security. Our CISO is well-qualified in the area of cybersecurity and data protection.
The CISO provides regular reports on our cybersecurity program and potential risks to the Audit and Enterprise Risk Committee ("AERC") of the Board of Directors. The AERC regularly briefs the full Board on these matters. One AERC member holds the CERT Certification in Cybersecurity Oversight from Carnegie Mellon University, and a second has significant work experience related to technology.
These qualifications include: (i) 23 years of experience in cybersecurity, security risk management and IT auditing; (ii) the designation of Certified Information Systems Security Professional ("CISSP"); and (iii) a Bachelor's degree in Computer Information Systems. Our CISO also previously held the Certified Information Systems Auditor ("CISA") and Certified in Risk and Information Systems Controls ("CRISC") certifications.
Our CISO is well-qualified in the area of cybersecurity and data protection. These qualifications include: (i) 24 years of experience in cybersecurity, security risk management and IT auditing; (ii) the designation of Certified Information Systems Security Professional ("CISSP"); and (iii) a Bachelor's degree in Computer Information Systems.
We also have a cybersecurity steering committee that takes an active role in setting strategic direction for cybersecurity initiatives and provides oversight and guidance for overall information security risk management. The CISO provides regular reports on our cybersecurity program and potential risks to the Audit and Enterprise Risk Committee ("AERC") of the Board of Directors.
The CISO, who oversees the CST, reports directly to our chief information officer and is responsible for the overall strategy and function of the cybersecurity program. We also have a cybersecurity steering committee that takes an active role in setting strategic direction for cybersecurity initiatives and provides oversight and guidance for overall information security risk management.
ITEM 1C. CYBERSECURITY. Risk Management and Strategy The Company’s cybersecurity approach comprises a holistic strategy that includes comprehensive security policies and standards, a robust security awareness and education program, and the implementation of advanced and layered defenses. Our cybersecurity program is aligned with generally accepted principles and practices for securing information systems and data.
ITEM 1C. CYBERSECURITY. Risk Management and Strategy The Company’s cybersecurity approach comprises a holistic strategy that includes comprehensive security policies and standards, a robust security awareness and education program, and the implementation of advanced and layered defenses, which is integrated into the Company's overall risk management processes.
We also perform periodic risk assessments throughout the term of the engagements, including those third parties located outside the United States that have access to our Company and customer information.
We also perform periodic risk assessments throughout the term of the engagements, including those third parties located outside the United States that have access to our Company and customer information. 46 Table of Co n t e n t s As of December 31, 2024, no cybersecurity threat, including from a cybersecurity incident, has materially affected our business strategy, results of operations, or financial condition.
The program is designed to comply with all applicable laws and regulations and uses guidance from many best practices. Our cybersecurity program, policies and controls align to those of the National Institute of Standards and Technology’s Cybersecurity Framework. We have established and continue to enhance our procedures for identifying cybersecurity risks and implementing defenses to mitigate these risks.
Our cybersecurity program is aligned with generally accepted principles and practices for securing information systems and data. The program is designed to comply with applicable laws and regulations and is based on many industry best practices. For instance, our cybersecurity program, policies and controls align to those of the National Institute of Standards and Technology’s Cybersecurity Framework.
To date, no cybersecurity threat, including from a cybersecurity incident, has materially affected our business strategy, results of operations, or financial condition. 43 Table of Contents Governance We recognize that security is an enterprise concern and requires stakeholders from across the enterprise to understand and manage this risk.
Governance We recognize that security is an enterprise concern and requires stakeholders from across the enterprise to understand and manage this risk. Our security management structure reflects a centralized security program that coordinates security functions across the enterprise.
Removed
Our security management structure reflects a centralized security program that coordinates security functions across the enterprise. The CISO, who oversees the CST, reports directly to our chief information officer and is responsible for the overall strategy and function of the cybersecurity program.
Added
We have established and continue to enhance our procedures for identifying cybersecurity risks and implementing defenses to mitigate these risks.
Added
Our CISO also previously held the Certified Information Systems Auditor ("CISA") and Certified in Risk and Information Systems Controls ("CRISC") certifications.
Added
For a discussion regarding risks associated with cybersecurity threats, see Risk Factors – General Business Risk – "Interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems, could harm our business," and "The use or anticipated use of AI technologies, including generative AI, by us or third parties, may increase the operational risks discussed above, or create new or unanticipated operational risks."

Item 2. Properties

Properties — owned and leased real estate

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Our Consumer Division is primarily administered from downtown Chicago, Illinois, where we currently lease approximately 33,000 square feet with terms through August 2033. We also lease 232 sales offices in various states totaling approximately 785,000 square feet. These leases are generally short-term in length, with remaining lease terms expiring between 2024 and 2030.
We also lease approximately 230 branch offices in various states totaling approximately 781,000 square feet. These leases are generally short-term in length, with remaining lease terms expiring between 2025 and 2030. As a result of our success with hybrid work arrangements and evolving business needs, our direct-to-consumer products are primarily administered via remote and hybrid work arrangements.
The entire 78 acre campus with six buildings (approximately 630,000 square feet) was listed for sale in December 2023. In the first half of 2024, we will move into approximately 125,000 square feet of leased office space at a nearby location with terms through June 2034.
In December 2023, the entire 77-acre campus with six buildings (approximately 630,000 square feet) was listed for sale in preparation for our move. We are presently in discussions with potential buyers for all or portions of the campus.
ITEM 2. PROPERTIES. Our headquarters and certain administrative operations of our subsidiaries and Worksite Division are located on a Company-owned corporate campus in Carmel, Indiana, immediately north of Indianapolis. We currently utilize four buildings for our operations, although not all of the space (approximately 400,000 square feet) is currently in use.
ITEM 2. PROPERTIES. Our headquarters and certain administrative operations of our subsidiaries and Worksite Division are in a 125,000 leased building with terms through June 2034 located in Carmel, Indiana, immediately north of Indianapolis. In April of 2024 we moved all but our mail operations to this new location from our owned Campus.
In Orlando, we moved to a smaller location in January 2023 where we lease approximately 22,000 square feet with terms through December 2028. In Milwaukee, we lease 7,000 square feet with terms through February 2030. In Birmingham, we lease 7,400 square feet with terms through 2026.
In June of 2024 we sold our Philadelphia, Pennsylvania office building. Our Optavise business has three office locations: Orlando, Florida; Milwaukee, Wisconsin; and Birmingham, Alabama. In Orlando, we lease 22,000 square feet with terms through December 2028. Our Milwaukee operations occupy 7,100 square feet pursuant to a lease with terms through February 2030.
Removed
Our direct to consumer products are primarily administered from a Company-owned office building in Philadelphia, Pennsylvania, with approximately 127,000 square feet. We occupy approximately 45 percent of this space, with unused space leased to tenants.
Added
Our outsourced mail operations will remain in one of the owned buildings (approximately 100,000 square feet) until a potential buyer and closing requirements are determined. Our Consumer Division is primarily administered from downtown Chicago, Illinois. We currently lease approximately 33,000 square feet with terms through August 2033.
Removed
As a result of our success with hybrid work arrangements and evolving business needs, we have an agreement to sell this building with the intent to close the sale in the first half of 2024. Our Optavise business has three locations: Orlando, Florida; Milwaukee, Wisconsin; and Birmingham, Alabama.
Added
Our Birmingham operation occupies 7,400 square feet pursuant to a lease with terms through July 2026. 47 Table of Co n t e n t s CNO Bermuda Re, moved into its 1,400 square foot Hamilton, Bermuda office in July 2024 with lease terms through June 2027.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. LEGAL PROCEEDINGS. Information required for Item 3. is incorporated by reference to the discussion under the heading "Legal Proceedings" in the note to the consolidated financial statements entitled "Litigation and Other Legal Proceedings" included in Item 8. of this Form 10-K.
ITEM 3. LEGAL PROCEEDINGS. Information required for Item 3. is incorporated by reference to the discussion under the heading "Legal Proceedings" in the note to the consolidated financial statements entitled "Commitments and Contingencies" included in Item 8. of this Form 10-K.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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From September 2019 to December 2023, chief actuary and from June 2020 to June 2022, chief risk officer. From 2013 to 2019, Ms. DeToro held executive leadership positions at New York Life. From 2011 to 2013, principal at Deloitte Consulting. Yvonne K. Franzese, 65 2017 Since November 2017, chief human resources officer of CNO.
From September 2019 to December 2023, chief actuary and from June 2020 to June 2022, chief risk officer. From 2013 to 2019, Ms. DeToro held executive leadership positions at New York Life. From 2011 to 2013, principal at Deloitte Consulting. Yvonne K. Franzese, 66 2017 Since November 2017, chief human resources officer of CNO.
Goldberg has held various other positions since joining CNO in 2004. Eric R. Johnson, 63 1997 Since September 2003, chief investment officer of CNO and president and chief executive officer of 40|86 Advisors, CNO's wholly-owned registered investment advisor. Since January 2018, executive in charge of corporate development activities. Mr.
Goldberg has held various other positions since joining CNO in 2004. Eric R. Johnson, 64 1997 Since September 2003, chief investment officer of CNO and president and chief executive officer of 40|86 Advisors, CNO's wholly-owned registered investment advisor. Since January 2018, executive in charge of corporate development activities. Mr.
From 2007 to 2012, he served as chief executive officer of Allianz Life Insurance Company of North America and was president of Commercial Business, Fireman's Fund Insurance Company from 2004 to 2007. Karen J. DeToro, 52 2019 Since January 2024, president, Worksite Division.
From 2007 to 2012, he served as chief executive officer of Allianz Life Insurance Company of North America and was president of Commercial Business, Fireman's Fund Insurance Company from 2004 to 2007. Karen J. DeToro, 53 2019 Since January 2024, president, Worksite Division.
From 2016 until joining CNO, chief human capital officer of TCF Bank. From 2007 to 2016, Ms. Franzese held various human resource positions at Allianz, including the chief human resources role for Allianz of North America. Scott L. Goldberg, 53 2004 Since January 2020, president, Consumer Division. From September 2013 to January 2020, president of Bankers Life. Mr.
From 2016 until joining CNO, chief human capital officer of TCF Bank. From 2007 to 2016, Ms. Franzese held various human resources positions at Allianz, including the chief human resources role for Allianz of North America. Scott L. Goldberg, 54 2004 Since January 2020, president, Consumer Division. From September 2013 to January 2020, president of Bankers Life. Mr.
