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What changed in CNO Financial Group, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CNO Financial Group, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+563 added−628 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in CNO Financial Group, Inc.'s 2023 10-K

563 paragraphs added · 628 removed · 418 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

145 edited+58 added−39 removed143 unchanged
Biggest changeOur annuity and life insurance products generally provide policyholders with an income tax advantage, as compared to other savings investments such as certificates of deposit and bonds, because taxes on the increase in value of the products are deferred until received by policyholders. With other savings investments, the increase in value is generally taxed as earned.
Biggest changeNAIC goals include improving access to different types of insurance products in minority communities, addressing issues related to affordability, and providing guidance to regulators on ways to improve insurance access and the understanding of insurance in underserved communities. 27 Table of Contents FEDERAL INCOME TAXATION Our annuity and life insurance products generally provide policyholders with an income tax advantage, as compared to other savings investments such as certificates of deposit and bonds, because taxes on the increase in value of the products are deferred until received by policyholders.
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; • 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; 17 Table of Contents • establish guaranty associations; and • license agents.
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.
The NAIC develops model laws and regulations, many of which are adopted by state legislatures or insurance regulators, relating to: • reserve requirements; • risk-based capital ("RBC") standards; • codification of insurance accounting principles; • risk management; • group capital; • investment restrictions; • corporate governance; • restrictions on an insurance company's ability to pay dividends; • credit for reinsurance; • insurance data security; • product illustrations; and • privacy.
The NAIC develops model laws and regulations, many of which are adopted by state legislatures or insurance regulators, relating to: • reserve requirements; • risk-based capital ("RBC") standards; • codification of insurance accounting principles; • risk management; • group capital; • investment restrictions; • corporate governance; • restrictions on an insurance company's ability to pay dividends; • credit for reinsurance; • product illustrations; and • privacy, data security and cybersecurity.
Indemnity reinsurance does not discharge the original insurer's primary liability to the insured. Our reinsured business is ceded to numerous reinsurers. Based on our periodic review of their financial statements, insurance industry reports and reports filed with state insurance departments, we believe the assuming companies are able to honor all contractual commitments.
Indemnity reinsurance does not discharge the original insurer's primary liability to the insured. Our reinsured business is ceded to numerous reinsurers. Based on our periodic review of their financial statements, insurance industry reports and reports filed with state insurance departments, we believe the assuming companies are able to honor all material contractual commitments.
This structure unifies consumer capabilities into a single division and integrates the strength of our agent sales forces with one of the largest direct-to-consumer businesses with proven experience in advertising, web/digital and call center support. In 2021, we began selling our direct-to-consumer products through third party distributors. Exclusive Agents .
This structure unifies consumer capabilities into a single division and integrates the strength of our agent sales forces with one of the largest direct-to-consumer insurance businesses with proven experience in advertising, web/digital and call center support. In 2021, we began selling our direct-to-consumer products through third party distributors. Exclusive Agents .
Although the impact of implementing the approach for our life insurance products has not been significant to date, the ultimate impact is unknown. The NAIC adopted the Risk Management and Own Risk and Solvency Assessment Model Act ("ORSA"), which has been enacted by the domiciliary states of our insurance subsidiaries.
Although the impact of implementing this approach for our life insurance products has not been significant to date, the ultimate impact is unknown. The NAIC adopted the Risk Management and Own Risk and Solvency Assessment Model Act ("ORSA"), which has been enacted by the domiciliary states of our insurance subsidiaries.
In New York, the NYDFS amended Regulation – Suitability and Best Interests in Life Insurance and Annuity Transactions ("Regulation 187") to add a "best interest" standard for recommendations regarding the sale of life insurance and annuity products in New York.
In New York, the NYDFS amended Regulation – Suitability and Best Interests in Life Insurance and Annuity Transactions to add a "best interest" standard for recommendations regarding the sale of life insurance and annuity products in New York.
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, 2022.
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.
Our Predecessor was organized in 1979 and commenced operations in 1982. Data in Item 1. are provided as of or for the year ended December 31, 2022 (as the context implies), unless otherwise indicated. MARKETING AND DISTRIBUTION Our insurance subsidiaries develop, market and administer health insurance, annuity, individual life insurance and other insurance products.
Our Predecessor was organized in 1979 and commenced operations in 1982. Data in Item 1. are provided as of or for the year ended December 31, 2023 (as the context implies), unless otherwise indicated. MARKETING AND DISTRIBUTION Our insurance subsidiaries develop, market and administer health insurance, annuity, individual life insurance and other insurance products.
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. In evaluating our deferred tax assets, we consider whether it is more likely than not that the deferred tax assets will be realized.
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 net operating loss carryforwards ("NOLs"). In evaluating our deferred tax assets, we consider whether it is more likely than not that the deferred tax assets will be realized.
Our insurance subsidiaries collectively hold licenses to market our insurance products in all fifty states, the District of Columbia, and certain protectorates of the United States. Sales to residents of the following states accounted for at least 5 percent of our 2022 collected premiums: Florida (11 percent), Pennsylvania (6 percent), Iowa (6 percent) and Texas (5 percent).
Our insurance subsidiaries collectively hold licenses to market our insurance products in all fifty states, the District of Columbia, and certain protectorates of the United States. Sales to residents of the following states accounted for at least 5 percent of our 2023 collected premiums: Florida (11 percent), Pennsylvania (6 percent), Iowa (5 percent) and Texas (5 percent).
The Dodd-Frank Act created the Federal Insurance Office ("FIO") within the U.S. Treasury Department to monitor all aspects of the insurance industry. Its authority extends to most lines of insurance written by our insurance subsidiaries, although the FIO is not empowered with any general regulatory authority over insurers.
The Dodd-Frank Act created the Federal Insurance Office ("FIO") within the U.S. Treasury Department to monitor all aspects of the insurance industry. Its authority extends to most lines of insurance written by our insurance subsidiaries, although the FIO is not empowered with any direct regulatory authority over insurers.
In January 2020, the NAIC revised the Suitability in Annuity Transactions Model Regulation to apply a "best interest" standard for the sale of annuities. The amended model regulation has been adopted by two of our insurance subsidiaries' domiciliary states and a proposed amendment is pending in another domiciliary state.
In January 2020, the NAIC revised the Suitability in Annuity Transactions Model Regulation to apply a "best interest" standard for the sale of annuities. The amended model regulation has been adopted by three of our insurance subsidiaries' domiciliary states and a proposed amendment is pending in another domiciliary state.
In addition, we have filed as exhibits to this 2022 Form 10-K the applicable certifications of the Company's Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act of 2002 regarding the Company's public disclosures. 6 Table of Contents CNO became the successor to Conseco, Inc., an Indiana corporation (our "Predecessor"), in connection with a bankruptcy reorganization which became effective on September 10, 2003 (the "Effective Date").
In addition, we have filed as exhibits to this 2023 Form 10-K the applicable certifications of the Company's Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act of 2002 regarding the Company's public disclosures. 6 Table of Contents CNO became the successor to Conseco, Inc., an Indiana corporation (our "Predecessor"), in connection with a bankruptcy reorganization which became effective on September 10, 2003.
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, 2022, 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, 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.
For example, the SEC's Regulation Best Interest enhances the broker/dealer standard of conduct beyond existing suitability obligations and requires broker/dealers to act in the best interest of the customer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer.
For example, the SEC's Regulation Best Interest ("Reg BI") enhances the broker/dealer standard of conduct beyond existing suitability obligations and requires broker/dealers to act in the best interest of the customer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer.
Our supplemental health policies are individually underwritten using a simplified issue application. Based on an applicant's responses on the application, the underwriter either: (i) approves the policy as applied for; (ii) approves the policy with reduced benefits; or (iii) rejects the application.
Most of our supplemental health policies are individually underwritten using a simplified issue application. Based on an applicant's responses on the application, the underwriter either: (i) approves the policy as applied for; (ii) approves the policy with reduced benefits; or (iii) rejects the application.
In May 2022, 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 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.
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 in some cases, 10 Table of Contents 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 specified number of years or upon the policyholder reaching a specified age, we will pay to the policyholder, or in some cases, 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.
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.
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.
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. 27 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. 28 Table of Contents
Once the payments begin, the amount, frequency and length of time over which they are payable are fixed. SPIAs often are purchased by persons at or near retirement age who desire a steady stream of payments over a future period of years. The single premium is often the payout from a fixed rate contract.
Once the payments begin, the amount, frequency and length of time over which they are payable are fixed. SPIAs often are purchased by persons at or near retirement age who desire a steady stream of payments over a future period of years. The single premium is often the payout from a fixed 10 Table of Contents rate contract.
The implicit interest rate on SPIAs is based on market conditions when the policy is issued. The implicit interest rate on our outstanding SPIAs averaged 6.6 percent at December 31, 2022. Other annuities also include closed blocks of structured settlements, which were last sold over 25 years ago. Health Supplemental Health .
The implicit interest rate on SPIAs is based on market conditions when the policy is issued. The implicit interest rate on our outstanding SPIAs averaged 6.7 percent at December 31, 2023. Other annuities also include closed blocks of structured settlements, which were last sold over 25 years ago. Health Supplemental Health .
The Worksite Division also offers a suite of voluntary benefits, benefits administration technology and year-round advocacy services to reduce costs and increase benefits engagement to employers and their employees. We centralize certain functional areas, including marketing, business unit finance, sales training and support, and agent recruiting, among others.
The Worksite Division also offers a suite of voluntary benefits, benefits administration technology and year-round advocacy services to reduce costs and increase benefits engagement to employers and their employees. We centralize certain functional areas, including marketing, business unit finance and sales support, among others.
Indiana, our lead state regulator, has not adopted the Holding Company Amendments, although all states are expected to do so since the NAIC is developing an accreditation standard, as noted above. The NAIC Financial Analysis Handbook provides guidance for insurance regulators on reviewing GCC submissions. We cannot predict what impact this regulatory tool may have on our business .
Indiana, our lead state regulator, has not yet adopted the Holding Company Amendments, although all states are expected to do so since the NAIC developed an accreditation standard, as noted above. The NAIC Financial Analysis Handbook provides guidance for insurance regulators on reviewing GCC submissions. We cannot predict what impact this regulatory tool may have on our business .
In marketing these products, we currently concentrate on individuals who have recently become eligible for Medicare by reaching the age of 65. Approximately 62 percent of new sales of Medicare supplement policies in 2022 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 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.
These policies combine insurance protection with a savings component that gradually increases in amount over the life of the policy. The policyholder may borrow against the savings component that may be at a rate of interest lower than that available 11 Table of Contents from other lending sources.
These policies combine insurance protection with a savings component that gradually increases in amount over the life of the policy. The policyholder may borrow against the savings component that may be at a rate of interest lower than that available from other lending sources.
Numerous regulatory bodies are focused on enacting regulations requiring investment advisers, broker/dealers and/or agents to meet a higher standard of care when providing advice to their clients and to provide enhanced disclosure of conflicts 24 Table of Contents of interest.
Numerous regulatory bodies are focused on enacting regulations requiring investment advisers, broker/dealers and/or agents to meet a higher standard of care when providing advice to their clients and to provide enhanced disclosure of conflicts of interest.
It is possible that further tax legislation will be enacted which would contain provisions with possible adverse effects on our annuity and life insurance products. Our insurance company subsidiaries are taxed under the life insurance company provisions of the Code.
It is possible that further tax legislation will be enacted which would contain provisions with possible adverse effects on our annuity and life insurance products. Our U.S. based insurance company subsidiaries are taxed under the life insurance company provisions of the Code.
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, 2022, we had approximately 275 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, 2023, we had approximately 350 exclusive producing agents working across the United States.
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.
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.
