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CNO Financial's (CNO) Q2 Earnings Miss on Higher Expenses

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CNO Financial Group, Inc. (CNO - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of 54 cents, which missed the Zacks Consensus Estimate by 21.7%. Also, the bottom line dropped 36.5% year over year.

Total revenues jumped 19.6% year over year to $1,022 million in the second quarter. The top line beat the consensus mark by 11.8%.

The weak quarterly earnings were caused by a massive increase in benefits and expenses, partially offset by improved insurance policy income and increased net investment income.

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

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

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

Quarterly Performance

Insurance policy income of $628.3 million rose 0.4% year over year and beat our estimate by 1.3%.

CNO’s net investment income increased 78.5% year over year to $399.7 million in the second quarter.

Annuity collected premiums of $401.8 million declined 8% year over year. New annualized premiums for health and life products advanced 11% year over year to $98.7 million.

Total benefits and expenses were $926.7 million, which jumped 66.9% year over year in the second quarter. The increase in the metric was attributable to higher insurance policy benefits, interest expenses and other operating costs.

Financial Update (as of Jun 30, 2023)

CNO Financial exited the second quarter with unrestricted cash and cash equivalents of $457.7 million, which declined from the 2022-end level of $575.7 million.

Total assets of $34,053.9 million rose from $33,133.1 million at 2022-end.

Total shareholders’ equity jumped to $1,995.8 million from $1,768.8 million as of Dec 31, 2022.

Book value per diluted share declined to $17.31 in the second quarter from $18.31 a year ago.

Adjusted operating return on equity came in at 8%, which deteriorated 530 basis points year over year.

The debt-to-capital ratio was 36.3% at the second-quarter end.

Share Repurchase and Dividend Update

CNO Financial rewarded its shareholders with $47 million in the form of share buybacks worth $30 million and dividends of $17 million.

As of Jun 30, 2023, the company had remaining repurchase funds of $115.6 million.

2023 Guidance

CNO Financial expects 2023 EPS in the range of $2.65-$2.85, indicating a decline from the 2022 figure of $3.06.

The company expects the expense ratio to be in the range of 19-19.4% for 2023. It also expects expenses to decline in the coming quarters.

CNO anticipates the effective tax rate for the year to be between 23% and 24%.

Zacks Rank

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

Other Finance Sector Releases

Of the other Finance sector players that have reported second-quarter results so far, the bottom-line results of Synchrony Financial (SYF - Free Report) , American Express Company (AXP - Free Report) and Morgan Stanley (MS - Free Report) beat the respective Zacks Consensus Estimate.

Synchrony Financial reported second-quarter 2023 adjusted EPS of $1.32, which beat the Zacks Consensus Estimate of $1.22. However, the bottom line plunged 17.5% year over year. Net interest income of SYF improved 8.4% year over year to $4,120 million, beating the consensus mark by 0.6%.

Other income of Synchrony Financial amounted to $61 million, which dropped 69.2% year over year in the second quarter. Total loan receivables grew 14.7% year over year to $94.8 billion. The purchase volume advanced 0.1% year over year to $47,276 million in the second quarter.

American Express reported second-quarter 2023 EPS of $2.89, beating the Zacks Consensus Estimate by 3.2%. The bottom line increased 12.5% year over year. For the quarter under review, AXP’s total revenues, net of interest expense, increased 12.4% year over year to $15,054 million.

However, the top line missed the consensus estimate by 2.3%. Network volumes jumped 8% year over year to $426.6 billion in the second quarter. Total interest income was $4,775 million in the second quarter, up 71% year over year. The International Card Services segment recorded a pre-tax income of $253 million, up 38% from a year ago.

Morgan Stanley’s second-quarter 2023 EPS of $1.24 surpassed the Zacks Consensus Estimate of $1.14. However, the bottom line reflects a decline of 11% from the year-ago quarter. Net revenues were $13.46 billion, up 2% from the prior-year quarter.

The top line beat the consensus estimate of $12.76 billion. While equity and fixed income underwriting fees increased 52% and 21%, respectively, from the prior-year quarter, advisory fees declined 24%. Therefore, total investment banking fees increased only marginally from the prior-year quarter. Fixed-income trading revenues of MS decreased 31%, and equity trading income declined 14% year over year.

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