From November 2018 to December 2022, senior vice president and chief information officer. Prior to joining CNO, Mr. Mead held various positions at AIG Technologies from 1996 to 2018, including senior vice president and transformation executive. Rocco F. Tarasi, 52 2017 Since March 2019, chief marketing officer.
From November 2018 to December 2022, senior vice president and chief information officer. Prior to joining CNO, Mr. Mead held various positions at AIG Technologies from 1996 to 2018, including senior vice president and transformation executive. Rocco F. Tarasi, 53 2017 Since March 2019, chief marketing officer of CNO.
Prior to joining CNO, Ms. Linnenbringer held various positions at Genworth Financial from 2000 to 2015. Paul H. McDonough, 59 2019 Since March 2019, chief financial officer of CNO. From 2005 to 2017, executive vice president and chief financial officer of OneBeacon Insurance Group. Michael E. Mead, 57 2018 Since January 2023, chief information officer.
Linnenbringer held various positions at Genworth Financial from 2000 to 2015. Paul H. McDonough, 60 2019 Since March 2019, chief financial officer of CNO. From 2005 to 2017, executive vice president and chief financial officer of OneBeacon Insurance Group. Michael E. Mead, 58 2018 Since January 2023, chief information officer of CNO.
Zimpfer has held various legal positions since joining CNO in 1998. ___________________________ (a) The executive officers serve as such at the discretion of the Board of Directors and are elected annually. (b) Business experience is given for at least the last five years. 45 Table of Contents PART II
Zimpfer has held various legal positions since joining CNO in 1998. ___________________________ (a) The executive officers serve as such at the discretion of the Board of Directors and are elected annually. (b) Business experience is given for at least the last five years. 49 Table of Co n t e n t s PART II
Williams has served in various actuarial capacities since joining CNO in 2003, including most recently as senior vice president of valuation. Matthew J. Zimpfer, 56 1998 Since June 2008, general counsel. Mr.
Jeremy D. Williams, 48 2003 Since January 2024, chief actuary of CNO. Mr. Williams has served in various actuarial capacities since joining CNO in 2003, including most recently as senior vice president of valuation. Matthew J. Zimpfer, 57 1998 Since June 2008, general counsel of CNO. Mr.
Johnson has held various investment management positions since joining CNO in 1997. Jeanne L. Linnenbringer, 61 2015 Since January 2023, chief operations officer. From August 2017 to December 2022, senior vice president of operations. From June 2015 to August 2017, various leadership positions including senior vice president of consumer operations and vice president of customer service.
Jeanne L. Linnenbringer, 62 2015 Since January 2023, chief operations officer of CNO. From August 2017 to December 2022, senior vice president of operations. From June 2015 to August 2017, various leadership positions including senior vice president of consumer operations and vice president of customer service. Prior to joining CNO, Ms.
ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 44 Table of Contents Executive Officers of the Registrant Officer With CNO Positions with CNO Name and Age (a) Since Principal Occupation and Business Experience (b) Gary C. Bhojwani, 56 2016 Since January 2018, chief executive officer. From April 2016 to December 2017, president of CNO.
ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 48 Table of Co n t e n t s Executive Officers of the Registrant Officer With CNO Positions with CNO Name and Age (a) Since Principal Occupation and Business Experience (b) Gary C. Bhojwani, 57 2016 Since January 2018, chief executive officer of CNO.
From April 2015 until joining CNO, chief executive officer of GCB, LLC, an insurance and financial services consulting company that he founded. Mr. Bhojwani was a member of the board of management of Allianz SE and Chairman of Allianz of America, Allianz Life Insurance Company, and Fireman’s Fund Insurance Company from 2012 to 2015.
Bhojwani was a member of the board of management of Allianz SE and Chairman of Allianz of America, Allianz Life Insurance Company, and Fireman’s Fund Insurance Company from 2012 to 2015.
Removed
Michellen A. Wildin, 59 2023 Since January 2024, chief accounting officer. From October 2023 to December 2023, senior vice president of accounting. Prior to joining CNO, Ms. Wildin served as senior vice president, financial planning and analysis at F&G Annuities and Life, Inc., from 2021 to 2023.
Added
From April 2016 to December 2017, president of CNO. From April 2015 until joining CNO, chief executive officer of GCB, LLC, an insurance and financial services consulting company that he founded. Mr.
Removed
From 2013 to 2021, held various positions at New York Life, including vice president, corporate budget and expense analytics and chief financial officer of NYL Direct. Previously, held senior-level accounting, finance, strategy and operations roles at Aviva and ING. Jeremy D. Williams, 47 2003 Since January 2024, chief actuary. Mr.
Added
Johnson has held various investment management positions since joining CNO in 1997. Joel T. Koehneman, 40 2025 Since January 2025, chief accounting officer of CNO. Prior to joining CNO, Mr. Koehneman served as Finance Director at CDW Corporation in 2024. From 2008 to 2023, he held various positions within the audit practice at PricewaterhouseCoopers, primarily focused on life insurance clients.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed1 unchanged
The comparison for each of the periods assumes that $100 was invested on December 31, 2018 in each of CNO common stock, the stocks included in the S&P Life and Health Insurance Index and the stocks included in the S&P MidCap 400 Index and that all dividends were reinvested.
The comparison for each of the periods assumes that $100 was invested on December 31, 2019 in each of CNO common stock, the stocks included in the S&P Life and Health Insurance Index and the stocks included in the S&P MidCap 400 Index and that all dividends were reinvested.
EQUITY COMPENSATION PLAN INFORMATION The following table summarizes information, as of December 31, 2023, relating to our common stock that may be issued under the CNO Financial Group, Inc. Amended and Restated Long-Term Incentive Plan.
EQUITY COMPENSATION PLAN INFORMATION The following table summarizes information, as of December 31, 2024, relating to our common stock that may be issued under the CNO Financial Group, Inc. Amended and Restated Long-Term Incentive Plan.
In determining dividends, our Board of Directors takes into consideration our financial condition, including current and expected earnings and projected cash flows.
In determining dividends, our Board of Directors reviews our surplus and takes into consideration our financial condition, including current and expected earnings and projected cash flows.
PERFORMANCE GRAPH The performance graph below compares CNO's cumulative total shareholder return on its common stock for the period from December 31, 2018 through December 31, 2023 with the cumulative total return of the Standard & Poor's Life and Health Insurance Index (the "S&P Life and Health Insurance Index") and the Standard & Poor's MidCap 400 Index (the "S&P MidCap 400 Index").
PERFORMANCE GRAPH The performance graph below compares CNO's cumulative total shareholder return on its common stock for the period from December 31, 2019 through December 31, 2024 with the cumulative total return of the Standard & Poor's Life and Health Insurance Index (the "S&P Life and Health Insurance Index") and the Standard & Poor's MidCap 400 Index (the "S&P MidCap 400 Index").
Since that date, the Company's Board of Directors has authorized additional repurchases from time to time, most recently in May 2023 when it authorized the repurchase of an additional $500.0 million of the Company's outstanding shares of common stock.
Since that date, the Company's Board of Directors has authorized additional repurchases from time to time, most recently in February 2025 when it authorized the repurchase of an additional $500.0 million of the Company's outstanding shares of common stock.
As of February 7, 2024, there were approximately 51,000 holders of the outstanding shares of common stock, including individual participants in securities position listings. We commenced the payment of a dividend on our common stock in the second quarter of 2012. The dividend on our common stock is declared each quarter by our Board of Directors.
As of February 5, 2025, there were approximately 73,000 holders of the outstanding shares of common stock, including individual participants in securities position listings. We commenced the payment of a dividend on our common stock in the second quarter of 2012. The dividend on our common stock is declared each quarter by our Board of Directors.
Number of securities to be issued upon exercise of outstanding options and rights Weighted-average exercise price of outstanding options and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) Equity compensation plans approved by security holders 2,184,754 $ 19.45 4,061,473 Equity compensation plans not approved by security holders — — — Total 2,184,754 $ 19.45 4,061,473
Number of securities to be issued upon exercise of outstanding options and rights Weighted-average exercise price of outstanding options and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) Equity compensation plans approved by security holders 1,791,185 $ 19.48 2,874,434 Equity compensation plans not approved by security holders — — — Total 1,791,185 $ 19.48 2,874,434
The stock performance shown in this graph represents past performance and should not be considered an indication of future performance of CNO's common stock. 46 Table of Contents *$100 invested on 12/31/18 in stock or index, including reinvestment of dividends. 12/18 12/19 12/20 12/21 12/22 12/23 CNO Financial Group, Inc. $ 100.00 $ 125.09 $ 157.60 $ 172.59 $ 169.83 $ 212.49 S&P Life & Health Insurance Index 100.00 123.18 111.51 152.41 168.18 176.00 S&P MidCap 400 Index 100.00 126.20 143.44 178.95 155.58 181.15 47 Table of Contents ISSUER PURCHASES OF EQUITY SECURITIES Period (in 2023) Total number of shares (or units) Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs(a) (dollars in millions) October 1 through October 31 4,329 $ 22.82 — $ 601.8 November 1 through November 30 1,039,699 26.09 1,039,309 574.7 December 1 through December 31 1,893,755 27.94 1,892,572 521.8 Total 2,937,783 27.28 2,931,881 521.8 _________________ (a) In May 2011, the Company announced a securities repurchase program.
The stock performance shown in this graph represents past performance and should not be considered an indication of future performance of CNO's common stock. 50 Table of Co n t e n t s *$100 invested on December 31, 2019 in stock or index, including reinvestment of dividends. 12/19 12/20 12/21 12/22 12/23 12/24 CNO Financial Group, Inc. $ 100.00 $ 125.99 $ 137.98 $ 135.77 $ 169.88 $ 231.28 S&P Life & Health Insurance Index 100.00 90.52 123.73 136.53 142.87 171.87 S&P MidCap 400 Index 100.00 113.66 141.80 123.28 143.54 163.54 51 Table of Co n t e n t s ISSUER PURCHASES OF EQUITY SECURITIES Period (in 2024) Total number of shares (or units) Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs(a) (dollars in millions) October 1 through October 31 924,471 $ 35.02 923,066 $ 299.5 November 1 through November 30 419,482 38.16 419,418 283.5 December 1 through December 31 1,136,209 38.14 1,134,898 240.3 Total 2,480,162 36.98 2,477,382 240.3 _________________ (a) In May 2011, the Company announced a securities repurchase program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

167 edited+46 added−41 removed115 unchanged
Income from insurance products is the sum of the insurance margins of the annuity, health and life product lines, less expenses allocated to the insurance lines. It excludes the income from our fee income business, investment income not allocated to product lines, net expenses not allocated to product lines (primarily holding company expenses) and income taxes.