These minimum lifetime loss ratios vary by state and product. We provide to the 19 Table of Contents insurance departments, where required, annual calculations that demonstrate compliance with required minimum benefit ratios for long-term care, Medicare supplement, and supplemental health insurance. These calculations are prepared utilizing statutory lapse and interest rate assumptions.
These minimum lifetime loss ratios vary by state and product. We provide to the insurance departments, where required, annual calculations that demonstrate compliance with required minimum benefit ratios for long-term care, Medicare supplement, and supplemental health insurance. These calculations are prepared utilizing statutory lapse and interest rate assumptions.
Approximately 74 percent of the total number of our supplemental health policies inforce were sold with return of premium or cash value riders.
Approximately 65 percent of the total number of our supplemental health policies inforce were sold with return of premium or cash value riders.
The tele-sales agents are primarily engaged in the sale of our graded benefit life insurance policies and the sale of Medicare Advantage plans of third-party insurance companies using direct response marketing techniques. New policyholder leads are generated primarily from television, print advertising, direct response mailings and the internet.
In addition, we have tele-sales agents that are primarily engaged in the sale of our graded benefit life insurance policies and the sale of Medicare Advantage plans of third-party insurance companies using direct response marketing techniques. New policyholder leads are generated primarily from television, print advertising, direct response mailings and the internet.
The Company and its insurance subsidiaries are registered as a holding company system pursuant to the laws and regulations in our domiciliary states. 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. 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 21 Table of Contents basis of the system is a formula that applies prescribed factors to various risk elements in an insurer's business to report a minimum capital requirement proportional to the amount of risk assumed by the insurer.
The basis of the system is a formula that applies prescribed factors to various risk elements in an insurer's business to report a minimum capital requirement proportional to the amount of risk assumed by the insurer.
This provision increases the tax for statutory accounting purposes, which 26 Table of Contents reduces statutory earnings and surplus and, accordingly, decreases the amount of cash dividends that may be paid by the life insurance subsidiaries.
This provision increases the tax for statutory accounting purposes, which reduces statutory earnings and surplus and, accordingly, decreases the amount of cash dividends that may be paid by the life insurance subsidiaries.
Our invested assets are predominately fixed rate in nature and their value fluctuates with changes in market rates, among other factors (such as changes in the overall compensation for risk required by the market as well as issuer specific changes in 12 Table of Contents credit quality).
Our invested assets are predominately fixed rate in nature and their value fluctuates with changes in market rates, among other factors (such as changes in the overall compensation for risk required by the market as well as issuer specific changes in credit quality).
We sell these products through exclusive agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing. We had premium collections of $4.1 billion, $4.0 billion and $3.7 billion in 2022, 2021 and 2020, respectively.
We sell these products through exclusive agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing. We had premium collections of $4.1 billion, $4.1 billion and $4.0 billion in 2023, 2022 and 2021, respectively.
Long-term care collected premiums were $263.9 million during 2022, 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 $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.
These products include single premium immediate annuities ("SPIAs"). SPIAs accounted for $7.7 million of our total premiums collected in 2022. SPIAs are designed to provide a series of periodic payments for a fixed period of time or for life, according to the policyholder's choice at the time of issuance.
These products include single premium immediate annuities ("SPIAs"). SPIAs accounted for $9.6 million of our total premiums collected in 2023. SPIAs are designed to provide a series of periodic payments for a fixed period of time or for life, according to the policyholder's choice at the time of issuance.
Regulation of Investments Our insurance subsidiaries are subject to state laws and regulations that require diversification of their investment portfolios and limit the amount of investments in certain investment categories, such as below-investment grade bonds, equity real estate and common stocks.
Regulation of Investments Our insurance subsidiaries are subject to state laws and regulations that require diversification of their investment portfolios and limit the amount of investments in certain investment categories, such as below-investment grade bonds, ownership in joint venture interests in real estate and common stocks.
For instance, such insurers should incorporate climate risk into their financial risk management (e.g., a company's ORSA should address climate risk). As of August 15, 2022, New York domestic insurers should have implemented certain corporate governance changes and developed plans to implement the organizational structure changes (e.g., clearly defining roles and responsibilities related to managing climate risk).
For instance, such insurers should incorporate climate risk into their financial risk management (e.g., a company's ORSA should address climate risk). New York domestic insurers have implemented certain corporate governance changes and developed plans to implement organizational structure changes (e.g., clearly defining roles and responsibilities related to managing climate risk).
("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 $24.4 billion of assets (at fair value) under management at December 31, 2022, of which $24.2 billion were our assets (including investments held by variable interest entities ("VIEs") that are included on our consolidated balance sheet) and $.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 $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.
In 2022, a significant portion of our new annuity sales were "premium bonus" products. These products typically specify a bonus rate, applied to the premium deposited, of 3 percent for the first policy year only. The premium bonus vests over a number of years. Fixed Interest Annuities .
In recent years, a significant portion of our new annuity sales were "premium bonus" products. These products typically specify a bonus rate, applied to the premium deposited, of 3 percent for the first policy year only. The premium bonus vests over a number of years.
Graded benefit life insurance policies are issued without medical examination or evidence of insurability. There is minimal underwriting on annuities. 14 Table of Contents LIABILITIES FOR INSURANCE PRODUCTS At December 31, 2022, the total balance of our liabilities for insurance products was $27.4 billion. These liabilities are generally payable over an extended period of time.
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.
ITEM 1. BUSINESS OF CNO. CNO Financial Group, Inc., a Delaware corporation ("CNO"), is a holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance and financial services products.
ITEM 1. BUSINESS OF CNO. CNO Financial Group, Inc., a Delaware corporation ("CNO"), is a 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.
In some of our product lines, such as life insurance and fixed annuities, we have a relatively small market share. Even in some of the lines in which we are one of the top writers, our market share is relatively small.
In some of our product lines, such as life insurance and fixed annuities, we have a relatively small market share from a total industry-wide perspective. Even in some of the lines in which we are one of the top writers, our market share is relatively small.
The Inflation Reduction Act also introduces a 1% excise tax on share buybacks, effective for tax years beginning in 2023, which would apply to future share repurchases made by CNO. 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% 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.
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 $683.9 million, or 16 percent, of our total collected premiums in 2022.
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.
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 $1,509.5 million, or 39 percent, of our total premium collections during 2022.
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.
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 worksite and group sales 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 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.
Such regulations will be applicable to the Company when adopted. On May 25, 2022, the SEC proposed rules requiring registered investment companies, business development companies, and registered and certain unregistered investment advisers to disclose in their fund prospectuses, annual reports and Form ADV information about how funds and advisers incorporate environmental, social and governance factors into their investment strategies.
On May 25, 2022, the SEC proposed rules requiring registered investment companies, business development companies, and registered and certain unregistered investment advisers to disclose in their fund prospectuses, annual reports and Form ADV information about how funds and advisers incorporate environmental, social and governance factors into their investment strategies.
On November 15, 2021, the NYDFS issued additional guidance stating that New York domestic insurers, such as Bankers Conseco Life Insurance Company, are expected to manage climate risks by outlining actions that are proportionate to the nature, scale and complexity of their businesses.
The NYDFS issued guidance for New York domestic insurers, such as Bankers Conseco Life Insurance Company, stating that they are expected to manage climate risks by outlining actions that are proportionate to the nature, scale and complexity of their businesses.
Such business had total insurance policy liabilities of $2.4 billion at December 31, 2022. (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 $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.
Medicare supplement collected premiums were $651.6 million during 2022, or 15 percent, of our total collected premiums. Medicare is a federal health insurance program for disabled persons and seniors (age 65 and older).
Medicare supplement collected premiums were $609.4 million during 2023, or 15 percent, of our total collected premiums. Medicare is a federal health insurance program for disabled persons and seniors (age 65 and older).
The SEC is the principal regulator of our asset management operations. We have a broker/dealer subsidiary that is registered under the Securities Exchange Act of 1934 and is subject to federal and state regulation, including, but not limited to, the Financial Industry Regulatory Authority ("FINRA").
We have a broker/dealer subsidiary that is registered under the Securities Exchange Act of 1934 and is subject to federal and state regulation, including, but not limited to, the Financial Industry Regulatory Authority ("FINRA").
Our main competitors for life insurance sold through direct marketing channels include Mutual of Omaha, Cuna Mutual, 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, Colonial Life and Accident Company and subsidiaries of Globe Life Inc.
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.
We also regularly collect associate feedback through surveys to better learn and understand associates' needs, priorities and issues of concern. • Compensation At CNO, we strive for a culture of exceptional performance. We believe in developing associates through a challenging work environment coupled with extensive support and training. Our compensation philosophy is focused on pay-for-performance.
We also regularly collect associate feedback through surveys to better learn and understand associates' needs, priorities and issues of concern. • Compensation At CNO, we strive for a culture of exceptional performance. We believe in developing associates through a challenging work environment coupled with extensive support and training. We are committed to fair pay practices and pay equity.
The 2022 annual statutory financial statements of each of our insurance subsidiaries reflect total adjusted capital in excess of the levels that would subject our subsidiaries to any regulatory action.
The 2023 annual statutory financial statements of each of our U.S. based insurance subsidiaries reflect total adjusted capital in excess of the levels that would subject such subsidiaries to any regulatory action.
The Consumer Division serves individual consumers, engaging with them on the phone, virtually, online, face-to-face with agents, or through a combination of sales channels. The Worksite Division focuses on worksite and group sales for businesses, associations, and other membership groups, interacting with customers at their place of employment and virtually.
The Consumer Division serves individual consumers, engaging with them on the phone, virtually, online, face-to-face with agents, or through a combination of sales channels. 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.
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; • continually monitor and manage the relationship between our investment portfolio and the financial characteristics of our insurance liabilities such as durations and cash flows; and • maximize total return through active strategic asset allocation and investment management.
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.
Supplemental health collected premiums were $692.9 million during 2022, or 16 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.
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.
The ability of our insurance subsidiaries to pay dividends is also impacted by various criteria established by rating agencies to maintain or receive higher ratings and by the capital levels that we target for our insurance subsidiaries.
The ability of our insurance subsidiaries to pay dividends is also impacted by various criteria established by rating agencies to maintain or receive higher ratings and by the capital levels that we target for our insurance subsidiaries. Bermuda Regulations In 2023, we formed CNO Bermuda Re, Ltd.
In addition to the SEC rules, the NAIC and several states have proposed and/or enacted laws and regulations requiring investment advisers, broker/dealers and/or agents (e.g., insurance producers) to disclose conflicts of interest to clients and/or to meet a higher standard of care when providing recommendations or advice to their clients.
In addition to the SEC rules, the NAIC and several states have proposed and/or enacted laws and regulations requiring insurance producers to disclose conflicts of interest to clients and/or to meet a best interest standard of care when providing recommendations or advice to their clients.
With respect to the NYDFS' more complex expectations, it will issue additional guidance on the implementation timelines. The board of directors of Bankers Conseco Life Insurance Company approved a Climate Risk Policy in June 2022.
With respect to the NYDFS' more complex expectations (e.g., using scenario analysis when developing business strategies), it will issue additional guidance on the implementation timelines. The board of directors of Bankers Conseco Life Insurance Company approved a Climate Risk Policy in June 2022.
The principle-based reserving approach has been adopted by the domiciliary states of our insurance subsidiaries, effective for life insurance and certain annuity products issued on or after 18 Table of Contents January 1, 2020. Similar reserving requirements for additional products are expected to be implemented over time.
The principle-based reserving approach has been adopted by all states, where it has been effective for life insurance and certain annuity products issued on or after January 1, 2020. Similar reserving requirements for additional products are expected to be implemented over time.