Income from insurance products is the sum of the insurance margins of the annuity, health and life product lines, less expenses allocated to the insurance lines. It excludes the income from our fee income business, investment income not allocated to product lines, net expenses not allocated to product lines (primarily holding company expenses) and income taxes.
We estimated these payments based on our historical experience and our expectation of future payment patterns which is consistent with the assumptions used in our reserve calculations for these blocks of business. • The average interest rate we assumed would be credited to our total insurance liabilities (excluding interest rate bonuses for the first policy year only and excluding the effect of credited rates attributable to variable or fixed indexed products) over the term of the contracts was 4.4 percent.
We estimated these payments based on our historical experience and our expectation of future payment patterns which is consistent with the assumptions used in our reserve calculations for these blocks of business. • The average interest rate we assumed would be credited to our total insurance liabilities (excluding interest rate bonuses for the first policy year only and excluding the effect of credited rates attributable to variable or fixed indexed products) over the term of the contracts was 4.3 percent.
Such 4.4 percent rate includes interest credited to annuity and universal life products as well as the rates assumed in our calculations of reserves for health and traditional life products which are set based on investment yields at policy issuance and are locked-in in accordance with current accounting requirements. Refer to "Part 1 - Item 1A.
Such 4.3 percent rate includes interest credited to annuity and universal life products as well as the rates assumed in our calculations of reserves for health and traditional life products which are set based on investment yields at policy issuance and are locked-in in accordance with current accounting requirements. Refer to "Part 1 - Item 1A.
At December 31, 2023, the carrying value of the FHLB common stock was $94.6 million. As of December 31, 2023, collateralized borrowings from the FHLB totaled $2.2 billion and the proceeds were used to purchase matched variable rate fixed maturity securities. The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet.
At December 31, 2024, the carrying value of the FHLB common stock was $94.6 million. As of December 31, 2024, collateralized borrowings from the FHLB totaled $2.2 billion and the proceeds were used to purchase matched variable rate fixed maturity securities. The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet.
Our RBC ratio at December 31, 2023, exceeded our targeted statutory RBC ratio of 375 percent and the minimum 350 percent that is reflected in our risk appetite statement that we share and discuss with rating agencies and insurance regulators. We believe that the 375 percent RBC ratio target continues to adequately support our financial strength and credit ratings.
Our RBC ratio at December 31, 2024, exceeded our targeted statutory RBC ratio of 375 percent and the minimum 350 percent that is reflected in our risk appetite statement that we share and discuss with rating agencies and insurance regulators. We believe that the 375 percent RBC ratio target continues to adequately support our financial strength and credit ratings.
(b) Includes projected interest payments based on interest rates, as applicable, as of December 31, 2023. Refer to the note to the consolidated financial statements entitled "Notes Payable - Direct Corporate Obligations" for additional information on notes payable. (c) These borrowings represent collateralized borrowings from the FHLB and projected interest payments on such borrowings.
(b) Includes projected interest payments based on interest rates, as applicable, as of December 31, 2024. Refer to the note to the consolidated financial statements entitled "Notes Payable - Direct Corporate Obligations" for additional information on notes payable. (c) These borrowings represent collateralized borrowings from the FHLB and projected interest payments on such borrowings.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS. In this section, we review the consolidated financial condition of CNO and its consolidated results of operations for the years ended December 31, 2023, 2022 and 2021 and, where appropriate, factors that may affect future financial performance.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS. In this section, we review the consolidated financial condition of CNO and its consolidated results of operations for the years ended December 31, 2024, 2023 and 2022 and, where appropriate, factors that may affect future financial performance.
When recognizing an allowance associated with a credit loss, the cost basis is not adjusted. When we determine a security is uncollectable, the remaining amortized cost will be written off. In determining the credit loss component, we discount the estimated cash flows on a security by security basis.
When recognizing an allowance associated with a credit loss, the cost basis is not adjusted. When we determine a security is uncollectible, the remaining amortized cost will be written off. In determining the credit loss component, we discount the estimated cash flows on a security by security basis.
We consider the impact of macroeconomic conditions on inputs used to measure the amount of credit loss. For most structured securities, cash flow estimates are based on bond-specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity, prepayment speeds and structural support, including overcollateralization, excess spread, subordination and guarantees.
We consider the impact of macroeconomic conditions on inputs used to measure the amount of credit loss. For most structured securities, cash flow estimates are based on bond-specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity, prepayment speeds and structural support, including over-collateralization, excess spread, subordination and guarantees.
Our estimates of future taxable income are based on evidence we consider to be objectively verifiable. At December 31, 2023, our projection of future taxable income for purposes of determining the valuation allowance is based on our estimates of such future taxable income through the date our NOLs expire.
Our estimates of future taxable income are based on evidence we consider to be objectively verifiable. At December 31, 2024, our projection of future taxable income for purposes of determining the valuation allowance is based on our estimates of such future taxable income through the date our NOLs expire.
Future regulatory changes made by the BMA may impact the capital efficiency of the reinsurance structure and could require the holding company to contribute additional capital to CNO Bermuda Re or Bankers Life to recapture the ceded business.
Future regulatory changes made by the BMA or other events may impact the capital efficiency of the reinsurance structure and could require the holding company to contribute additional capital to CNO Bermuda Re or Bankers Life to recapture the ceded business.
During 2023, the financial statements of three of our U.S. based insurance subsidiaries prepared in accordance with statutory accounting practices prescribed or permitted by regulatory authorities reflected asset adequacy or premium deficiency reserves.
During 2024, the financial statements of three of our U.S. based insurance subsidiaries prepared in accordance with statutory accounting practices prescribed or permitted by regulatory authorities reflected asset adequacy or premium deficiency reserves.
Many of our products include surrender charges, market interest rate adjustments or other features to encourage persistency; however, at December 31, 2023, approximately $4.4 billion of our total insurance liabilities could be surrendered by the policyholder without penalty. Finally, changes in interest rates can have significant effects on our investment portfolio.
Many of our products include surrender charges, market interest rate adjustments or other features to encourage persistency; however, at December 31, 2024, approximately $3.4 billion of our total insurance liabilities could be surrendered by the policyholder without penalty. Finally, changes in interest rates can have significant effects on our investment portfolio.
Management believes this information helps provide a better understanding of the business and a more meaningful analysis of the results of our insurance product lines. Net investment income is allocated to the product lines using the book yield of investments backing the block of business, which is applied to the average insurance liabilities for the block in each period.
Management believes this information helps provide an additional understanding of the business and a more meaningful analysis of the results of our insurance product lines. Net investment income is allocated to the product lines using the book yield of investments backing the block of business, which is applied to the average insurance liabilities for the block in each period.
In addition, we also review and update our assumptions on a more frequent basis to the extent current conditions or circumstances warrant changes that could be significant to our operating results. The impacts of these unlocking exercises have had a significant impact on our earnings.
In addition, we also review and update our assumptions on a more frequent basis to the extent current conditions or circumstances warrant changes that could be significant to our operating results. The impacts of the review have had a significant impact on our earnings.
Investment income not allocated to product lines represents net investment income less: (i) equity returns credited to policyholder account balances; (ii) the investment income allocated to our product lines; (iii) interest expense 49 Table of Contents on notes payable and investment borrowings; (iv) expenses related to the funding agreement-backed note ("FABN") program; and (v) certain expenses related to benefit plans that are offset by special-purpose investment income; plus (vi) the impact of annual option forfeitures related to fixed indexed annuity surrenders.
Investment income not allocated to product lines represents net investment income less: (i) equity returns credited to policyholder account balances; (ii) the investment income allocated to our product lines; (iii) interest expense on notes payable, investment borrowings and financing arrangements; (iv) expenses related to the funding agreement-backed note ("FABN") program; and (v) certain expenses related to benefit plans that are offset by special-purpose investment income; plus (vi) the impact of annual option forfeitures related to fixed indexed annuity surrenders.
Management believes insurance product margin and income from insurance products help provide a better understanding of the business and a more meaningful analysis of the results of our insurance product lines. We market our products through the Consumer and Worksite Divisions that reflect the customers served by the Company.
Management believes insurance product margin and income from insurance products help provide an additional understanding of the business and a more meaningful analysis of the results of our insurance product lines. We market our products through the Consumer and Worksite Divisions that reflect the customers served by the Company.
If we intend to sell an impaired fixed maturity security, available for sale, or identify an impaired fixed maturity security, available for sale, for which is it more likely than not we will be required to sell before anticipated recovery, the 52 Table of Contents difference between the fair value and the amortized cost is included in net investment gains (losses) and the fair value becomes the new amortized cost.
If we intend to sell an impaired fixed maturity security, available for sale, or identify an impaired fixed maturity security, available for sale, for which is it more likely than not we will be required to sell before anticipated recovery, the difference between the fair value and the amortized cost is included in net investment gains (losses) and the fair value becomes the new amortized cost.
The most significant impacts related to supplemental health and Medicare supplement products which were favorably (unfavorably) impacted by $41.9 million and $(10.6) million, respectively. The primary supplemental health changes related to lower morbidity and higher surrender assumptions. The primary Medicare supplement changes related to higher near-term morbidity and higher persistency assumptions.
The most significant impacts related to supplemental health and Medicare supplement products which were favorably (unfavorably) impacted by $41.9 million and $(10.6) million, respectively. The primary supplemental health changes related to lower morbidity and higher surrender assumptions.
We cannot be assured that the regulators will not seek to assert greater supervision and control over our insurance subsidiaries' businesses and financial affairs. Our estimated consolidated statutory RBC ratio of our U.S. based insurance subsidiaries was 402 percent at December 31, 2023, compared to 384 percent at December 31, 2022.
We cannot be assured that the regulators will not seek to assert greater supervision and control over our insurance subsidiaries' businesses and financial affairs. Our estimated consolidated statutory RBC ratio of our U.S. based insurance subsidiaries was 383 percent at December 31, 2024, compared to 402 percent at December 31, 2023.
During 2023, 2022 and 2021, we recognized an increase (decrease) in earnings of $(3.5) million, $48.9 million and $8.9 million, respectively, for the mark-to-market change in the agent deferred compensation plan liability which was impacted by changes in the underlying actuarial assumptions used to value the liability.
During 2024, 2023 and 2022, we recognized an increase (decrease) in earnings of $6.6 million, $(3.5) million and $48.9 million, respectively, for the mark-to-market change in the agent deferred compensation plan liability which was impacted by changes in the underlying actuarial assumptions used to value the liability.