Several states have adopted the model law (or a form thereof), including Indiana. We are also required to file an annual Certificate of Compliance with the Indiana Department of Insurance. In addition, certain state legislatures have adopted or are actively considering general consumer privacy legislation that may apply to us.
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.
These products include universal life and other interest-sensitive life products that provide life insurance with adjustable rates of return related to current interest rates. They accounted for $227.9 million, or 6 percent, of our total collected premiums in 2022.
During 2023, we collected life insurance premiums of $937.0 million, or 23 percent, of our total collected premiums. Interest-Sensitive Life . These products include universal life and other interest-sensitive life products that provide life insurance with adjustable rates of return related to current interest rates. They accounted for $237.0 million, or 6 percent, of our total collected premiums in 2023.
In addition, the demand and cost of television advertising appropriate for our direct to consumer campaigns fluctuates from period to period and will impact the average cost to generate a TV lead. 13 Table of Contents We must attract and retain sales representatives to sell our insurance and annuity products.
In addition, the demand and cost of television advertising appropriate for our direct to consumer campaigns fluctuates from period to period and will impact the average cost to generate a television lead. We must attract and retain sales representatives to sell our insurance and annuity products. Strong competition exists among insurance and financial services companies for sales representatives.
The following table summarizes premium collections by segment for the years ended December 31, 2022, 2021 and 2020 (dollars in millions): 2022 2021 2020 Annuities: Fixed indexed annuities $ 1,509.5 $ 1,348.1 $ 1,122.1 Fixed interest annuities 87.4 45.4 37.3 Other annuities 7.7 6.9 5.6 Total annuities 1,604.6 1,400.4 1,165.0 Health: Supplemental health 692.9 688.0 677.2 Medicare supplement 651.6 707.5 750.5 Long-term care 263.9 264.0 263.9 Total health 1,608.4 1,659.5 1,691.6 Life: Interest-sensitive life 227.9 219.4 206.5 Traditional life 683.9 676.4 633.1 Total life 911.8 895.8 839.6 Total premium collections $ 4,124.8 $ 3,955.7 $ 3,696.2 8 Table of Contents Annuities During 2022, we collected annuity premiums of $1,604.6 million, or 41 percent, of our total premiums collected.
The following table summarizes premium collections by segment for the years ended December 31, 2023, 2022 and 2021 (dollars in millions): 2023 2022 2021 Annuities: Fixed indexed annuities $ 1,373.9 $ 1,509.5 $ 1,348.1 Fixed interest annuities 199.7 87.4 45.4 Other annuities 9.6 7.7 6.9 Total annuities 1,583.2 1,604.6 1,400.4 Health: Supplemental health 706.6 692.9 688.0 Medicare supplement 609.4 651.6 707.5 Long-term care 261.8 263.9 264.0 Total health 1,577.8 1,608.4 1,659.5 Life: Interest-sensitive life 237.0 227.9 219.4 Traditional life 700.0 683.9 676.4 Total life 937.0 911.8 895.8 Total premium collections $ 4,098.0 $ 4,124.8 $ 3,955.7 8 Table of Contents Annuities During 2023, we collected annuity premiums of $1,583.2 million, or 39 percent, of our total premiums collected.
The ability of our insurance subsidiaries to pay dividends is based on their financial statements that are prepared in accordance with statutory accounting 20 Table of Contents practices prescribed or permitted by regulatory authorities, which differ from financial statements prepared in accordance with GAAP.
The ability of our U.S. based insurance subsidiaries to pay dividends is based on their financial statements that are prepared in accordance with statutory accounting practices prescribed or permitted by regulatory authorities, which differ from financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
Insurance Regulatory Examinations and Other Activities State insurance departments periodically examine the books, records, accounts, and business practices of their domiciled insurers, as previously noted. State insurance departments may also conduct examinations of non-domiciliary insurers licensed in their states.
Insurance Regulatory Examinations and Other Activities State insurance departments periodically examine the books, records, accounts, and business practices of their domiciled insurers, as previously noted.
Single premium whole life products accounted for $38.2 million of our total collected premiums in 2022. INVESTMENTS 40|86 Advisors, Inc.
Single premium whole life products accounted for $29.5 million of our total collected net premiums in 2023. INVESTMENTS 40|86 Advisors, Inc.
At December 31, 2022, we had an exclusive agency force of approximately 4,100 producing agents and financial representatives working from 235 branch and satellite field offices throughout the United States as well as dedicated tele-sales agents who conduct sales over the phone. The field agents establish one-on-one contact with potential policyholders and promote strong personal relationships with existing policyholders.
At December 31, 2023, we had an exclusive agency force of approximately 4,200 producing agents and financial representatives working from 232 branch and satellite field offices throughout the United States. The field agents establish one-on-one contact with potential policyholders and promote strong personal relationships with existing policyholders.
These products include fixed rate single-premium deferred annuities ("SPDAs") and flexible premium deferred annuities ("FPDAs"). These products accounted for $87.4 million, or 2 percent, of our total premium collections during 2022.
Fixed Interest Annuities . These products include fixed rate single-premium deferred annuities ("SPDAs") and flexible premium deferred annuities ("FPDAs"). These products accounted for $199.7 million, or 5 percent, of our total premium collections during 2023.
In addition, while, based on a 2021 Medicare Supplement Loss Ratios report, we ranked eighth in direct premiums earned for Medicare supplement insurance in 2021 with a market share of 2.1 percent, the top writer of Medicare supplement insurance had direct premiums with a market share of 33 percent during the period.
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.
As of December 31, 2022, the average crediting rate on our outstanding traditional annuities was 3 percent. 9 Table of Contents The initial crediting rate is largely a function of: • the interest rate we earn on invested assets acquired with the new annuity fund deposits; • the costs related to marketing and maintaining the annuity products; and • the rates offered on similar products by our competitors.
The initial crediting rate is largely a function of: • the interest rate we earn on invested assets acquired with the new annuity fund deposits; • the costs related to marketing and maintaining the annuity products; and • the rates offered on similar products by our competitors.
Federal and state lawmakers and regulatory bodies may consider additional or more detailed regulation regarding these subjects and the privacy and security of personal information. 23 Table of Contents 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.
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.
Under this proposal, the NAIC Structured Securities Group would model CLO investments and evaluate tranche level losses across all debt and equity tranches under a series of calibrated and weighted collateral stress scenarios to assign NAIC designations that eliminate RBC arbitrage.
The SSG will model CLO investments and evaluate tranche level losses across all debt and equity tranches under a series of calibrated and weighted collateral stress scenarios to assign NAIC designations.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, prepayment rates on investments may increase so that we might have to reinvest those proceeds in lower-yielding investments. 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.
Biggest changeAs 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.
The current financial strength ratings of our primary insurance subsidiaries from AM Best, Fitch, Moody's and S&P 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".
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".
Depending on the nature of the information compromised, in the event of a data breach or other unauthorized access to or acquisition of our customer data, we may also have obligations to notify customers and federal and state government regulators about the incident and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident.
Depending on the nature of the information compromised, in the event of a data breach or other unauthorized access to or acquisition of our customer data, we may also have obligations to notify customers, other stakeholders, and federal and state government regulators about the incident and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident.
Our investment portfolio may be adversely affected as a result of the delays or failures of borrowers to make payments of principal and interest when due or delays or moratoriums on foreclosures, enforcement actions with respect to delinquent or defaulted mortgages imposed by governmental authorities or the failure of tenants to pay rent or tenants' demands for lease modifications.
Our investment portfolio may be adversely affected as a result of any delays or failures of borrowers to make payments of principal and interest when due or delays or moratoriums on foreclosures, enforcement actions with respect to delinquent or defaulted mortgages imposed by governmental authorities or the failure of tenants to pay rent or tenants' demands for lease modifications.
All fifty states, as well as a growing number of regulatory bodies have adopted consumer notification requirements in the event of the actual or 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 data. Such breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another.
If our ratings are downgraded, we may experience declining sales of certain of our insurance products, defections of our independent and exclusive sales force, and increased policies being redeemed or allowed to lapse. These events would adversely affect our financial results, which could then lead to ratings downgrades.
If our ratings are downgraded, we may experience declining sales of certain of our insurance products, defections of our independent and exclusive sales force, and increased policies being redeemed or allowed to lapse. These events would adversely affect our financial results, which could then lead to additional ratings downgrades.
While we seek to mitigate this risk by having a broadly diversified portfolio, events or developments that have a negative impact on any particular industry, group of related industries or geographic area may have an adverse effect on the investment portfolio.
While we seek to mitigate this risk by having a broadly diversified portfolio, events or developments that have a correlated negative impact on any particular industry, group of related industries or geographic area may have an adverse effect on the investment portfolio.
Changes in accounting standards may adversely affect our reported results of operation and financial condition. Our consolidated financial statements are prepared in conformity with GAAP. From time to time, we are required to adopt new accounting standards issued by the Financial Accounting Standards Board (the "FASB").
Changes in accounting standards may adversely affect our reported results of operation and financial condition. Our consolidated financial statements are prepared in conformity with GAAP. From time to time, we are required to adopt new accounting standards issued by the Financial Accounting Standards Board.
For example, a natural or man-made disaster or a pandemic could lead to increased reinsurance prices and potentially cause us to retain more risk than we otherwise would retain if we were able to obtain reinsurance at lower prices.
For example, a natural or man-made disaster could lead to increased reinsurance prices and potentially cause us to retain more risk than we otherwise would retain if we were able to obtain reinsurance at lower prices.
Such transactions may include, but are not limited to, additional repurchases or issuances of common stock, acquisitions or sales of shares of CNO's stock by certain holders of its shares, including persons who have held, currently hold or may accumulate in the future 5 percent or more of CNO's outstanding common stock for their own account.
Such transactions may include, but are not limited to, additional repurchases or issuances of common stock, acquisitions or sales of shares of CNO's stock by certain holders of its shares, including persons who have held, currently hold or may accumulate in the future five percent or more of CNO's outstanding common stock for their own account.
In addition to the RBC requirements, certain states have established minimum capital requirements for insurance companies licensed to do business in their state.
In addition to the RBC requirements, states have established minimum capital requirements for insurance companies licensed to do business in their state.
CNO expects to receive regulatory approval for future dividends from our insurance subsidiaries, but there can be no assurance that such payments will be approved or that the financial condition of our insurance subsidiaries will not deteriorate, making future approvals less likely.
CNO expects to seek regulatory approval for future dividends from our insurance subsidiaries, but there can be no assurance that such payments will be approved or that the financial condition of our insurance subsidiaries will not deteriorate, making future approvals less likely.
As of December 31, 2022, we had an aggregate principal amount of indebtedness of $1,150.0 million (comprised of $500.0 million of 5.250% Senior Notes due 2025, $500.0 million of 5.250% Senior Notes due 2029 (collectively, the "Notes")) and $150.0 million of 5.125% Subordinated Debentures due 2060 (the "Debentures").
As of December 31, 2023, we had an aggregate principal amount of indebtedness of $1,150.0 million (comprised of $500.0 million of 5.250% Senior Notes due 2025, $500.0 million of 5.250% Senior Notes due 2029 (collectively, the "Notes")) and $150.0 million of 5.125% Subordinated Debentures due 2060 (the "Debentures").
The surrender charges that are imposed on our fixed rate annuities typically decline during a penalty period, which ranges from five to twelve years after the date the policy is issued. Surrender charges are eliminated after the penalty period. Surrenders and redemptions could require us to dispose of assets earlier than we had planned, possibly at a loss.
The surrender charges that are imposed on our fixed rate annuities typically decline during a penalty period, which ranges from five to twelve years after the date the policy is issued. Surrender charges are eliminated after the penalty period. Surrenders and other policy withdrawals could require us to dispose of assets earlier than we had planned, possibly at a loss.
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 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 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.
Additional impairments may need to be taken or allowances provided for in the future, and the ultimate loss may exceed our current loss estimates. 31 Table of Contents The determination of fair value of our fixed maturity securities results in unrealized investment gains and losses and is, in some cases, highly subjective and could materially impact our operating results and financial condition.
Additional impairments may need to be taken or allowances provided for in the future, and the ultimate loss may exceed our current loss estimates. The determination of fair value of our fixed maturity securities results in unrealized investment gains and losses and is, in some cases, highly subjective and could materially impact our operating results and financial condition.
For example, a natural or man-made disaster or a pandemic, such as the COVID-19 pandemic, could lead to unexpected changes in persistency rates as policyholders and contractholders who are affected by the disaster may be unable to meet their contractual obligations, such as payment of premiums on our insurance policies and deposits into our investment products.
For example, a natural or man-made disaster could lead to unexpected changes in persistency rates as policyholders and contractholders who are affected by the disaster may be unable to meet their contractual obligations, such as payment of premiums on our insurance policies and deposits into our investment products.
We believe policyholders are generally more likely to surrender their policies if they believe the issuer is having financial difficulties, or if they are able to reinvest the policy's value at a higher rate of return in an alternative insurance or investment product. 33 Table of Contents We face risk with respect to our reinsurance agreements.
We believe policyholders are generally more likely to surrender their policies if they believe the issuer is having financial difficulties, or if they are able to reinvest the policy's value at a higher rate of return in an alternative insurance or investment product. We face risk with respect to our reinsurance agreements.
We transfer exposure to certain risks to others through reinsurance arrangements. Under these arrangements, other insurers assume a portion of our losses and expenses associated with reported and unreported claims in exchange for a portion of policy premiums. The availability, amount and cost of reinsurance depend on general market conditions and may vary significantly.
We transfer exposure to certain risks to third parties through reinsurance arrangements. Under these arrangements, other insurers assume a portion of our losses and expenses associated with reported and unreported claims in exchange for a portion of policy premiums. The availability, amount and cost of reinsurance depend on general market conditions and may vary significantly.
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 state's judgment, the insurance subsidiary is not maintaining adequate statutory surplus or capital or that 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 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.
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.
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.
Such statutory accounting principles (including principles that impact the calculation of RBC and our insurance liabilities) are subject to continued review by the NAIC in an effort to address emerging issues and improve financial reporting. Proposals being considered by the NAIC could negatively impact our insurance subsidiaries, if enacted. Our insurance subsidiaries are also subject to RBC requirements.
Such statutory accounting principles (including principles that impact the calculation of RBC and our insurance liabilities) are subject to continued review by the NAIC in an effort to address emerging issues and improve financial reporting. Proposals being considered by the NAIC could negatively impact our insurance subsidiaries, if enacted. Our U.S. based insurance subsidiaries are also subject to RBC requirements.
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.
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, 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 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. Our U.S. based insurance subsidiaries are required to comply with statutory accounting principles.
As of December 31, 2022, our reinsurance receivables and ceded life insurance inforce totaled $4.2 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, 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.
In addition, an 34 Table of Contents event of default under the Revolving Credit Agreement would permit our lenders to terminate commitments to extend further credit. See the note to the consolidated financial statements entitled "Notes Payable - Direct Corporate Obligations" for more information.
In addition, an event of default under the Revolving Credit Agreement would permit our lenders to terminate commitments to extend further credit. See the note to the consolidated financial statements entitled "Notes Payable - Direct Corporate Obligations" for more information.
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 (3.29 percent at December 31, 2022), and the annual restriction could limit our ability to use a substantial portion of our NOLs to offset future taxable income.
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 (3.81 percent at December 31, 2023), and the annual restriction could limit our ability to use a substantial portion of our NOLs to offset future taxable income.
When asset-backed securities, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, collateralized loan obligations and commercial mortgage-backed securities, (collectively referred to as "structured securities") prepay faster than expected, investment income may be adversely affected due to the acceleration of the amortization of purchase premiums or the inability to reinvest at comparable yields in lower interest rate environments.
When asset-backed securities, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, CLOs and commercial mortgage-backed securities, (collectively referred to as "structured securities") prepay faster than expected, investment income may be adversely affected due to the acceleration of the amortization of purchase premiums or the inability to reinvest at comparable yields in lower interest rate environments.
In addition, such a disaster or pandemic could also significantly increase our mortality and morbidity experience above the assumptions we used in pricing our products.
In addition, such a disaster could also significantly increase our mortality and morbidity experience above the assumptions we used in pricing our products.
The ability of our insurance subsidiaries to pay dividends is also impacted by various criteria established by rating agencies to maintain or receive higher financial strength ratings and by the capital levels that we target for our insurance subsidiaries, as well as the RBC compliance requirements under the Revolving Credit Agreement.
The ability of our insurance subsidiaries to pay dividends is also impacted by various criteria established by rating agencies to maintain or receive higher financial strength ratings and by the capital levels that we target for our insurance subsidiaries, as well as regulatory and other financial covenant compliance requirements under the Revolving Credit Agreement.
The estimated RBC ratio of CLTX was 340 percent at December 31, 2022. 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 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.
A decline in the current financial strength rating of our insurance subsidiaries could cause us to experience decreased sales, increased agent attrition and increased policyholder lapses and redemptions. An important competitive factor for our insurance subsidiaries is the financial strength ratings they receive from nationally recognized rating organizations.
A decline in the current financial strength rating of our insurance subsidiaries could cause us to experience decreased sales, increased agent attrition and increased policyholder lapses and other policy withdrawals. An important competitive factor for our insurance subsidiaries is the financial strength ratings they receive from nationally recognized rating organizations.
These risks are significantly greater with respect to below-investment grade securities and alternative investments, which comprised 5.4 percent and 2.5 percent of our total investments as of December 31, 2022.
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.
We compete with other insurance companies, financial services companies and other entities for agents 41 Table of Contents and sales managers and for business through marketing organizations. If we are unable to attract and retain these agents, sales managers and marketing organizations, our ability to grow our business and generate revenues from new sales would suffer.
We compete with other insurance companies, financial services companies and other entities for agents and sales managers and for business through marketing organizations. If we are unable to attract and retain these agents, sales managers and marketing organizations, our ability to grow our business and generate revenues from new sales would suffer.
In addition, there is a greater risk related to our modeling due to accounting changes, such as the new guidance related to targeted improvements to the accounting for long-duration insurance contracts which became effective on January 1, 2023.
In addition, there is a greater risk related to our 32 Table of Contents modeling due to accounting changes, such as the new guidance related to targeted improvements to the accounting for long-duration insurance contracts which became effective on January 1, 2023.
To further protect against the possibility of triggering an ownership change under Section 382, CNO's shareholders approved an amendment to CNO's certificate of incorporation designed to prevent certain transfers of common stock which could limit our ability to use our NOLs.
To further protect against the possibility of triggering an ownership change under Section 382, CNO's shareholders approved amendments included in CNO's certificate of incorporation designed to prevent certain transfers of common stock which could limit our ability to use our NOLs.
Additionally, the writedown of our deferred tax assets that would occur in the event of an ownership change for purposes of Section 382 could cause us to breach the debt to total capitalization covenant in the Revolving Credit Agreement.
Additionally, the writedown of our deferred tax assets that would occur in the event of an ownership change for purposes of Section 382 could cause us to breach the debt to total capitalization covenant and the consolidated net worth covenant in the Revolving Credit Agreement.
These examinations or investigations often 37 Table of Contents 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 registered investment advisors doing business through such entities and the entities' supervision of those persons.
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 2022 statutory annual statements of each of our 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 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.
Uncertainty remains regarding potential adjustments to the Dodd-Frank Act and it is uncertain whether any such changes to the Dodd-Frank Act would result in a material effect on our business operations. State insurance regulators, federal regulators and the NAIC continually reexamine existing laws and regulations and may impose changes in the future.
Uncertainty remains regarding potential amendments to the Dodd-Frank Act and whether any such changes to the Dodd-Frank Act would result in a material effect on our business operations. State insurance regulators, federal regulators and the NAIC continually reexamine existing laws and regulations and may impose changes in the future.
We regularly monitor ownership changes (as calculated for purposes of Section 382) based on available information and, as of December 31, 2022, our analysis indicated that we were below the 50 percent ownership change threshold that could limit 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, 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 may also be subject to claims by third parties for breach of copyright, trademark, trade secret or license usage rights.
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.
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 21.6 percent at December 31, 2022); and (ii) a minimum consolidated net worth of not less than the sum of (x) $2,674 million plus (y) 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 $3,493.9 million at December 31, 2022 compared to the minimum requirement of $2,694.4 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 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).
Our structured securities (as defined below), which comprised 29.6 percent of our available for sale fixed maturity investments at December 31, 2022, are generally subject to variable prepayment on the assets underlying such securities, such as mortgage loans.
Our structured securities (as defined below), which comprised 31.7 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.
As of December 31, 2022, we had net deferred tax assets of $1,157.5 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, 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.
Insurance regulations generally permit an insurer 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.
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.
The ultimate realization of our deferred tax assets depends upon generating sufficient future taxable income during the periods in which our temporary differences become deductible and before our capital loss carry-forwards and NOLs expire. Our assessment of the realizability of our deferred tax assets requires significant judgment.
The ultimate realization of our deferred tax assets depends upon generating sufficient future taxable income during the periods in which our temporary differences become deductible and before our capital loss carry-forwards and NOLs expire.
Complying with 40 Table of Contents these obligations could cause us to incur substantial costs (including fines) and could increase negative publicity surrounding any incident that compromises customer data.
Complying with these obligations could cause us to incur substantial costs (including fines) and could increase negative publicity surrounding any incident that compromises customer data.
Refer to "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Changes in Actuarial Assumptions" for further information related to changes in certain actuarial assumptions and their impact on our operating results in 2022.
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.
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, supply chain issues affecting investors, the performance of the economy in general, the policies adopted by the Federal Reserve as a result of the performance of the economy, 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, 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.
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, 2022, approximately $4.5 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, 2023, approximately $4.4 billion of our total insurance liabilities could be surrendered by the policyholder without penalty.
As of December 31, 2022, we had $790.3 million of federal tax NOLs resulting in deferred tax assets of approximately $166.0 million (which expire in years 2023 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.
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.
Our spread is a key component of our net income. Investment income is also an important component of the profitability of our health products, especially long-term care and supplemental health policies.
Our spread, which is a component of product margin, provides a key contribution to our net income. Investment income is also an important component of the profitability of our health products, especially long-term care and supplemental health policies.
High inflation levels could have adverse consequences for us, the insurance industry and the U.S. economy generally . The U.S. economy is currently experiencing increasing levels 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 . 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.
In particular, Medicare reform could affect our ability to price or sell our products or profitably maintain our blocks inforce. For example, the Medicare Advantage program provides incentives for health plans to offer managed care plans to seniors.
In particular, Medicare reform could affect our ability to price or sell our products or profitably maintain our blocks inforce. For example, the Medicare Advantage program provides incentives for health plans to offer managed care plans to seniors. The growth of managed care plans under this program has decreased sales of the traditional Medicare supplement products we sell.
We seek to monitor and control our exposure to risks arising out of these activities through a risk control framework encompassing a variety of reporting systems, internal controls, management review processes and other mechanisms.
We seek to monitor and control our exposure to risks arising out of these activities through a risk control framework encompassing a variety of reporting systems, internal controls, management review processes and other mechanisms. However, these processes and procedures may not effectively control all known risks or effectively identify unforeseen risks.