Fluctuations by product line are discussed in greater detail in the narratives that follow. 60 Table of Contents Total allocated and unallocated expenses are summarized in the table below. Expenses not allocated to product lines include certain significant items listed in the table below.
Fluctuations by product line are discussed in greater detail in the narratives that follow.Total allocated and unallocated expenses are summarized in the table below. Expenses not allocated to product lines include certain significant items listed in the table below.
Such estimates are subject to numerous risks and uncertainties and the extent to which actual impacts differ from the assumptions used in our deferred tax valuation model. Based on our assessment, we have concluded that it is more likely than not that all our deferred tax assets of $937.1 million will be realized through future taxable earnings.
Such estimates are subject to numerous risks and uncertainties and the extent to which actual impacts differ from the assumptions used in our deferred tax valuation model. Based on our assessment, we have concluded that it is more likely than not that all our net deferred tax assets of $791.4 million will be realized through future taxable earnings.
Pursuant to the CLMA, CDOC will contribute funds to CNO Bermuda Re in the event: (i) CNO Bermuda Re's statutory economic capital and surplus is less than 150 percent of its ECR at the end of any calendar quarter; or (ii) CNO Bermuda Re's liquid assets are insufficient to meet its contractual obligations to ceding insurers, in each case, unless Bankers Life has provided notice of recapture pursuant to the terms of the Reinsurance Agreement.
Pursuant to the CLMA between CNO Bermuda Re and CDOC, CDOC will contribute funds to CNO Bermuda Re in the event: (i) CNO Bermuda Re's statutory economic capital and surplus is less than 150 percent of its ECR at the end of any calendar quarter; or (ii) CNO Bermuda Re's liquid assets are insufficient to meet its contractual obligations to ceding insurers, in each case, unless Bankers Life has provided notice of recapture pursuant to the terms of a modified coinsurance agreement between it and CNO Bermuda Re.
INVESTMENTS Our investment strategy is to: (i) provide largely stable investment income from a diversified high quality fixed income portfolio; (ii) mitigate the effect of changing interest rates through active asset/liability management; (iii) provide liquidity to meet our cash obligations to policyholders and others; (iv) maximize total return through active strategic asset allocation and investment management, while managing the capital efficiency of the portfolio; and (v) use outside managers in specialized investment classes to add value to our overall strategy.
INVESTMENTS Our investment strategy is to: (i) provide largely stable investment income from a diversified high quality fixed income portfolio; (ii) mitigate the effect of changing interest rates through active asset/liability management; (iii) provide liquidity to meet our cash obligations to policyholders and others; (iv) manage capital efficiency through active strategic asset allocation and investment management; and (v) use outside managers in specialized investment classes to add value to our overall strategy.
Free cash flow is a measure of holding company liquidity and is calculated as: (i) dividends, management fees and surplus debenture interest payments received from our subsidiaries; plus (ii) earnings on corporate investments; less (iii) interest expense, corporate expenses and net tax payments. In 2023, we generated $311 million of such free cash flow.
Free cash flow is a measure of holding company liquidity and is calculated as: (i) dividends, management fees and surplus debenture interest payments received from our subsidiaries; plus (ii) earnings on corporate investments; less (iii) interest expense, corporate expenses and net tax payments. In 2024, we generated $284.3 million of such free cash flow.
The 64 Table of Contents cash value rider is similar to the return of premium rider, but also provides for payment of a graded portion of the return of premium benefit if the policy terminates before the return of premium benefit is earned.
The cash value rider is similar to the return of premium rider, but also provides for payment of a graded portion of the return of premium benefit if the policy terminates before the return of premium benefit is earned.
As the policies age, insurance policy benefits will typically increase, but the increase in benefits will be partially offset by investment income earned on the accumulated assets. Margin from Medicare supplement business was $116.9 million in 2023 compared to $151.0 million in 2022 and $162.5 million in 2021.
As the policies age, insurance policy benefits will typically increase, but the increase in benefits will be partially offset by investment income earned on the accumulated assets. Margin from Medicare supplement business was $113.9 million in 2024 compared to $116.9 million in 2023 and $151.0 million in 2022.
Net insurance liabilities for the purpose of allocating investment income to product lines are equal to: (i) policyholder account balances for annuity products; (ii) total reserves before the fair value adjustments reflected in accumulated other comprehensive income (loss), if applicable, for all other products; less (iii) amounts related to reinsurance business; (iv) deferred acquisition costs; (v) the present value of future profits; and (vi) the value of unexpired options credited to insurance liabilities.
Net insurance liabilities for the purpose of allocating investment income to product lines are equal to: (i) policyholder account values for interest sensitive products; (ii) total reserves before the fair value adjustments reflected in accumulated other comprehensive income (loss), if applicable, for all other products; less (iii) amounts related to reinsured business; (iv) deferred acquisition costs; (v) the present value of future profits; and (vi) the value of unexpired options credited to insurance liabilities.
Net insurance liabilities for the purpose of allocating investment income to product lines are equal to: (i) policyholder account balances for annuity products; (ii) total reserves before the fair value adjustments reflected in accumulated other comprehensive income (loss), if applicable, for all other products; less (iii) amounts related to reinsurance business; (iv) deferred acquisition costs; (v) the present value of future profits; and (vi) the value of unexpired options credited to insurance liabilities.
Net insurance liabilities for the purpose of allocating investment income to product lines are equal to: (i) policyholder account values for interest sensitive products; (ii) total reserves before the fair value adjustments reflected in accumulated other comprehensive income (loss), if applicable, for all other products; less (iii) amounts related to reinsured business; (iv) deferred acquisition costs; (v) the present value of future profits; and (vi) the value of unexpired options credited to insurance liabilities.
We recognize the mark-to-market change in the estimated value of this liability through earnings as assumptions change. During 2023, 2022 and 2021, we recognized an increase (decrease) in earnings of $(29.9) million, $440.2 million and $186.8 million, respectively, resulting from changes in the fair value of embedded derivative liabilities and MRBs related to our fixed indexed annuities.
We recognize the mark-to-market change in the estimated value of this liability through earnings as assumptions change. During 2024, 2023 and 2022, we recognized an increase (decrease) in earnings of $24.7 million, $(29.9) million and $440.2 million, respectively, resulting from changes in the fair value of embedded derivative liabilities and MRBs related to our fixed indexed annuities.
The following table sets forth the aggregate amount of dividends (net of capital contributions) and other distributions that our insurance subsidiaries paid to our non-insurance subsidiaries in each of the last three fiscal years (dollars in millions): Years ended December 31, 2023 2022 2021 Dividends (net of contributions) from insurance subsidiaries $ 227.1 $ 129.0 $ 328.3 Surplus debenture interest 82.0 58.8 55.4 Fees for services provided pursuant to service agreements 116.1 124.0 117.8 Total dividends and other distributions paid by insurance subsidiaries $ 425.2 $ 311.8 $ 501.5 The ability of our U.S. based insurance subsidiaries to pay dividends is subject to state insurance department regulations and is based on the financial statements of our insurance subsidiaries prepared in accordance with statutory accounting practices prescribed or permitted by regulatory authorities, which differ from GAAP.
The following table sets forth the aggregate amount of dividends (net of capital contributions) and other distributions that our insurance subsidiaries paid to our non-insurance subsidiaries in each of the last three fiscal years (dollars in millions): Years ended December 31, 2024 2023 2022 Dividends (net of contributions) from insurance subsidiaries $ 129.0 $ 227.1 $ 129.0 Surplus debenture interest 84.4 82.0 58.8 Fees for services provided pursuant to service agreements 119.7 116.1 124.0 Total dividends and other distributions paid by insurance subsidiaries $ 333.1 $ 425.2 $ 311.8 The ability of our U.S. based insurance subsidiaries to pay dividends is subject to state insurance department regulations and is based on the financial statements of our insurance subsidiaries prepared in accordance with statutory accounting practices prescribed or permitted by regulatory authorities, which differ from GAAP.
However, insurance regulators may prohibit payments by our insurance subsidiaries to parent companies if they determine that such payments could be adverse to our policyholders or contractholders.
However, insurance regulators may prohibit payments by our insurance subsidiaries to parent companies if they determine that such payments could be adverse to our policyholders or contract holders.
Over the last several years, we have experienced a shift in the sale of Medicare supplement policies to the sale of Medicare Advantage policies. We receive fee income when Medicare Advantage policies of other providers are sold, which is recorded in our Fee income segment.
In recent years, we have experienced a shift in the sale of Medicare supplement policies to the sale of Medicare Advantage policies. We receive fee income when Medicare Advantage policies of other providers are sold, which is recorded in our Fee income segment.
As of December 31, 2023, approximately 13 percent of our insurance liabilities had interest rates that may be reset annually; 48 percent had a fixed explicit interest rate for the duration of the contract; 36 percent are fixed indexed products where the income earned is subject to a participation rate that typically may be changed annually; and the remainder had no explicit interest rates.
As of December 31, 2024, approximately 13 percent of our insurance liabilities had interest rates that may be reset annually; 44 percent had a fixed explicit interest rate for the duration of the contract; 39 percent are fixed indexed products where the income earned is subject to a participation rate that typically may be changed annually; and the remainder had no explicit interest rates.
The amount and timing of future share repurchases (if any) will be based on business and market conditions and other factors including, but not limited to, available free cash flow, the current price of our common stock and investment opportunities. In 2023, we repurchased 6.6 million shares of common stock for $165.1 million under our securities repurchase program.
The amount and timing of future share repurchases (if any) will be based on business and market conditions and other factors including, but not limited to, available free cash flow, the current price of our common stock and investment opportunities. In 2024, we repurchased 8.9 million shares of common stock for $281.6 million under our securities repurchase program.
Net investment income and interest credited exclude the change in market values of the underlying options supporting the fixed indexed annuity products and corresponding offsetting amount credited to policyholder account balances. Such amounts were $118.3 million, $(181.3) million and $195.5 million in 2023, 2022 and 2021, respectively.
Net investment income and interest credited exclude the change in market values of the underlying options supporting the fixed indexed annuity products and corresponding offsetting amount credited to policyholder account balances. Such amounts were $231.8 million, $118.3 million and $(181.3) million in 2024, 2023 and 2022, respectively.
(d) These borrowings represent the securities issued by VIEs and include projected interest payments based on interest rates, as applicable, as of December 31, 2023. 78 Table of Contents (e) Includes benefits expected to be paid pursuant to our deferred compensation plan and postretirement plans based on numerous actuarial assumptions and interest credited at 5.00 percent.