This could result in a significantly higher ratio of claim costs to premiums if healthier policyholders allow their policies to lapse, while policies of less healthy policyholders continue inforce.
This could result in a significantly higher ratio of claim costs to premiums if healthier policyholders allow their policies to lapse, while policies of less healthy policyholders continue inforce. This would reduce our premium income and profitability in future periods.
However, as each of the immediate insurance subsidiaries of CDOC has negative earned surplus, any dividend payments from the insurance subsidiaries to CNO require the prior approval of the director or commissioner of the applicable state insurance department. In 2022, our insurance subsidiaries paid dividends of $143.6 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 2023, our U.S. based insurance subsidiaries paid dividends of $526.5 million to CDOC.
Moreover, surrenders and redemptions require faster amortization of either the acquisition costs or the commissions associated with the original sale of a product, thus reducing our net income.
Moreover, surrenders and other policy withdrawals require faster amortization of deferred acquisition costs associated with the original sale of a product, thus reducing our net income.
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.
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 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.
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 extent to which major health issues, including COVID-19, impact our business, results of operations or financial condition will depend on future developments which are highly uncertain and cannot be predicted, including but not limited to: (i) new variants of COVID-19 or new health pandemics; (ii) the efficacy of vaccines and the rate of vaccine adoption; (iii) premature mortality impacts on our claim experience; (iv) potential changes in monetary policy enacted by the Federal Reserve; and (v) potential fiscal stimulus measures implemented by the federal government.
The extent to which major health issues impact our business, results of operations or financial condition depends on future developments which are highly uncertain and cannot be predicted, including but not limited to: (i) new viruses or virus mutations; (ii) the efficacy of vaccines and other medical inventions; (iii) premature mortality impacts on our claim experience; (iv) responses by government authorities, including potential changes in monetary policy enacted by the Federal Reserve and potential fiscal stimulus measures implemented by the federal government; and (v) responses in behavior by policyholders, businesses and the population more generally.
A natural or man-made disaster or a pandemic could also disrupt the operations of our counterparties or result in increased prices for the products and services they provide to us.
Disasters also could disrupt public and private infrastructure, including communications and financial services, which could disrupt our normal business operations. A natural or man-made disaster could also disrupt the operations of our counterparties or result in increased prices for the products and services they provide to us.
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). 28 Table of Contents If interest rates were to return to low levels for an extended period of time, we may have to invest new cash flows or reinvest proceeds from investments that have matured or have been prepaid or sold at yields that have the effect of reducing our net investment income as well as the spread between interest earned on investments and interest credited to some of our products below present or planned levels.
If interest rates were to return to low levels for an extended period of time, we may have to invest new cash flows or reinvest proceeds from investments that have matured or have been prepaid or sold at yields that have the effect of reducing our net investment income as well as the spread between interest earned on investments and interest credited to some of our products below present or planned levels.
The occurrence of natural or man-made disasters or a pandemic or climate change could adversely affect our financial condition and results of operations. We are exposed to various risks arising out of natural and man-made disasters, including earthquakes, hurricanes, floods, tornadoes, acts of terrorism and military actions, the impacts of climate change and pandemics.
We are exposed to various risks arising out of natural and man-made disasters, including earthquakes, hurricanes, floods, tornadoes, acts of terrorism and military actions and the impacts of climate change.
The continued threat of terrorism and ongoing military actions may cause significant volatility in global financial markets, and a natural or man-made disaster or a pandemic could trigger an economic downturn in the areas directly or indirectly affected by the disaster or pandemic.
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.
Our indebtedness will require approximately $60.8 million in cash to service in 2023 (based on the principal amounts outstanding and applicable interest rates as of December 31, 2022). In addition, the Company has entered into the Revolving Credit Agreement. There were no amounts drawn under the Revolving Credit Agreement at December 31, 2022.
Our indebtedness will require approximately $60.8 million in cash to service in 2024 (based on the principal amounts outstanding and applicable interest rates as of December 31, 2023). In addition, the Company has entered into a $250.0 million unsecured revolving credit agreement which matures on July 16, 2026 (the "Revolving Credit Agreement").
We make and rely on numerous assumptions related to our business which are used to make decisions crucial to our operations. 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.
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.
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.
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.
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, the potential of a U.S. government default and inflation affect our business.
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.
See the note to the consolidated financial statements entitled "Income Taxes" for more information about the Section 382 Rights Agreement and the amendment to CNO's certificate of incorporation. If an ownership change were to occur for purposes of Section 382, we would be required to calculate an annual limitation on the use of our NOLs to offset future taxable income.
If an ownership change were to occur for purposes of Section 382, we would be required to calculate an annual limitation on the use of our NOLs to offset future taxable income.
Market dislocations, decreases in observable market activity or unavailability of information, in each case, arising from major public health issues, like COVID-19, may restrict our access to key inputs used to derive certain estimates and assumptions made in connection with financial reporting or otherwise.
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.
In addition, a disaster or a pandemic could adversely affect the value of the assets in our investment portfolio if it affects companies' ability to pay principal or interest on their securities.
In addition, a disaster could adversely affect the value of the assets in our investment portfolio if it affects companies' ability to pay principal or interest on their securities. Climate change regulation and market forces reacting to climate change may affect the values of certain invested assets, or the Company's willingness to continue to hold them.
This increased competition may harm our ability to maintain or improve our profitability. In addition, because the actual cost of products is unknown when they are sold, we are subject to competitors who may sell a product at a price that does not cover its actual cost.
Even in some of the lines in which we are one of the top writers, our market share is relatively small. In addition, because the actual cost of products is unknown when they are sold, we are subject to competitors who may sell a product at a price that does not cover its actual cost.
We depend heavily on our telecommunication, information technology and other operational systems and on the integrity and timeliness of data we use to run our businesses and service our customers.
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. We depend heavily on our telecommunication, information technology and other operational systems and on the integrity and timeliness of data we use to run our businesses and service our customers.
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 could increase our tax costs and reduce sales of our insurance and annuity products.
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.
Expectations of lower future investment earnings may require us to accelerate amortization, write down the balance of insurance acquisition costs or 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 insurance products, thereby reducing net income in future periods.
Our reserves for future insurance policy benefits and claims may prove to be inadequate, requiring us to increase liabilities which results in reduced net income and shareholders' equity. Liabilities for insurance products are calculated using management's best judgments, based on our past experience and standard actuarial tables of mortality, morbidity, lapse rates, investment experience and expense levels.
Our reserves for future insurance policy benefits and claims may prove to be inadequate, requiring us to increase liabilities which results in reduced net income and shareholders' equity. 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.
We are generally able to change the participation rate at the beginning of each index period (typically on each policy anniversary date), subject to contractual minimums. At December 31, 2022, $1.5 billion of our fixed indexed annuity account values were at contractual minimum guarantees or participation rates.
We are generally able to change the participation rate at the beginning of each index period (typically on each policy anniversary date), subject to contractual minimums.
This would reduce our premium income and profitability in future periods. 32 Table of Contents Our business, financial condition, results of operations, liquidity and cash flows depend on the accuracy of our models and assumptions, and we could experience significant gains or losses if the models and assumptions differ significantly from actual results.
Our business, financial condition, results of operations, liquidity and cash flows depend on the accuracy of our models and assumptions, and we could experience significant gains or losses if the models and assumptions differ significantly from actual results. We make and rely on numerous assumptions related to our business which are used to make decisions crucial to our operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur Optavise business has three locations: Orlando, Florida; Milwaukee, Wisconsin; and Birmingham, Alabama. In Orlando, we exercised an early lease termination and moved to a smaller location in January 2023 where we lease approximately 22,000 square feet. Our Milwaukee operations relocated to a new 7,000 square foot leased office in August 2022.
Biggest changeIn 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.
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 have four buildings on the campus with approximately 420,000 square feet of space, although not all of such space is currently being used for our operations.
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.
These leases are generally short-term in length, with remaining lease terms expiring between 2023 and 2028. 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.
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.
Removed
Our Consumer Division is primarily administered from downtown Chicago, Illinois. We currently occupy approximately 135,000 square feet of office space under a lease agreement which expires in 2023.
Added
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.
Removed
We have signed a ten year lease agreement for approximately 33,000 square feet (reflecting, in part, our highly successful hybrid working arrangements) and will be moving to another building in downtown Chicago in 2023. We also lease 235 sales offices in various states totaling approximately 800,000 square feet.
Added
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.
Removed
Our Birmingham operation is in a 7,400 square foot leased office with terms through 2026.
Added
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.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

10 edited+3 added−1 removed1 unchanged
Biggest changeFrom 2013 to 2019 held executive leadership positions at New York Life. From 2011 to 2013, principal at Deloitte Consulting. Yvonne K. Franzese, 64 2017 Since November 2017, chief human resources officer of CNO. From 2016 until joining CNO, chief human capital officer of TCF Bank. From 2007 to 2016, Ms.
Biggest changeFrom 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.
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. 44 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. 45 Table of Contents PART II
ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 43 Table of Contents Executive Officers of the Registrant Officer With CNO Positions with CNO, Principal Name and Age (a) Since Occupation and Business Experience (b) Gary C. Bhojwani, 55 2016 Since January 2018, chief executive officer. From April 2016 to December 2017, president of CNO.
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.
Prior to joining CNO, Linnenbringer held various positions at Genworth Financial from 2000 to 2015. Paul H. McDonough, 58 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, 56 2018 Since January 2023, chief information officer.
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.
From November 2018 to December 2022, senior vice president and chief information officer. Prior to joining CNO, Mead held various positions at AIG Technologies from 1996 to 2018, including senior vice president and transformation executive. Rocco F. Tarasi, 51 2017 Since March 2019, chief marketing officer. From 2017 to March 2019, vice president of finance and operations for Bankers Life.
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.
Johnson, 62 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. Johnson has held various investment management positions since joining CNO in 1997. John R. Kline, 65 1990 Since July 2002, chief accounting officer. Mr.
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.
Franzese held various human resource positions at Allianz, including the chief human resources role for Allianz of North America. Scott L. Goldberg, 52 2004 Since January 2020, president, Consumer Division. From September 2013 to January 2020, president of Bankers Life. Mr. Goldberg has held various other positions since joining CNO in 2004. Eric R.
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.
Kline has served in various accounting and finance capacities with CNO since 1990. Jeanne L. Linnenbringer, 60 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.
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.
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. Michael B. Byers, 61 2021 Since February 2021, co-president, Worksite Division and since August 2021, 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, 52 2019 Since January 2024, president, Worksite Division.
Prior to joining CNO, he held various positions from October 2011 until September 2016, including interim chief financial officer beginning in August 2015 and chief financial officer beginning in January 2016, with ITT Financial Services, Inc., which filed for Chapter 7 Bankruptcy in September 2016. Matthew J. Zimpfer, 55 1998 Since June 2008, general counsel. Mr.
From 2017 to March 2019, vice president of finance and operations for Bankers Life. Prior to joining CNO, he held various positions from October 2011 to September 2016, including interim chief financial officer beginning in August 2015 and chief financial officer beginning in January 2016, with ITT Financial Services, Inc., which filed for Chapter 7 Bankruptcy in September 2016.
Removed
Prior to joining CNO, Byers was chairman and chief executive officer of DirectPath from 2018 to February 2021 and executive chairman from 2015 to 2018. Karen J. DeToro, 51 2019 Since September 2019, chief actuary of CNO and from June 2020 to June 2022, chief risk officer of CNO.
Added
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 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
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe stock performance shown in this graph represents past performance and should not be considered an indication of future performance of CNO's common stock. 45 Table of Contents *$100 invested on 12/31/17 in stock or index, including reinvestment of dividends. 12/17 12/18 12/19 12/20 12/21 12/22 CNO Financial Group, Inc. $ 100.00 $ 61.48 $ 76.90 $ 96.89 $ 106.10 $ 104.41 S&P Life & Health Insurance Index 100.00 79.23 97.60 88.35 120.76 133.25 S&P MidCap 400 Index 100.00 88.92 112.21 127.54 159.12 138.34 46 Table of Contents ISSUER PURCHASES OF EQUITY SECURITIES Period (in 2022) 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 31 399 $ 19.32 — $ 196.9 November 1 through November 30 207,813 22.52 207,496 192.3 December 1 through December 31 238,298 22.51 236,669 186.9 Total 446,510 22.51 444,165 186.9 _________________ (a) In May 2011, the Company announced a securities repurchase program.
Biggest changeThe 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 comparison for each of the periods assumes that $100 was invested on December 31, 2017 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, 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.
EQUITY COMPENSATION PLAN INFORMATION The following table summarizes information, as of December 31, 2022, 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, 2023, relating to our common stock that may be issued under the CNO Financial Group, Inc. Amended and Restated Long-Term Incentive Plan.
PERFORMANCE GRAPH The performance graph below compares CNO's cumulative total shareholder return on its common stock for the period from December 31, 2017 through December 31, 2022 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, 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").
Since that date, the Company's Board of Directors has authorized additional repurchases from time to time, most recently in May 2021 when it authorized the repurchase of an additional $500.0 million of the Company's outstanding securities.
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.
As of February 8, 2023, there were approximately 42,900 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 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.
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 2,735,760 $ 19.45 5,583,352 Equity compensation plans not approved by security holders — — — Total 2,735,760 $ 19.45 5,583,352
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

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe following summarizes the persistency of our major blocks of insurance business summarized by line of business: Years ended December 31, 2022 2021 2020 Annuity: Fixed indexed annuities (1) 83.9 % 84.8 % 85.1 % Fixed interest annuities (1) 90.9 % 90.9 % 91.5 % Other annuities (2) 95.7 % 96.8 % 94.1 % Health: Supplemental health (3) 88.2 % 88.8 % 88.7 % Medicare supplement (3) 82.1 % 82.6 % 83.4 % Long-term care (3) 91.0 % 87.7 % 91.5 % Life: Traditional life (3) 84.0 % 84.8 % 85.7 % Interest-sensitive life (3) 88.8 % 88.7 % 88.7 % _____________________ (1) Based on the total amount of death benefits, surrenders values and partial withdrawals divided by the average account value.
Biggest changeIn 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.
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.
Ratings have the most impact on our Worksite sales of supplemental health and life products since such ratings are often an important factor considered by employers. The current financial strength ratings of our primary insurance subsidiaries from AM Best, Fitch, Moody's and S&P are "A", "A-", "A3" and "A-", respectively.
Ratings have the most impact on our Worksite sales of supplemental health and life products since such ratings are often an important factor considered by employers. 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.
We are subject to the risk that our investments will decline in value if interest rates continue to rise. The Company is subject to risk resulting from fluctuations in market prices of our equity securities. In general, these investments have more year-to-year price variability than our fixed maturity investments. However, returns over longer time frames have been consistently higher.
We are subject to the risk that our investments will decline in value if interest rates rise. The Company is subject to risk resulting from fluctuations in market prices of our equity securities. In general, these investments have more year-to-year price variability than our fixed maturity investments. However, returns over longer time frames have been consistently higher.
Investment income not allocated to product lines includes investment income on investments in excess of amounts allocated to product lines, investments held by our holding companies, the spread we earn from our FHLB investment borrowing and FABN programs and variable components of investment income (including call and prepayment income, adjustments to returns on structured securities due to cash flow changes, income (loss) from Company-owned life insurance ("COLI") and alternative investment income not allocated to product lines), net of interest expense on corporate debt.
Investment income not allocated to product lines includes investment income on investments in excess of amounts allocated to product lines, investments held by our holding companies, the spread we earn from our FHLB investment borrowing and FABN programs and variable components of investment income (including call and prepayment income, adjustments to returns on structured securities due to cash flow changes, income (loss) from Company-owned life insurance ("COLI") and alternative investment income not allocated to product lines), net of interest expense on corporate debt and financing arrangements.
Investment income not allocated to product lines includes investment income on investments in excess of amounts allocated to product lines, investments held by our holding companies, the spread we earn from our FHLB investment borrowing and FABN programs and variable components of investment income (including call and prepayment income, adjustments to returns on structured securities due to cash flow changes, income (loss) from COLI and alternative investment income not allocated to product lines), net of interest expense on corporate debt.
Investment income not allocated to product lines includes investment income on investments in excess of amounts allocated to product lines, investments held by our holding companies, the spread we earn from our FHLB investment borrowing and FABN programs and variable components of investment income (including call and prepayment income, adjustments to returns on structured securities due to cash flow changes, income (loss) from COLI and alternative investment income not allocated to product lines), net of interest expense on corporate debt and financing arrangements.
Our RBC ratio at December 31, 2022, 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, 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.
(b) Includes projected interest payments based on interest rates, as applicable, as of December 31, 2022. 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, 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.
Risk Factors - A prolonged low interest rate environment may negatively impact our results of operations, financial position and cash flows" for additional information on interest rate risks. We simulate the cash flows expected from our existing insurance business under various interest rate scenarios.
Risk Factors - A return to a prolonged low interest rate environment may negatively impact our results of operations, financial position and cash flows" for additional information on interest rate risks. We simulate the cash flows expected from our existing insurance business under various interest rate scenarios.
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, 2022, 2021 and 2020 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, 2023, 2022 and 2021 and, where appropriate, factors that may affect future financial performance.
CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of various assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period.
CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of various assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as revenues and expenses during the reporting period.
There are six ratings above the "A-" rating of our primary insurance subsidiaries and fourteen ratings that are below that rating. Rating agencies have increased the frequency and scope of their credit reviews and requested additional information from the companies that they rate, including us.
There are six ratings above the "A3" rating of our primary insurance subsidiaries and fourteen ratings that are below that rating. Rating agencies have increased the frequency and scope of their credit reviews and requested additional information from the companies that they rate, including us.
Our estimates of future taxable income are based on evidence we consider to be objectively verifiable. At December 31, 2022, 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, 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.
In AM Best's view, a company rated "bbb" has an adequate ability to meet the terms of its obligations; however, the issuer is more susceptible to changes in economic or other conditions. Pluses and minuses show the relative standing within a category. AM Best has a total of 22 possible ratings ranging from "aaa (Exceptional)" to "d (In default)".
In AM Best's view, a company rated "bbb" has an adequate ability to meet the terms of its obligations; however, the issuer is more susceptible to changes in economic or other conditions. Pluses and minuses show the relative standing within a category. AM Best has a total of twenty-two possible ratings ranging from "aaa (Exceptional)" to "d (In default)".
Many of our products include surrender charges, market interest rate adjustments or other features to encourage persistency; however, at December 31, 2022, approximately $4.5 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, 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.
We have assumed that revisions to assumptions resulting in such adjustments would occur equally among policy types, ages and durations within each product classification. Any actual adjustment would be dependent on the specific policies affected and, therefore, may differ from such estimates.
We have assumed that revisions to assumptions resulting in the adjustments summarized below would occur equally among policy types, ages and durations within each product classification. Any actual adjustment would be dependent on the specific policies affected and, therefore, may differ from the estimates summarized below.
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 loss recognition testing 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 4.4 percent.
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.
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.
The ratio is determined after three years from the original issuance of the policy and over the lifetime of the policy and measured in accordance with statutory accounting principles.
The ratio is determined after three years from the original issuance of the policy and over the lifetime of the policy and measured in accordance with U.S. statutory accounting principles.
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 2022, we generated $178 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 2023, we generated $311 million of such free cash flow.
The new cost basis is not adjusted for any subsequent recoveries in fair value. 52 Table of Contents Future events may occur, or additional information may become available, which may necessitate future realized losses in our portfolio. Significant losses could have a material adverse effect on our consolidated financial statements in future periods.
The new cost basis is not adjusted for any subsequent recoveries in fair value. Future events may occur, or additional information may become available, which may necessitate future realized losses in our portfolio. Significant losses could have a material adverse effect on our consolidated financial statements in future periods.
Please read this discussion in conjunction with the consolidated financial statements and notes included in this Form 10-K. OVERVIEW We are a holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance and financial services products.
Please read this discussion in conjunction with the consolidated financial statements and notes included in this Form 10-K. OVERVIEW We are a 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.
During 2022, 2021 and 2020, we recognized an increase (decrease) in earnings of $48.9 million, $8.9 million and $(16.3) 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 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.
On February 1, 2023, AM Best affirmed its "A" financial strength ratings of our primary insurance subsidiaries and the outlook for these ratings is stable. The "A" rating is assigned to companies that have an excellent ability, in AM Best's opinion, to meet their ongoing obligations to policyholders.
On February 15, 2024, AM Best affirmed its "A" financial strength ratings of our primary insurance subsidiaries and the outlook for these ratings is stable. The "A" rating is assigned to companies that have an excellent ability, in AM Best's opinion, to meet their ongoing obligations to policyholders.
Recovery of our deferred tax asset is dependent on achieving the level of future taxable income projected in our deferred tax valuation model and failure to do so could result in an increase in the valuation allowance in a future period.
Recovery of our deferred tax asset is dependent on achieving the level of future taxable income projected in our deferred tax valuation model and failure to do so could result in the recognition of a valuation allowance in a future period.
In October 2021, Bankers Life issued a funding agreement to a series of the Trust in an aggregate principal amount of $500 million. In January 2022, Bankers Life issued two additional funding agreements, each to a series of the Trust, totaling $900 million.
In October 2021, Bankers Life issued a funding agreement to a series of the Trust in an aggregate principal amount of $500 million. In January 2022, Bankers Life issued two additional funding agreements, each to a series of 79 Table of Contents the Trust, totaling $900 million.
As a result, total outflows for all years exceed the corresponding liabilities of $27.4 billion included in our consolidated balance sheet as of December 31, 2022. As such payments are based on numerous assumptions, the actual payments may vary significantly from the amounts shown.
As a result, total outflows for all years exceed the corresponding liabilities of $27.9 billion included in our consolidated balance sheet as of December 31, 2023. As such payments are based on numerous assumptions, the actual payments may vary significantly from the amounts shown.
The borrowings are collateralized by investments with an estimated fair value of $2.2 billion at December 31, 2022, which are maintained in custodial accounts for the benefit of the FHLB.
The borrowings are collateralized by investments with an estimated fair value of $2.7 billion at December 31, 2023, which are maintained in custodial accounts for the benefit of the FHLB.
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.
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.
We estimated these payments using actuarial models based on historical experience and our expectation of the future payment patterns which is consistent with the assumptions used in our loss recognition testing for these blocks of business. • For short-term insurance products such as Medicare supplement insurance, the future payments relate only to amounts necessary to settle all outstanding claims, including those that have been incurred but not reported as of the balance sheet date.
We estimated these payments using actuarial models based on historical experience and our expectation of the future payment patterns which is consistent with the assumptions used in our reserve calculations for these blocks of business. • For insurance products such as Medicare supplement insurance, the future payments relate only to amounts necessary to settle all outstanding claims, including those that have been incurred but not reported as of the balance sheet date.
At December 31, 2022, the carrying value of the FHLB common stock was $75.2 million. As of December 31, 2022, collateralized borrowings from the FHLB totaled $1.6 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, 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.
However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. Pluses and minuses show the relative standing within a category. S&P has a total of 22 possible ratings ranging from "AAA (Extremely Strong)" to "D (Payment Default)".