(d) These borrowings represent the securities issued by VIEs and include projected interest payments based on interest rates, as applicable, as of December 31, 2024. (e) Includes benefits expected to be paid pursuant to our deferred compensation plan and postretirement plans based on numerous actuarial assumptions and interest credited at 5.50 percent.
The following tables summarize the impacts of our comprehensive annual actuarial reviews in 2023, 2022 and 2021 (dollars in millions): Insurance policy Line of business benefits 2023 Fixed indexed annuities $ 9.4 Other annuities 3.5 Supplemental health 41.9 Medicare supplement (10.6) Long-term care (9.0) Traditional life (5.2) Interest-sensitive life 3.9 Favorable impact on pre-tax operating income $ 33.9 2022 Fixed indexed annuities $ (3.2) Supplemental health 1.9 Long-term care 16.4 Traditional life (13.0) Interest-sensitive life (1.4) Favorable impact on pre-tax operating income $ .7 2021 Fixed indexed annuities $ (.7) Supplemental health 1.5 Medicare supplement 6.0 Long-term care (.4) Traditional life (2.5) Interest-sensitive life (.9) Favorable impact on pre-tax operating income $ 3.0 Summary of Operating Results: Net operating income was $356.1 million in 2023, compared to $360.4 million in 2022 and $400.4 million in 2021.
The following tables summarize the impacts of our comprehensive annual actuarial reviews on our operating income for the years ended December 31, 2024, 2023 and 2022 (dollars in millions): Insurance policy benefits Line of business 2024 2023 2022 Fixed indexed annuities $ 36.2 $ 9.4 $ (3.2) Other annuities — 3.5 — Supplemental health 0.3 41.9 1.9 Medicare supplement (9.4) (10.6) — Long-term care 0.9 (9.0) 16.4 Traditional life (4.5) (5.2) (13.0) Interest-sensitive life 3.8 3.9 (1.4) Favorable impact on pre-tax operating income $ 27.3 $ 33.9 $ 0.7 Summary of Operating Results: Net operating income was $429.3 million in 2024, compared to $356.1 million in 2023 and $360.4 million in 2022.
The return of premium rider generally provides that after a policy has been inforce for a specified number of years or upon the policyholder reaching a specified age, we will pay to the policyholder, or a beneficiary under the policy, the aggregate amount of all premiums paid under the policy, without interest, less the aggregate amount of all claims incurred under the policy.
The return of premium rider generally provides that after a policy has been inforce for a 69 Table of Co n t e n t s specified number of years or upon the policyholder reaching a specified age, we will pay to the policyholder, or a beneficiary under the policy, the aggregate amount of all premiums paid under the policy, without interest, less the aggregate amount of all claims incurred under the policy.
General account investments exclude the value of options. 2023 2022 2021 (dollars in millions) Weighted average investments at amortized cost allocated to product lines $ 20,567.5 $ 19,987.5 $ 19,098.8 Allocated investment income 957.8 915.2 905.6 Average yield on allocated investments 4.66 % 4.58 % 4.74 % Insurance statutes regulate the types of investments that our insurance subsidiaries are permitted to make and limit the amount of funds that may be used for any one type of investment.
General account investments exclude the value of options. 2024 2023 2022 (dollars in millions) Weighted average investments at amortized cost allocated to product lines $ 21,085.8 $ 20,567.5 $ 19,987.5 Allocated investment income 1,011.8 957.8 915.2 Average yield on allocated investments 4.80 % 4.66 % 4.58 % Insurance statutes regulate the types of investments that our insurance subsidiaries are permitted to make and limit the amount of funds that may be used for any one type of investment.
We estimate that our fixed maturity securities and short-term investments would decline in fair value by approximately $650 million if interest rates were to increase by 10 percent from their levels at December 31, 2023.
We estimate that our fixed maturity securities and short-term investments would decline in fair value by $729.6 million if interest rates were to increase by 10 percent from their levels at December 31, 2024.
Such non-deferred commissions are included in other operating costs and expenses on the consolidated statement of operations. 58 Table of Contents General: CNO is the top tier holding company for a group of insurance companies that develop, market and administer health insurance, annuity, individual life insurance and other insurance and financial services products.
Such non-deferred commissions are included in other operating costs and expenses on the consolidated statement of operations. 63 Table of Co n t e n t s General: CNO is the top tier holding company for a group of insurance companies that develop, market and administer health insurance, annuity, individual life insurance and other insurance and financial services products.
Such earnings are not indicative of, and are unrelated to, the Company's underlying fundamentals. 68 Table of Contents PREMIUM COLLECTIONS In accordance with GAAP, insurance policy income in our consolidated statement of operations consists of premiums earned for traditional insurance policies that have life contingencies or morbidity features.
Such earnings are not indicative of, and are unrelated to, the Company's underlying fundamentals. 73 Table of Co n t e n t s PREMIUM COLLECTIONS In accordance with GAAP, insurance policy income in our consolidated statement of operations consists of premiums earned for traditional insurance policies that have life contingencies or morbidity features.
Refer to "- Liquidity for Insurance Operations" above regarding the CLMA and limitations on CNO Bermuda Re's ability to pay dividends or other capital distributions to CDOC. 81 Table of Contents At December 31, 2023, CNO, CDOC and our other non-insurance subsidiaries held $255.6 million of unrestricted cash and cash equivalents which was above our minimum target level of $150 million.
Refer to "- Liquidity for Insurance Operations" above regarding the CLMA and limitations on CNO Bermuda Re's ability to pay dividends or other capital distributions to CDOC. At December 31, 2024, CNO, CDOC and our other non-insurance subsidiaries held $372.5 million of unrestricted cash and cash equivalents which was above our minimum target level of $150 million.
At December 31, 2023, we held investments with an amortized cost of $787.6 million and an estimated fair value of $768.6 million related to VIEs that we are required to consolidate. The investment portfolio held by the VIEs is primarily comprised of commercial bank loans, the borrowers for which are almost entirely rated below-investment grade.
At December 31, 2024, we held investments with an amortized cost of $437.0 million and an estimated fair value of $432.3 million related to VIEs that we are required to consolidate. The investment portfolio held by the VIEs is primarily comprised of commercial bank loans, the borrowers for which are almost entirely rated below-investment grade.
The increase in net insurance liabilities results in higher net investment income allocated. The earned yield was 4.39 percent in 2023, up from 4.25 percent in 2022, reflecting higher portfolio yields, and down slightly from 4.42 percent in 2021.
The increase in net insurance liabilities results in higher net investment income allocated. The earned yield was 4.66 percent in 2024, up from 4.39 percent in 2023 and 4.25 percent in 2022, reflecting higher portfolio yields.
The weighted average crediting rates at December 31, 2023, related to such annuity and universal life account values, that were at the minimum guaranteed crediting rate were 2.21 percent and 4.0 percent, respectively.
The weighted average crediting rates at December 31, 2024, related to such annuity and universal life account values, that were at the minimum guaranteed crediting rate were 2.66 percent and 4.17 percent, respectively.
We expect our expense ratio to be in the range of 18.8 percent to 19.2 percent, with a quarterly trend similar to 2023, starting on the high end in the first quarter of the year and then grading down throughout the year.
We expect our expense ratio to be in the range of 19.0 percent to 19.4 percent, with a quarterly trend similar to 2024, starting on the high end in the first quarter of the year and then grading down throughout the year.
We carry trading securities at estimated fair value; changes in fair value are reflected in the statement of operations. Our trading securities include: (i) investments purchased with the intent of selling in the near term to generate income; and (ii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option.
Our trading securities include: (i) investments purchased with the intent of selling in the near term to generate income; and (ii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option.
Investment Income Not Allocated to Product Lines (dollars in millions): 2023 2022 2021 Net investment income $ 1,499.7 $ 1,015.9 $ 1,420.7 Allocated to product lines: Annuity (516.3) (480.0) (468.9) Health (296.7) (293.3) (293.5) Life (144.8) (141.9) (143.2) Equity returns credited to policyholder account balances (131.5) 205.3 (219.8) Amounts allocated to product lines and credited to policyholder account balances (1,089.3) (709.9) (1,125.4) Impact of annual option forfeitures related to fixed indexed annuity surrenders 7.1 (1.0) 15.2 Amount related to variable interest entities and other non-operating items (74.8) (48.5) (30.5) Interest expense on debt (62.7) (62.5) (62.4) Interest expense on financing arrangements (2.4) — — Interest expense on investment borrowings from FHLB (104.7) (33.5) (9.8) Expenses related to FABN program (30.4) (30.0) (2.3) Less amounts credited to deferred compensation plans (offsetting investment income) (22.3) 13.4 (16.6) Total adjustments (290.2) (162.1) (106.4) Investment income not allocated to product lines $ 120.2 $ 143.9 $ 188.9 The above table reconciles net investment income to investment income not allocated to product lines.
Investment Income Not Allocated to Product Lines (dollars in millions): 2024 2023 2022 Net investment income $ 1,748.8 $ 1,499.7 $ 1,015.9 Allocated to product lines: Annuity (565.0) (516.3) (480.0) Health (299.6) (296.7) (293.3) Life (147.1) (144.8) (141.9) Equity returns credited to policyholder account balances (253.7) (131.5) 205.3 Amounts allocated to product lines and credited to policyholder account balances (1,265.4) (1,089.3) (709.9) Impact of annual option forfeitures related to fixed indexed annuity surrenders 26.0 7.1 (1.0) Amount related to variable interest entities and other non-operating items (33.5) (74.8) (48.5) Interest expense on debt (91.8) (62.7) (62.5) Interest expense on financing arrangements (4.7) (2.4) — Interest expense on investment borrowings from FHLB (123.2) (104.7) (33.5) Expenses related to FABN program (64.0) (30.4) (30.0) Less amounts credited to deferred compensation plans (offsetting investment income) (24.3) (22.3) 13.4 Total adjustments (315.5) (290.2) (162.1) Investment income not allocated to product lines $ 167.9 $ 120.2 $ 143.9 The above table reconciles net investment income to investment income not allocated to product lines.
Our commercial mortgage loan portfolio is primarily comprised of large commercial mortgage loans. Approximately 16 percent, 8 percent, 6 percent and 6 percent of the commercial mortgage loan balance were on properties located in California, Maryland, Wisconsin and Indiana, respectively. No other state comprised greater than five percent of the mortgage loan balance.