However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. Pluses and minuses show the relative standing within a category. S&P has a total of 83 Table of Contents twenty-two possible ratings ranging from "AAA (Extremely Strong)" to "D (Payment Default)".
(d) These borrowings represent the securities issued by VIEs and include projected interest payments based on interest rates, as applicable, as of December 31, 2022. 79 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 5.25 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, 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.
In May 2022, the Company increased its quarterly common stock dividend to $0.14 per share from $0.13 per share. On February 1, 2023, AM Best affirmed its "bbb" rating on our issuer credit and senior unsecured debt and the outlook for these ratings is stable.
In May 2023, the Company increased its quarterly common stock dividend to $0.15 per share from $0.14 per share. On February 15, 2024, AM Best affirmed its "bbb" rating on our issuer credit and senior unsecured debt and the outlook for these ratings is stable.
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, 2022 2021 2020 Dividends (net of contributions) from insurance subsidiaries $ 129.0 $ 328.3 $ 294.1 Surplus debenture interest 58.8 55.4 57.4 Fees for services provided pursuant to service agreements 124.0 117.8 111.7 Total dividends and other distributions paid by insurance subsidiaries $ 311.8 $ 501.5 $ 463.2 The ability of our 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, 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.
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.
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.
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 2022, we repurchased 7.6 million shares of common stock for $180.0 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 2023, we repurchased 6.6 million shares of common stock for $165.1 million under our securities repurchase program.
At December 31, 2022, the weighted average yield, computed on the cost basis of investments allocated to our product lines, was approximately 4.6 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 fixed indexed products) was 4.4 percent.
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.
Also, as we adopt the new accounting standard related to targeted improvements to the accounting for long-duration insurance contracts effective January 1, 2023, we will be updating our method of determining non-operating earnings for our fixed indexed annuities to better identify the volatile non-economic impacts of that line of business.
Also, as we adopted the new accounting standard related to targeted improvements to the accounting for long-duration insurance contracts effective January 1, 2023, we updated our method of determining non-operating earnings for our fixed indexed annuities to better identify the volatile non-economic impacts of that line of business.
Total asset adequacy and premium deficiency reserves for Bankers Life, Washington National and Bankers Conseco Life Insurance Company were $50.0 million, $134.5 million and $34.5 million, respectively, at December 31, 2022.
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.
When analyzing profitability of these segments, we use insurance product margin as the measure of profitability, which is: (i) insurance policy income; and (ii) net investment income allocated to the insurance product lines; less (i) insurance policy benefits and interest credited to policyholders; and (ii) amortization, non-deferred commissions and advertising expense.
When analyzing profitability of these segments, we use insurance product margin as the measure of profitability, which is: (i) insurance policy income; and (ii) net investment income allocated to the insurance product lines; less (i) insurance policy benefits and interest credited to policyholders; and (ii) amortization of deferred acquisition costs and present value of future profits, non-deferred commissions and advertising expense.
Changes in Actuarial Assumptions: We update the assumptions and experience underlying the expected gross margins for policies accounted for as investment contracts annually in the fourth quarter of each year.
Comprehensive Annual Actuarial Review: We update the assumptions and experience underlying the expected gross margins for policies accounted for as investment contracts annually in the fourth quarter of each year.
Management has made estimates in the past that we believed to be appropriate but were subsequently revised to reflect actual experience. If our future experience differs materially from these estimates and assumptions, our results of operations and financial condition could be materially affected.
Management has made estimates in the past that we believed to be appropriate but were subsequently revised as actual experience developed differently than expected. If our future experience differs materially from these estimates and assumptions, our results of operations and financial condition could be materially affected.
During 2022, the financial statements of three of our insurance subsidiaries prepared in accordance with statutory accounting practices prescribed or permitted by regulatory authorities reflected asset adequacy or premium deficiency reserves.
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.
At December 31, 2022, we held investments with an amortized cost of $1,134.2 million and an estimated fair value of $1,077.6 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, 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.
Our model is adjusted to reflect changes in our projections of future taxable income including changes resulting from the Tax Reform Act, investment strategies, the impact of the sale or reinsurance of business, the recapture of business previously ceded, tax planning strategies and the COVID-19 pandemic.
Our model is adjusted to reflect changes in our projections of future taxable income including changes resulting from the Tax Cuts and Job Act, investment strategies, the impact of the sale or reinsurance of business, the recapture of business previously ceded and tax planning strategies.
Consistent with this strategy, investments in fixed maturity securities and mortgage loans made up 90 percent of our $24.3 billion investment portfolio at December 31, 2022. The remainder of the invested assets was trading securities, investments held by VIEs, COLI, equity securities, policy loans and other invested assets.
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.
As of December 31, 2022, approximately 14 percent of our insurance liabilities had interest rates that may be reset annually; 49 percent had a fixed explicit interest rate for the duration of the contract; 34 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, 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.
Interest payments on those surplus debentures do not require additional approval provided the RBC ratio of CLTX exceeds 100 percent (but do 82 Table of Contents require prior written notice to the Texas Department of Insurance). The estimated RBC ratio of CLTX was 340 percent at December 31, 2022.
Interest payments on those surplus debentures do not require additional approval provided the RBC ratio of CLTX exceeds 100 percent (but do require prior written notice to the Texas Department of Insurance). The estimated RBC ratio of CLTX was 345 percent at December 31, 2023.
Investment income not allocated to product lines generally fluctuates 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. 62 Table of Contents Expenses not allocated to product lines includes certain significant items listed in the table below.
Investment income not allocated to product lines generally fluctuates 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.
The interest margin was $5.2 million in 2022, compared to $6.5 million in 2021 and $3.6 million in 2020. Net investment income was higher in 2022, compared to 2021 and 2020. The increase in average net insurance liabilities results in higher net investment income allocated, which is partially offset by lower earned yields.
The interest margin was $2.8 million in 2023 compared to $3.3 million in 2022 and $5.1 million in 2021. Net investment income in 2023 was comparable to 2022 and 2021. The increase in average net insurance liabilities results in higher net investment income allocated, which is offset by lower earned yields.
The weighted average crediting rates at December 31, 2022, related to such annuity and universal life account values, that were at the minimum guaranteed crediting rate were 2.11 percent and 4.49 percent, respectively.
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.
At December 31, 2022, 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 8.3 years and 8.4 years, respectively.
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.
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.
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.
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 and investment borrowings; (iv) expenses related to the funding agreement-backed note ("FABN") program; 48 Table of Contents and (v) certain expenses related to benefit plans that are offset by special-purpose investment income.
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.
The Company had remaining repurchase authority of $186.9 million as of December 31, 2022. In 2022, 2021 and 2020, dividends declared on common stock totaled $65.0 million ($0.55 per common share), $66.1 million ($0.51 per common share) and $67.4 million ($0.47 per common share), respectively.
The Company had remaining repurchase authority of $521.8 million as of December 31, 2023. In 2023, 2022 and 2021, dividends declared on common stock totaled $67.9 million ($0.59 per common share), $65.0 million ($0.55 per common share) and $66.1 million ($0.51 per common share), respectively.
Our commercial mortgage loan portfolio is primarily comprised of large commercial mortgage loans. Approximately 16 percent, 10 percent, 7 percent and 7 percent of the commercial mortgage loan balance were on properties located in California, Maryland, Wisconsin and Georgia, respectively. No other state comprised greater than six percent of the mortgage loan balance.
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.
However, as each of the immediate 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 2022, our insurance subsidiaries paid dividends to CDOC totaling $143.6 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. In 2023, our U.S. based insurance subsidiaries paid dividends to CDOC totaling $526.5 million.
An insurer rated "A", in S&P's opinion, has strong financial security characteristics, but is somewhat more likely to be affected by adverse business conditions than are insurers with higher ratings. Pluses and minuses show the relative standing 81 Table of Contents within a category. S&P has twenty-one possible ratings.
S&P financial strength ratings range from "AAA" to "R" and some companies are not rated. An insurer rated "A", in S&P's opinion, has strong financial security characteristics, but is somewhat more likely to be affected by adverse business conditions than are insurers with higher ratings. Pluses and minuses show the relative standing within a category. S&P has twenty-one possible ratings.
There are nine ratings above CNO's "Baa3" rating and eleven ratings that are below its rating. S&P most recently reviewed its "BBB-" rating on our senior unsecured debt on July 15, 2022. The outlook for these ratings is stable. In S&P's view, an obligation rated "BBB" exhibits adequate protection parameters.
There are eight ratings above CNO's "BBB+" rating and twelve ratings that are below its rating. S&P most recently reviewed its "BBB-" rating on our senior unsecured debt on June 23, 2023. The outlook for these ratings is stable. In S&P's view, an obligation rated "BBB" exhibits adequate protection parameters.
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 and investment borrowings; (iv) expenses related to the FABN program; and (v) certain expenses related to benefit plans that are offset by special-purpose investment income.
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 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.
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; and (iv) maximize total return through active strategic asset allocation and investment management.
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.
During 2022, we sold $1,651.5 million of fixed maturity investments which resulted in gross realized investment losses (before income taxes) of $104.0 million. Securities are generally sold at a loss following unforeseen issue-specific events or conditions or shifts in perceived relative values.
During 2023, we sold $712.2 million of fixed maturity investments which resulted in gross realized investment losses (before income taxes) of $58.9 million. Securities are generally sold at a loss following unforeseen issue-specific events or conditions or shifts in perceived relative values.
Net investment income and interest credited excludes the change in market values of the underlying options supporting the fixed indexed life products and corresponding offsetting amount credited to policyholder account balances. Such amounts were $(24.0) million, $24.3 million and $5.5 million in 2022, 2021 and 2020, 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 $118.3 million, $(181.3) million and $195.5 million in 2023, 2022 and 2021, respectively.
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 $145.8 million in 2022, compared to $164.0 million in 2021 and $188.3 million in 2020.
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.
We recognize the mark-to-market change in the estimated value of this liability through earnings as assumptions change. During 2022, 2021 and 2020, we recognized an increase (decrease) in earnings of $247.2 million, $67.2 million and $(79.1) million, respectively, resulting from changes in the estimated fair value of embedded derivative liabilities related to our fixed indexed annuities, net of related amortization.
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.
During 2022, we recognized net investment losses of $135.4 million, which were comprised of: (i) $9.6 million of net losses from the sales of investments; (ii) $11.2 million of losses related to equity securities, including the change in fair value; (iii) the decrease in fair value of certain other invested assets and fixed maturity investments with embedded derivatives of $45.9 million; (iv) the decrease in fair value of embedded derivatives related to a modified coinsurance agreement of $16.1 million; and (v) an increase in the allowance for credit losses of $52.6 million.
During 2023, we recognized net investment losses of $69.0 million, which were comprised of: (i) $68.7 million of net losses from the sales of investments; (ii) $0.2 million of losses related to equity securities, including the change in fair value; (iii) the net decrease in fair value of certain other invested assets and fixed maturity investments with embedded derivatives of $8.5 million; (iv) the increase in fair value of embedded derivatives related to a modified coinsurance agreement of $0.3 million; and (v) a decrease in the allowance for credit losses of $8.1 million.
General account investments exclude the value of options. 2022 2021 2020 (dollars in millions) Weighted average investments at amortized cost allocated to product lines $ 19,661.2 $ 18,877.0 $ 18,093.0 Allocated investment income 900.6 894.8 887.0 Average yield on allocated investments 4.58 % 4.74 % 4.90 % 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. 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.
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. CDOC holds surplus debentures from CLTX with an aggregate principal amount of $749.6 million.
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.
The fee income segment is summarized below (dollars in millions): 2022 2021 2020 Fee revenue $ 169.3 $ 147.6 $ 106.0 Operating costs and expenses (145.6) (128.2) (89.3) Net fee income $ 23.7 $ 19.4 $ 16.7 The increase in fee revenue in 2022 is primarily due to the growth related to the sales of third party products in recent periods and changes to our revenue recognition assumptions reflecting favorable policy persistency.
The fee income segment is summarized below (dollars in millions): 2023 2022 2021 Fee revenue $ 177.6 $ 169.3 $ 147.6 Operating costs and expenses (146.6) (145.6) (128.2) Net fee income $ 31.0 $ 23.7 $ 19.4 Net fee income increased in 2023 and 2022 is primarily due to growth in the sales of third party products by our Consumer Division in recent periods and changes to our revenue recognition assumptions reflecting favorable policy persistency; partially offset by lower earnings related to services provided by Optavise.
At December 31, 2022, the subsidiaries of CLTX had earned surplus (deficit) as summarized below (dollars in millions): Subsidiaries of CLTX Earned surplus (deficit) Additional information Bankers Life $ 374.1 (a) Colonial Penn (454.6) (b) ____________________ (a) Bankers Life paid dividends of $65.0 million to CLTX in 2022.
At December 31, 2023, the subsidiaries of CLTX had earned surplus (deficit) as summarized below (dollars in millions): Subsidiaries of CLTX Earned surplus (deficit) Additional information Bankers Life $ 34.6 (a) Colonial Penn (499.5) (b) ____________________ (a) Bankers Life paid dividends of $459.3 million to CLTX in 2023.
Average net insurance liabilities (total insurance liabilities less: (i) amounts related to reinsured business; (ii) deferred acquisition costs; (iii) present value of future profits; and (iv) the value of unexpired options credited to insurance liabilities) were $8,480.5 million, $7,771.8 million and $7,123.4 million in 2022, 2021 and 2020, respectively, driven by deposits and reinvested returns in excess of withdrawals.
Average net insurance liabilities (policyholder account balances less: (i) amounts related to reinsured business; (ii) deferred acquisition costs; (iii) present value of future profits; and (iv) the value of unexpired options credited to insurance liabilities) were $9,337.3 million, $8,788.6 million and $7,915.7 million in 2023, 2022 and 2021, respectively, driven by deposits and reinvested returns in excess of withdrawals.
If the healthier policyholders allow their policies to lapse, this would reduce our premium income and profitability in the future. 70 Table of Contents Total premium collections were as follows (dollars in millions): 2022 2021 2020 Premiums collected by product: Annuities: Fixed indexed (first-year) $ 1,509.2 $ 1,347.8 $ 1,121.7 Fixed indexed (renewal) .3 .3 .4 Subtotal - fixed indexed annuities 1,509.5 1,348.1 1,122.1 Fixed interest (first-year) 83.7 40.4 33.5 Fixed interest (renewal) 3.7 5.0 3.8 Subtotal - fixed interest annuities 87.4 45.4 37.3 Other annuities (first-year) 7.7 6.9 5.6 Total annuities 1,604.6 1,400.4 1,165.0 Health: Supplemental health (first-year) 73.2 67.9 72.7 Supplemental health (renewal) 619.7 620.1 604.5 Subtotal – supplemental health 692.9 688.0 677.2 Medicare supplement (first-year) 34.2 40.3 54.2 Medicare supplement (renewal) 617.4 667.2 696.3 Subtotal - Medicare supplement 651.6 707.5 750.5 Long-term care (first-year) 20.8 20.7 18.3 Long-term care (renewal) 243.1 243.3 245.6 Subtotal - long-term care 263.9 264.0 263.9 Total health 1,608.4 1,659.5 1,691.6 Life insurance: Interest-sensitive (first-year) 42.1 41.5 44.3 Interest-sensitive (renewal) 185.8 177.9 162.2 Subtotal - interest-sensitive 227.9 219.4 206.5 Traditional (first-year) 151.0 163.9 136.9 Traditional (renewal) 532.9 512.5 496.2 Subtotal - traditional 683.9 676.4 633.1 Total life insurance 911.8 895.8 839.6 Collections on annuity, health and life products: Total first-year premium collections 1,921.9 1,729.4 1,487.2 Total renewal premium collections 2,202.9 2,226.3 2,209.0 Total collections on insurance products $ 4,124.8 $ 3,955.7 $ 3,696.2 Annuities include fixed indexed, fixed interest and other annuities sold to the senior market.
If the healthier policyholders allow their policies to lapse, this would reduce our premium income and profitability in the future. 69 Table of Contents Total premium collections were as follows (dollars in millions): 2023 2022 2021 Premiums collected by product: Annuities: Fixed indexed (first-year) $ 1,373.8 $ 1,509.2 $ 1,347.8 Fixed indexed (renewal) .1 .3 .3 Subtotal - fixed indexed annuities 1,373.9 1,509.5 1,348.1 Fixed interest (first-year) 197.0 83.7 40.4 Fixed interest (renewal) 2.7 3.7 5.0 Subtotal - fixed interest annuities 199.7 87.4 45.4 Other annuities (first-year) 9.6 7.7 6.9 Total annuities 1,583.2 1,604.6 1,400.4 Health: Supplemental health (first-year) 81.6 73.2 67.9 Supplemental health (renewal) 625.0 619.7 620.1 Subtotal – supplemental health 706.6 692.9 688.0 Medicare supplement (first-year) 39.0 34.2 40.3 Medicare supplement (renewal) 570.4 617.4 667.2 Subtotal - Medicare supplement 609.4 651.6 707.5 Long-term care (first-year) 19.4 20.8 20.7 Long-term care (renewal) 242.4 243.1 243.3 Subtotal - long-term care 261.8 263.9 264.0 Total health 1,577.8 1,608.4 1,659.5 Life insurance: Interest-sensitive (first-year) 40.8 42.1 41.5 Interest-sensitive (renewal) 196.2 185.8 177.9 Subtotal - interest-sensitive 237.0 227.9 219.4 Traditional (first-year) 145.8 151.0 163.9 Traditional (renewal) 554.2 532.9 512.5 Subtotal - traditional 700.0 683.9 676.4 Total life insurance 937.0 911.8 895.8 Collections on annuity, health and life products: Total first-year premium collections 1,907.0 1,921.9 1,729.4 Total renewal premium collections 2,191.0 2,202.9 2,226.3 Total collections on insurance products $ 4,098.0 $ 4,124.8 $ 3,955.7 Annuities include fixed indexed, fixed interest and other annuities sold to the senior market.
Expenses not allocated to product lines as adjusted for such significant items are summarized below (dollars in millions): 2022 2021 2020 Expenses not allocated to product lines $ 40.8 $ 80.5 $ 83.8 Experience refund related to a reinsurance agreement (a) 22.5 — — Net expenses related to significant legal and regulatory matters — (12.8) (23.5) Charge related to asset impairments — — (3.7) Transaction expenses related to acquisition of DirectPath — (2.5) — Adjusted total $ 63.3 $ 65.2 $ 56.6 _______________ (a) Under the terms of the reinsurance agreement to cede a substantial portion of our legacy long-term care block, we are entitled to receive an experience refund of up to $22.5 million if certain rate increases are approved and implemented.
Total allocated and unallocated expenses as adjusted for the significant items are summarized below (dollars in millions): 2023 2022 2021 Expenses allocated to product lines $ 599.0 $ 596.6 $ 566.5 Expenses not allocated to product lines 51.7 40.8 80.5 Experience refund related to a reinsurance agreement (a) — 22.5 — Net recoveries (expenses) related to significant legal and regulatory matters 21.7 — (12.8) Transaction expenses related to acquisition of Optavise — — (2.5) Adjusted total $ 672.4 $ 659.9 $ 631.7 _______________ (a) Under the terms of the reinsurance agreement to cede a substantial portion of our legacy long-term care block, we were entitled to receive an experience refund of up to $22.5 million if certain rate increases were approved and implemented.
The three-level hierarchy for fair value measurements is described in the note to the consolidated financial statements entitled "Fair Value Measurements." The following summarizes investments on our consolidated balance sheet carried at fair value by pricing source and fair value hierarchy level as of December 31, 2022 (dollars in millions): Quoted prices in active markets for identical assets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Total fair value Priced by third-party pricing services $ 59.6 $ 21,310.3 $ — $ 21,369.9 Priced by independent broker quotations — 112.0 233.3 345.3 Priced by matrices — .8 — .8 Priced by other methods (a) — 13.1 120.1 133.2 Total $ 59.6 $ 21,436.2 $ 353.4 $ 21,849.2 Percent of total .3 % 98.1 % 1.6 % 100.0 % _______________ (a) Represents primarily securities benchmarked to comparable securities to determine fair value.
The three-level hierarchy for fair value measurements is described in the note to the consolidated financial statements entitled "Fair Value Measurements." The following summarizes investments on our consolidated balance sheet carried at fair value by pricing source and fair value hierarchy level as of December 31, 2023 (dollars in millions): Quoted prices in active markets for identical assets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Total fair value Priced by third-party pricing services $ 24.2 $ 22,396.4 $ — $ 22,420.6 Priced by independent broker quotations — 113.0 185.0 298.0 Priced by matrices — .4 — .4 Priced by other methods (a) — 36.5 117.1 153.6 Total $ 24.2 $ 22,546.3 $ 302.1 $ 22,872.6 Percent of total .1 % 98.6 % 1.3 % 100.0 % _______________ (a) Represents primarily securities benchmarked to comparable securities to determine fair value.
There were no amounts outstanding under the Revolving Credit Agreement at December 31, 2022. 83 Table of Contents The scheduled principal and interest payments on our direct corporate obligations are as follows (dollars in millions): Principal Interest (a) 2023 $ — $ 60.8 2024 — 60.8 2025 500.0 (b) 47.8 2026 — (c) 34.3 2027 — 33.9 2028 and thereafter 650.0 (d) 293.2 $ 1,150.0 $ 530.8 _________________________ (a) Based on interest rates as of December 31, 2022.
The scheduled principal and interest payments on our direct corporate obligations are as follows (dollars in millions): Principal Interest (a) 2024 $ — $ 60.8 2025 500.0 (b) 47.7 2026 — (c) 34.3 2027 — 33.9 2028 — 34.0 2029 and thereafter 650.0 (d) 259.2 $ 1,150.0 $ 469.9 _________________________ (a) Based on interest rates as of December 31, 2023.
The Consumer Division serves individual consumers, engaging with them on the phone, virtually, online, face-to-face with agents, or through a combination of sales channels. This structure unifies consumer capabilities into a single division and integrates the strength of our agent sales forces with one of the largest direct-to-consumer insurance businesses with proven experience in advertising, web/digital and call center support.
This structure unifies consumer capabilities into a single division and integrates the strength of our agent sales forces with one of the largest direct-to-consumer insurance businesses with proven experience in advertising, web/digital and call center support.
In 2022, other non-operating items include a one-time restructuring charge of $7.1 million primarily related to an early retirement program. The program reduced our headcount by 2 percent and is expected to reduce run-rate expenses by approximately $10 million. Other non-operating items also include earnings attributable to VIEs that we are required to consolidate, net of affiliated amounts.
The program reduced our headcount by 2 percent and was expected to reduce run-rate expenses by approximately $10 million. Other non-operating items also include earnings attributable to VIEs that we are required to consolidate, net of affiliated amounts.
There are nine ratings above CNO's "BBB-" rating and twelve ratings that are below its rating. 84 Table of Contents 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.
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 estimate that our fixed maturity securities and short-term investments (net of corresponding changes in insurance acquisition costs or loss recognition reserves) would decline in fair value by approximately $600 million if interest rates were to increase by 10 percent from their levels at December 31, 2022.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 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. 86 Table of Contents
Biggest changeITEM 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

Other CNO 10-K year-over-year comparisons