Our commercial mortgage loan portfolio is primarily comprised of large commercial mortgage loans. Approximately 17 percent, 7 percent, 6 percent, 6 percent, and 5 percent of the commercial mortgage loan balance were on properties located in California, Maryland, Wisconsin, Utah and Georgia, respectively. No other state comprised greater than five percent of the mortgage loan balance.
Total asset adequacy and premium deficiency reserves for Bankers Life, Washington National and Bankers Conseco Life Insurance Company were $70.0 million, $134.5 million and $34.5 million, respectively, at December 31, 2023.
Total asset adequacy and premium deficiency reserves for Bankers Life, Washington National and Bankers Conseco Life Insurance Company were $90.0 million, $51.0 million and $34.5 million, respectively, at December 31, 2024.
In addition, the impact of actual adjustments would reflect the net effect of all changes in assumptions during the period. 55 Table of Contents Change in assumptions Estimated adjustment to income before income taxes based on revisions to certain assumptions (dollars in millions) Annuities Fixed indexed and fixed interest annuity products: 5% increase to assumed mortality $ 3 5% decrease to assumed mortality (4) 10% increase to assumed surrender rate (3) 10% decrease to assumed surrender rate 2 50 basis point increase in interest rates (a) 68 50 basis point decrease in interest rates (a) (75) Other annuities: 5% increase to assumed mortality 5 5% decrease to assumed mortality (5) Health Medicare supplement: 5% increase to assumed mortality 2 5% decrease to assumed mortality (2) 10% increase to assumed lapse rate 3 10% decrease to assumed lapse rate (3) 10% increase to assumed morbidity (49) 10% decrease to assumed morbidity 48 Supplemental health: 5% increase to assumed mortality 8 5% decrease to assumed mortality (9) 10% increase to assumed lapse rate 20 10% decrease to assumed lapse rate (20) 10% increase to assumed morbidity (21) 10% decrease to assumed morbidity 21 Long-term care: 5% increase to assumed mortality 32 5% decrease to assumed mortality (34) 10% increase to assumed lapse rate 20 10% decrease to assumed lapse rate (20) 10% increase to assumed morbidity (75) 10% decrease to assumed morbidity 68 Life Traditional life: 5% increase to assumed mortality (34) 5% decrease to assumed mortality 35 10% increase to assumed lapse rate 6 10% decrease to assumed lapse rate (6) Interest-sensitive life products: 5% increase to assumed mortality (6) 5% decrease to assumed mortality 6 10% increase to assumed lapse rate 1 10% decrease to assumed lapse rate (1) _____________________ (a) The estimated impact of the hypothetical 50 basis point increase or decrease in interest rates related to our fixed indexed and fixed interest annuity products would be reflected in our pre-tax non-operating earnings. 56 Table of Contents The following summarizes the persistency of our major blocks of insurance business summarized by line of business: Years ended December 31, 2023 2022 2021 Annuity: Fixed indexed annuities (1) 89.7 % 90.9 % 90.9 % Fixed interest annuities (1) 83.4 % 83.9 % 84.8 % Other annuities (2) 97.2 % 95.7 % 96.8 % Health: Supplemental health (3) 88.5 % 88.2 % 88.8 % Medicare supplement (3) 84.3 % 82.1 % 82.6 % Long-term care (3) 90.5 % 91.0 % 87.7 % Life: Traditional life (3) 83.9 % 84.0 % 84.8 % Interest-sensitive life (3) 89.1 % 88.8 % 88.7 % _____________________ (1) Based on the total amount of death benefits, surrenders values and partial withdrawals divided by the average account value.
In addition, the impact of actual adjustments would reflect the net effect of all changes in assumptions during the period. 59 Table of Co n t e n t s Change in assumptions Estimated adjustment to income before income taxes based on revisions to certain assumptions (dollars in millions) Annuities Fixed indexed and fixed interest annuity products: 5% increase to assumed mortality $ 2 5% decrease to assumed mortality (2) 10% increase to assumed lapse rate (4) 10% decrease to assumed lapse rate 4 50 basis point increase in interest rates (a) 74 50 basis point decrease in interest rates (a) (80) Other annuities: 5% increase to assumed mortality 5 5% decrease to assumed mortality (5) Health Medicare supplement: 5% increase to assumed mortality 2 5% decrease to assumed mortality (2) 10% increase to assumed lapse rate 3 10% decrease to assumed lapse rate (3) 10% increase to assumed morbidity (57) 10% decrease to assumed morbidity 57 Supplemental health: 5% increase to assumed mortality 10 5% decrease to assumed mortality (11) 10% increase to assumed lapse rate 24 10% decrease to assumed lapse rate (24) 10% increase to assumed morbidity (25) 10% decrease to assumed morbidity 25 Long-term care: 5% increase to assumed mortality 34 5% decrease to assumed mortality (37) 10% increase to assumed lapse rate 21 10% decrease to assumed lapse rate (22) 10% increase to assumed morbidity (81) 10% decrease to assumed morbidity 75 Life Traditional life: 5% increase to assumed mortality (42) 5% decrease to assumed mortality 43 10% increase to assumed lapse rate 6 10% decrease to assumed lapse rate (7) Interest-sensitive life products: 5% increase to assumed mortality (5) 5% decrease to assumed mortality 6 10% increase to assumed lapse rate 1 10% decrease to assumed lapse rate (1) _____________________ (a) The estimated impact of the hypothetical 50 basis point increase or decrease in interest rates related to our fixed indexed and fixed interest annuity products would be reflected in our pre-tax non-operating earnings. 60 Table of Co n t e n t s The following summarizes the persistency of our major blocks of insurance business summarized by line of business: Years ended December 31, 2024 2023 2022 Annuity: Fixed indexed annuities (1) 88.1 % 89.7 % 90.9 % Fixed interest annuities (1) 82.9 % 83.4 % 83.9 % Other annuities (2) 90.6 % 97.2 % 95.7 % Health: Medicare supplement (3) 84.1 % 84.3 % 82.1 % Supplemental health (3) 88.0 % 88.5 % 88.2 % Long-term care (3) 91.1 % 90.5 % 91.0 % Life: Traditional life (3) 84.1 % 83.9 % 84.0 % Interest-sensitive life (3) 88.7 % 89.1 % 88.8 % _____________________ (1) Based on the total amount of death benefits, surrender values and partial withdrawals divided by the average account value.
We expect a significant improvement in net investment income not allocated to product lines, which assumes higher returns on our alternative investments.
We expect improved results in net investment income not allocated to product lines, which assumes higher returns on our alternative investments.
On November 15, 2023, Fitch upgraded the financial strength ratings of our primary insurance subsidiaries to "A" from "A-" and the outlook for these ratings is stable. An insurer rated "A", in Fitch's opinion, indicates a low expectation of ceased or interrupted payments and indicates strong capacity to meet policyholder and contract obligations.
On October 29, 2024, Fitch affirmed its "A" financial strength ratings of our primary insurance subsidiaries and the outlook for these ratings is stable. An insurer rated "A", in Fitch's opinion, indicates a low expectation of ceased or interrupted payments and indicates strong capacity to meet policyholder and contract obligations.
Further, CNO Bermuda Re may not pay any dividends or make any capital distributions to its parent and/or affiliates within the five years following the initial reinsurance transaction unless approved by the BMA.
Further, CNO Bermuda Re may not pay any dividends 85 Table of Co n t e n t s or make any capital distributions to its parent and/or affiliates within the five years following the initial reinsurance transaction unless approved by the BMA.
At December 31, 2023, the estimated duration of our fixed income securities (as modified to reflect estimated prepayments and call premiums) and the estimated duration of our insurance liabilities were approximately 8.1 years and 8.2 years, respectively.
At December 31, 2024, the estimated duration of our fixed income securities (as modified to reflect estimated prepayments and call premiums) and the estimated duration of our insurance liabilities were approximately 7.9 years and 8.4 years, respectively.
In estimating the payments we expect to make to our policyholders, we considered the following: • For products such as immediate annuities and structured settlement annuities without life contingencies, the payment obligation is fixed and determinable based on the terms of the policy. • For products such as universal life, ordinary life, long-term care, supplemental health and deferred annuities, the future payments are not due until the occurrence of an insurable event (such as death or disability) or a triggering event (such as a surrender or partial withdrawal).
As such payments are based on numerous assumptions, the actual payments may vary significantly from the amounts shown. 83 Table of Co n t e n t s In estimating the payments we expect to make to our policyholders, we considered the following: • For products such as immediate annuities and structured settlement annuities without life contingencies, the payment obligation is fixed and determinable based on the terms of the policy. • For products such as universal life, ordinary life, long-term care, supplemental health and deferred annuities, the future payments are not due until the occurrence of an insurable event (such as death or disability) or a triggering event (such as a surrender or partial withdrawal).
At December 31, 2023, the weighted average yield, computed on the cost basis of investments allocated to our product lines, was approximately 4.7 percent, and the average interest rate credited or accruing to our total insurance liabilities (excluding interest rate bonuses for the first policy year only and excluding the effect of credited rates attributable to variable or 84 Table of Contents fixed indexed products) was 4.4 percent.
At December 31, 2024, the weighted average yield, computed on the cost basis of investments allocated to our product lines, was approximately 4.8 percent, and the average interest rate credited or accruing to our total insurance liabilities (excluding interest rate bonuses for the first policy year only and excluding the effect of credited rates attributable 90 Table of Co n t e n t s to variable or fixed indexed products) was 4.3 percent.
We expect to receive regulatory approval for future dividends from our subsidiaries, but there can be no assurance that such payments will be approved or that the financial condition of our insurance subsidiaries will not change, making future approvals less likely.
We expect to receive regulatory approval for future dividends from our subsidiaries, but there can be no assurance that such payments will be approved or that the financial condition of our insurance subsidiaries will not change, making future approvals less likely. During 2024, CDOC made capital contributions of $67.0 million to its insurance subsidiaries.
During 2023, 2022 and 2021, we recognized a decrease in earnings of $6.3 million, $73.2 million and $17.4 million, respectively, due to the net change in market value of investments recognized in earnings. The change in value will fluctuate from period to period based on market conditions.
During 2024, 2023 and 2022, we recognized an increase (decrease) in earnings of $22.8 million, $(6.3) million and $(73.2) million, respectively, due to the net change in market value of investments recognized in earnings. The change in value will fluctuate from period to period based on market conditions.
Consistent with this strategy, investments in fixed maturity securities and mortgage loans made up 90 percent of our $26.1 billion investment portfolio at December 31, 2023. The remainder of the invested assets was trading securities, investments held by VIEs, equity securities, policy loans and other invested assets.
Consistent with this strategy, investments in fixed maturity securities and mortgage loans made up 91 percent of our $27.9 billion investment portfolio at December 31, 2024. The remainder of the invested assets were trading securities, investments held by VIEs, equity securities, policy loans and other invested assets.
There are six ratings above the "A-" rating of our primary insurance subsidiaries and fourteen ratings that are below that rating. Moody's most recently reviewed its "A3" financial strength ratings of our primary insurance subsidiaries on May 12, 2023. The outlook for these ratings remains stable. Moody’s financial strength ratings range from "Aaa" to "C".
There are five ratings above the "A" rating of our primary insurance subsidiaries and thirteen ratings that are below that rating. Moody's most recently reviewed its "A3" financial strength ratings of our primary insurance subsidiaries on July 10, 2024. The outlook for these ratings remains stable. Moody’s financial strength ratings range from "Aaa" to "C".
There are five ratings above the "A" rating of our primary insurance subsidiaries and thirteen ratings that are below that rating. S&P most recently reviewed its "A-" financial strength ratings of our primary insurance subsidiaries on June 23, 2023. The outlook for these ratings is stable.
There are six ratings above the "A3" rating of our primary insurance subsidiaries and fourteen ratings that are below that rating. S&P most recently reviewed its "A-" financial strength ratings of our primary insurance subsidiaries on June 4, 2024. The outlook for these ratings is stable.
Any future increase in the valuation allowance may result in additional income tax expense and reduce shareholders' equity, and such an increase could have a significant impact upon our earnings in the future.
The recognition of a valuation allowance would increase income tax expense and reduce shareholders' equity, and such an increase could have a significant impact upon our earnings in the future.
The interest-sensitive life margins excluding the impacts of the actuarial review changes previously discussed were $94.8 million, $80.9 million and $67.2 million in 2023, 2022 and 2021, respectively. The increase in margin in 2023 and 2022 reflects more favorable mortality and growth in the block due to sales in recent periods.
The interest-sensitive life margins adjusted to exclude the impacts of the annual actuarial review previously discussed were $94.1 million, $94.8 million and $80.9 million in 2024, 2023 and 2022, respectively. The increase in the adjusted margin in 2024 and 2023 compared to 2022 reflects more favorable mortality and growth in the block due to sales in recent periods.
Changes to our cash flow assumptions are recognized in the liability for future policy benefits remeasurement (gain) loss in the consolidated statement of operations.
A more detailed review of assumptions is performed annually. Changes to our cash flow assumptions are recognized in the liability for future policy benefits remeasurement (gain) loss in the consolidated statement of operations.
Our investment strategy is to maximize, over a sustained period and within acceptable parameters of quality and risk, investment income and total investment return through active strategic asset allocation and investment management.
Our investment strategy is to manage, over a sustained period and within acceptable parameters of quality and risk, capital efficiency through active strategic asset allocation and investment management.
Insurance product margin was $959.0 million, $936.5 million and $953.4 million in 2023, 2022 and 2021, respectively. Insurance product margin, excluding the impacts summarized in the table above, were $925.1 million, $935.8 million and $950.4 million in 2023, 2022 and 2021, respectively.
Insurance product margin was $1,040.0 million, $959.0 million and $936.5 million in 2024, 2023 and 2022, respectively. Insurance product margin, excluding the impacts summarized in the table above, were $1,012.7 million, $925.1 million and $935.8 million in 2024, 2023 and 2022, respectively.
Such changes are recognized in the current period as a reduction of the capitalized balances. The effect of changes in assumptions related to future mortality and lapses are recognized prospectively over the remaining contract term.
Such changes are recognized in the current period as a reduction of the capitalized balances. The effect of changes in assumptions related to future mortality and lapses are recognized prospectively over the remaining contract term. The carrying values of deferred acquisition costs are not subject to recovery testing.
Refer to the note to the consolidated financial statements entitled "Investments in Variable Interest Entities" for additional information on these investments. LIQUIDITY AND CAPITAL RESOURCES 2024 Outlook We expect operating earnings per diluted share to be in the range of $3.10 to $3.30, excluding any significant items in the year.
Refer to the note to the consolidated financial statements entitled "Investments in Variable Interest Entities" for additional information on these investments. 81 Table of Co n t e n t s LIQUIDITY AND CAPITAL RESOURCES 2025 Outlook We expect operating earnings per diluted share to be in the range of $3.70 to $3.90, excluding any significant items in the year.
However, as each of the immediate U.S. based insurance subsidiaries of CDOC has significant negative earned surplus, any dividend payments from the insurance subsidiaries require the prior approval of the director or commissioner of the applicable state insurance department. In 2023, our U.S. based insurance subsidiaries paid dividends to CDOC totaling $526.5 million.
However, as each of the immediate U.S. based insurance subsidiaries of CDOC has significant negative earned surplus, any dividend payments from the insurance subsidiaries require the prior approval of the director or commissioner of the applicable state insurance department.
Outlook We believe that the existing cash available to the holding company, the cash flows to be generated from operations and other transactions will be sufficient to allow us to meet our debt service obligations, pay corporate expenses and satisfy other financial obligations.
There are nine ratings above CNO's "Baa3" rating and eleven ratings that are below its rating. Outlook We believe that the existing cash available to the holding company, the cash flows to be generated from operations and other transactions will be sufficient to allow us to meet our debt service obligations, pay corporate expenses and satisfy other financial obligations.
We receive fee income when Medicare Advantage policies of other providers are sold, which is recorded in our Fee income segment. We continue to invest in both our Medicare supplement products and Medicare Advantage distribution to ensure we are well-positioned to meet our customers' needs and preferences. For example, we launched a new competitive Medicare supplement product in 2022.
We receive fee income when Medicare Advantage policies of other providers are sold, which is recorded in our Fee income segment. We continue to invest in both our Medicare supplement products and Medicare Advantage distribution to meet our customers' needs and preferences.
Such amount will generally fluctuate from period to period based on the level of prepayment income (including call premiums) and trading account income; the performance of our alternative investments (which are typically reported a quarter in arrears); the earnings related to the investments underlying our COLI; and the spread we earn from our FHLB investment borrowing and FABN programs. 67 Table of Contents Net Non-Operating Income (Loss): The following summarizes our net non-operating income (loss) for the three years ended December 31, 2023 (dollars in millions): 2023 2022 2021 Net realized investment gains (losses) from sales, impairments and change in allowance for credit losses $ (62.7) $ (62.2) $ 36.5 Net change in market value of investments recognized in earnings (6.3) (73.2) (17.4) Fair value changes related to agent deferred compensation plan (3.5) 48.9 8.9 Changes in fair value of embedded derivative liabilities and market risk benefits (29.9) 440.2 186.8 Other (.3) (3.9) 3.6 Net non-operating income (loss) before taxes $ (102.7) $ 349.8 $ 218.4 Net realized investment losses were $62.7 million in 2023, including the favorable change in the allowance for credit losses of $8.1 million which were recorded in earnings.
Other factors driving fluctuations include the performance of our alternative investments (which are typically reported a quarter in arrears); the earnings related to the investments underlying our COLI; the spread we earn from our FHLB investment borrowing and FABN programs; and the level of prepayment income (including call premiums) and trading account income. 72 Table of Co n t e n t s Net Non-Operating Income (Loss): The following summarizes our net non-operating income (loss) for each of the three years ended December 31, 2024 (dollars in millions): 2024 2023 2022 Net realized investment gains (losses) from sales, impairments and change in allowance for credit losses $ (72.7) $ (62.7) $ (62.2) Net change in market value of investments recognized in earnings 22.8 (6.3) (73.2) Fair value changes related to agent deferred compensation plan 6.6 (3.5) 48.9 Changes in fair value of embedded derivative liabilities and market risk benefits 24.7 (29.9) 440.2 Other (13.9) (0.3) (3.9) Net non-operating income (loss) before taxes $ (32.5) $ (102.7) $ 349.8 Net realized investment losses were $72.7 million in 2024, net of reductions in the allowance for credit losses of $9.4 million which were recorded in earnings.
The following summarizes our earnings for the three years ended December 31, 2023 (dollars in millions, except per share data): 2023 2022 2021 Insurance product margin Annuity margin $ 235.0 $ 226.9 $ 243.2 Health margin 494.3 504.4 497.6 Life margin 229.7 205.2 212.6 Total insurance product margin 959.0 936.5 953.4 Allocated expenses (599.0) (596.6) (566.5) Income from insurance products 360.0 339.9 386.9 Fee income 31.0 23.7 19.4 Investment income not allocated to product lines 120.2 143.9 188.9 Expenses not allocated to product lines (51.7) (40.8) (80.5) Operating earnings before taxes 459.5 466.7 514.7 Income tax expense on operating income (103.4) (106.3) (114.3) Net operating income (a) 356.1 360.4 400.4 Net realized investment gains (losses) from sales, impairments and change in allowance for credit losses (62.7) (62.2) 36.5 Net change in market value of investments recognized in earnings (6.3) (73.2) (17.4) Fair value changes related to agent deferred compensation plan (3.5) 48.9 8.9 Changes in fair value of embedded derivative liabilities and market risk benefits (29.9) 440.2 186.8 Other (.3) (3.9) 3.6 Net non-operating income (loss) before taxes (102.7) 349.8 218.4 Income tax expense (benefit) on non-operating income (loss) (23.1) 79.6 48.5 Net non-operating income (loss) (79.6) 270.2 169.9 Net income $ 276.5 $ 630.6 $ 570.3 Per diluted share: Net operating income $ 3.09 $ 3.06 $ 3.05 Net non-operating income (loss) (.69) 2.30 1.30 Net income $ 2.40 $ 5.36 $ 4.35 50 Table of Contents ____________ (a) Management believes that an analysis of net income applicable to common stock before: (i) net realized investment gains or losses from sales, impairments and change in allowance for credit losses, net of taxes; (ii) net change in market value of investments recognized in earnings, net of taxes; (iii) changes in fair value of embedded derivative liabilities and market risk benefits ("MRBs") related to our fixed indexed annuities, net of taxes; (iv) fair value changes related to the agent deferred compensation plan, net of taxes; (v) loss related to reinsurance transactions, net of taxes; (vi) loss on extinguishment of debt, net of taxes; (vii) changes in the valuation allowance for deferred tax assets and other tax items; and (viii) other non-operating items consisting primarily of earnings attributable to VIEs, net of taxes ("net operating income", a non-GAAP financial measure) is important to evaluate the financial performance of the company, and is a key measure commonly used in the life insurance industry.
Expenses not allocated to product lines primarily include the expenses of our corporate operations, excluding interest expense on debt. 54 Table of Co n t e n t s The following summarizes our earnings for each of the three years ended December 31, 2024 (dollars in millions, except per share data): 2024 2023 2022 Insurance product margin Annuity margin $ 274.2 $ 235.0 $ 226.9 Health margin 516.8 494.3 504.4 Life margin 249.0 229.7 205.2 Total insurance product margin 1,040.0 959.0 936.5 Allocated expenses (615.3) (599.0) (596.6) Income from insurance products 424.7 360.0 339.9 Fee income 30.0 31.0 23.7 Investment income not allocated to product lines 167.9 120.2 143.9 Expenses not allocated to product lines (71.8) (51.7) (40.8) Operating earnings before taxes 550.8 459.5 466.7 Income tax expense on operating income (121.5) (103.4) (106.3) Net operating income (a) 429.3 356.1 360.4 Net realized investment losses from sales, impairments and change in allowance for credit losses (72.7) (62.7) (62.2) Net change in market value of investments recognized in earnings 22.8 (6.3) (73.2) Fair value changes related to agent deferred compensation plan 6.6 (3.5) 48.9 Changes in fair value of embedded derivative liabilities and market risk benefits 24.7 (29.9) 440.2 Other (13.9) (0.3) (3.9) Net non-operating income (loss) before taxes (32.5) (102.7) 349.8 Income tax expense (benefit) on non-operating income (loss) (7.2) (23.1) 79.6 Net non-operating income (loss) (25.3) (79.6) 270.2 Net income $ 404.0 $ 276.5 $ 630.6 Per diluted share: Net operating income $ 3.97 $ 3.09 $ 3.06 Net non-operating income (loss) (0.23) (0.69) 2.30 Net income $ 3.74 $ 2.40 $ 5.36 __________ (a) Management believes that an analysis of net income applicable to common stock before: (i) net realized investment gains or losses from sales, impairments and the change in allowance for credit losses, net of taxes; (ii) net change in market value of investments recognized in earnings, net of taxes; (iii) changes in fair value of embedded derivative liabilities and market risk benefits ("MRBs") related to our fixed indexed annuities, net of taxes; (iv) fair value changes related to the agent deferred compensation plan, net of taxes; (v) gains or losses related to material reinsurance transactions, net of taxes; (vi) loss on extinguishment of debt, net of taxes; (vii) changes in the valuation allowance for deferred tax assets and other tax items; and (viii) other non-operating items including earnings attributable to variable interest entities, net of taxes ("net operating income," a non-GAAP financial measure) is important to evaluate the financial performance of the company, and is a key measure commonly used in the life insurance industry.
Margin from Long-term care products was $83.0 million in 2023 compared to $122.5 million in 2022 and $118.2 million in 2021. The margin excluding the impacts of the actuarial review changes previously discussed was $92.0 million, $106.1 million and $118.6 million in 2023, 2022 and 2021, respectively.
Margin from Long-term care products was $133.1 million in 2024 compared to $83.0 million in 2023 and $122.5 million in 2022. The margin adjusted to exclude the impacts of the annual actuarial review previously discussed was $132.2 million, $92.0 million and $106.1 million in 2024, 2023 and 2022, respectively.
For example, the following events could have a material adverse effect on our cash flows: • An adverse decision in pending or future litigation. • An inability to obtain rate increases on certain of our insurance products. • Worse than anticipated claims experience. • Lower than expected dividends and/or surplus debenture interest payments from our insurance subsidiaries (resulting from inadequate earnings or capital or regulatory requirements). • An inability to meet and/or maintain the covenants in our Revolving Credit Agreement. • A significant increase in policy surrender levels. • A significant increase in investment defaults. • An inability of our reinsurers to meet their financial obligations.
For example, the following events could have a material adverse effect on our cash flows: • An adverse decision in pending or future litigation. • An inability to obtain rate increases on certain of our insurance products. • Worse than anticipated claims experience. • Lower than expected dividends and/or surplus debenture interest payments from our insurance subsidiaries (resulting from inadequate earnings or capital or regulatory requirements). • An inability to meet and/or maintain the covenants in our Revolving Credit Agreement. • A significant increase in policy surrender levels. • A significant increase in investment defaults. • An inability of our reinsurers to meet their financial obligations. 84 Table of Co n t e n t s While we actively manage the relationship between the duration and cash flows of our invested assets and the estimated duration and cash flows of benefit payments arising from contract liabilities, there could be significant variations in the timing of such cash flows.
The effective tax rate for 2023, 2022 and 2021 was 22.5 percent, 22.8 percent and 22.2 percent, respectively. 61 Table of Contents Margin from Annuity Products (dollars in millions): 2023 2022 2021 Annuity margin: Fixed indexed annuities Insurance policy income $ 19.7 $ 14.5 $ 12.8 Net investment income 410.3 373.8 350.2 Insurance policy benefits (10.1) (20.0) (9.9) Interest credited (161.9) (127.5) (109.5) Amortization and non-deferred commissions (65.8) (57.4) (48.6) Margin from fixed indexed annuities $ 192.2 $ 183.4 $ 195.0 Average net insurance liabilities $ 9,337.3 $ 8,788.6 $ 7,915.7 Margin/average net insurance liabilities 2.06 % 2.09 % 2.46 % Fixed interest annuities Insurance policy income $ 1.0 $ .8 $ .8 Net investment income 83.6 83.0 93.6 Insurance policy benefits (.5) (1.1) (1.1) Interest credited (45.2) (45.7) (50.9) Amortization and non-deferred commissions (5.0) (4.6) (5.0) Margin from fixed interest annuities $ 33.9 $ 32.4 $ 37.4 Average net insurance liabilities $ 1,612.0 $ 1,700.5 $ 1,879.3 Margin/average net insurance liabilities 2.10 % 1.91 % 1.99 % Other annuities Insurance policy income $ 7.7 $ 7.8 $ 6.0 Net investment income 22.4 23.2 25.1 Insurance policy benefits (18.4) (17.2) (17.4) Interest credited (2.3) (2.3) (2.5) Amortization and non-deferred commissions (.5) (.4) (.4) Margin from other annuities $ 8.9 $ 11.1 $ 10.8 Average net insurance liabilities $ 458.8 $ 481.7 $ 506.3 Margin/average net insurance liabilities 1.94 % 2.30 % 2.13 % Total annuity margin $ 235.0 $ 226.9 $ 243.2 Average net insurance liabilities $ 11,408.1 $ 10,970.8 $ 10,301.3 Margin/average net insurance liabilities 2.06 % 2.07 % 2.36 % The favorable (unfavorable) impacts of our comprehensive annual actuarial review (reflected in insurance policy benefits) on annuity product margins are summarized below (dollars in millions): 2023 2022 2021 Fixed indexed annuities $ 9.4 $ (3.2) $ (.7) Fixed interest annuities — — — Other annuities 3.5 — — Margin, excluding impact of comprehensive annual actuarial review: Fixed indexed annuities 182.8 186.6 195.7 Fixed interest annuities 33.9 32.4 37.4 Other annuities 5.4 11.1 10.8 62 Table of Contents Margin from fixed indexed annuities was $192.2 million in 2023 compared to $183.4 million in 2022 and $195.0 million in 2021.
The effective tax rate for 2024, 2023 and 2022 was 22.0 percent, 22.5 percent and 22.8 percent, respectively. 66 Table of Co n t e n t s Margin from Annuity Products (dollars in millions): 2024 2023 2022 Annuity margin: Fixed indexed annuities Insurance policy income $ 28.0 $ 19.7 $ 14.5 Net investment income 458.7 410.3 373.8 Insurance policy benefits 14.2 (10.1) (20.0) Interest credited (205.1) (161.9) (127.5) Amortization and non-deferred commissions (80.0) (65.8) (57.4) Margin from fixed indexed annuities $ 215.8 $ 192.2 $ 183.4 Average net insurance liabilities $ 9,848.9 $ 9,337.3 $ 8,788.6 Margin/average net insurance liabilities 2.19 % 2.06 % 2.09 % Fixed interest annuities Insurance policy income $ 1.2 $ 1.0 $ 0.8 Net investment income 84.1 83.6 83.0 Insurance policy benefits 0.1 (0.5) (1.1) Interest credited (46.6) (45.2) (45.7) Amortization and non-deferred commissions (7.2) (5.0) (4.6) Margin from fixed interest annuities $ 31.6 $ 33.9 $ 32.4 Average net insurance liabilities $ 1,578.3 $ 1,612.0 $ 1,700.5 Margin/average net insurance liabilities 2.00 % 2.10 % 1.91 % Other annuities Insurance policy income $ 6.3 $ 7.7 $ 7.8 Net investment income 22.2 22.4 23.2 Insurance policy benefits 0.9 (18.4) (17.2) Interest credited (2.1) (2.3) (2.3) Amortization and non-deferred commissions (0.5) (0.5) (0.4) Margin from other annuities $ 26.8 $ 8.9 $ 11.1 Average net insurance liabilities $ 422.3 $ 458.8 $ 481.7 Margin/average net insurance liabilities 6.35 % 1.94 % 2.30 % Total annuity margin $ 274.2 $ 235.0 $ 226.9 Average net insurance liabilities $ 11,849.5 $ 11,408.1 $ 10,970.8 Margin/average net insurance liabilities 2.31 % 2.06 % 2.07 % 67 Table of Co n t e n t s The favorable (unfavorable) impacts of our comprehensive annual actuarial review (reflected in insurance policy benefits) on annuity product margins are summarized below (dollars in millions): 2024 2023 2022 Fixed indexed annuities $ 36.2 $ 9.4 $ (3.2) Fixed interest annuities — — — Other annuities — 3.5 — Margin, excluding impact of comprehensive annual actuarial review: Fixed indexed annuities 179.6 182.8 186.6 Fixed interest annuities 31.6 33.9 32.4 Other annuities 26.8 5.4 11.1 Margin from fixed indexed annuities was $215.8 million in 2024 compared to $192.2 million in 2023 and $183.4 million in 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The information included under the caption "Market-Sensitive Instruments and Risk Management" in Item 7. "Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations" is incorporated herein by reference. 85 Table of Contents
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The information included under the caption "Market-Sensitive Instruments and Risk Management" in Item 7. "Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations" is incorporated herein by reference. 91 Table of Co n t e n t s

Other CNO 10-K year-over-year comparisons