CNO Financial Group, Inc. (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.
The company focuses on serving middle-income pre-retiree and retired Americans, which are attractive, underserved, high growth markets. The company sells its products through exclusive agents, independent producers (some of whom sell one or more of the company's prod...
CNO Financial Group, Inc. (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.
The company focuses on serving middle-income pre-retiree and retired Americans, which are attractive, underserved, high growth markets. The company sells its products through exclusive agents, independent producers (some of whom sell one or more of the company's product lines exclusively) and direct marketing.
The company views its operations as three insurance product lines (annuity, health and life) and the investment and fee income segments.
The company markets its products through the Consumer and Worksite Divisions that reflect the customers served by the company. 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. 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.
The company centralizes certain functional areas, including marketing, business unit finance and sales support, among others. The company primarily markets its insurance products under its three primary brands: Bankers Life, Washington National and Colonial Penn.
Marketing and Distribution
The company’s insurance subsidiaries develop, market and administer health insurance, annuity, individual life insurance and other insurance and financial services products. The company sells these products through exclusive agents, independent producers (some of whom sell one or more of the company’s product lines exclusively) and direct marketing.
The company's insurance subsidiaries collectively hold licenses to market the company's insurance products in all fifty states, the District of Columbia, and certain protectorates of the United States.
The company markets its products through its two sales organization divisions - the Consumer and Worksite Divisions that reflect the customers served by the company.
Consumer Division
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 the company's 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, the company began selling its direct-to-consumer products through third party distributors.
Exclusive Agents: At December 31, 2024, the company had an exclusive agency force of approximately 4,500 producing agents (monthly average of agents that have submitted at least one policy in the month) and financial representatives working from approximately 230 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. Field agents sell Medicare supplement, supplemental health and long-term care insurance policies, life insurance and annuities. These agents also sell Medicare Advantage plans through distribution arrangements with third-party insurance companies. After the sale of an insurance policy, the agent serves as a contact person for policyholder questions, claims assistance and additional insurance needs. In addition, the company has tele-sales agents that are primarily engaged in the sale of the company’s 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. Financial representatives are able to buy and sell securities for clients and may provide ongoing investment advice for clients.
Independent Producers: Supplemental health and life insurance products are also sold through a diverse network of independent agents, insurance brokers and marketing organizations. The general agency and insurance brokerage distribution system comprises independent agents licensed to sell its products in all fifty states, the District of Columbia, and certain protectorates of the United States.
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. With a separate Worksite Division, the company is bringing a sharper focus to this high-growth business while further capitalizing on the strength of the company's wholly owned subsidiary, Optavise, LLC ('Optavise'). Through the company's Optavise brand, the company guides employers and their employees through their healthcare choices with a suite of voluntary benefits, benefits administration technology and year-round advocacy services to reduce costs and increase benefits engagement.
Exclusive Agents: At December 31, 2024, the company had approximately 370 exclusive producing agents working across the United States. These agents establish relationships with employers and have one-on-one contact with potential policyholders primarily at their place of employment and primarily sell supplemental health and life insurance products.
Independent Producers: Supplemental health and life insurance products are also sold through a diverse network of independent agents, insurance brokers and marketing organizations. The general agency and insurance brokerage distribution system comprises independent agents licensed to sell its products in all fifty states, the District of Columbia, and certain protectorates of the United States.
Marketing organizations typically recruit agents by advertising the company's products and commission structure through direct mail advertising or through seminars for agents and brokers. These organizations bear most of the costs incurred in marketing the company's products.
Annuities
Annuity products include fixed indexed annuity, traditional fixed rate annuity and single premium immediate annuity products. Annuities offer a tax-deferred means of accumulating savings for retirement needs and provide a tax-efficient source of income in the payout period. For fixed indexed annuities, the company's major source of income is the spread between the investment income earned on the underlying general account assets and the cost of the index options purchased to provide index-based credits to the contractholders' accounts. The company's 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 the company’s major annuity products:
Fixed Indexed Annuities: Substantially all of the deposits on the company’s fixed indexed annuity products are currently paid in a lump sum. The company’s fixed indexed annuities are deferred annuity contracts offering a fixed credit option and at least one indexed option, generating an interest return tied to the price return of an external index (typically the S&P 500). The company’s fixed indexed annuity contracts are designed so that the guaranteed contract value meets regulatory requirements such that the contract holder receives no less than 87.5 percent of deposits paid, compounded annually at a rate of up to 3 percent, which establishes a floor value for the contract in the event of cash disbursement (full surrender, death claim payout, or annuitization). Within each contract issued, each fixed indexed annuity specifies:
The index to be used.
The time period during which the change in the index is measured. At the end of the time period, the change in the index is applied to the account value. The time period for most contracts is one year but can range up to four years for some older inforce contracts.
The method used to measure the change in the index.
The measured change in the index is multiplied by a participation rate (percentage of change in the index) before the credit is applied. Some policies guarantee the initial participation rate for the life of the contract, and some vary the rate for each period.
The measured change in the index may also be limited by a ‘cap’ before the credit is applied. Some policies guarantee the initial cap for the life of the contract, and some vary the cap for each period.
The measured change in the index may also be limited to the excess in the measured change over a ‘margin’ before the credit is applied. Some policies guarantee the initial margin for the life of the contract, and some vary the margin for each period.
The company’s fixed indexed annuity contracts are usually surrendered prior to the specified maturity date (typically the policy anniversary after the customer’s 99th birthday). At surrender or maturity, they are provided various annuitization options allowing for periodic payments (paid over various periods, such as their remaining life or a term-certain period). However, the majority of contracts remain in the accumulation phase until the customer surrenders the contract or has a death claim. Policyholders can surrender the contract at any time, at which point they receive their account value, as specified in the contract, less any applicable surrender charges, subject to the floor value defined above. They may also take one penalty-free withdrawal of up to 10 percent of the premium paid each policy year (after the first year only for some contracts).
The company’s fixed indexed annuities credit interest on an annual basis. Depending on the credit option chosen, that interest is based on a fixed interest rate, guaranteed for the annual crediting period, or the price return of the underlying index (the S&P 500 index or the Morningstar US Dividend Growth Barclays 5 percent VC index) subject to a participation rate (receiving a portion of the appreciation) or a cap rate (receiving all appreciation up to the cap); any indexed option return is subject to a 0 percent floor. All crediting rates are subject to contractual guaranteed minimums. The company has a disciplined rate-setting approach that allows the company to set crediting rates consistent with the investment return earned on the net premiums received and (if applicable) the current option cost to fund the indexed benefit.
In 2016, the company began offering a guaranteed lifetime income rider to the company's fixed indexed annuity contracts, which allows policyholders the option to elect to receive a guaranteed income stream for life, without having to annuitize their policy. In 2021, an optional benefit was added to the rider which enhances the guaranteed income stream payout amount for a two-year period if the policyholder meets certain conditions related to the ability to perform activities of daily living. These benefits are often referred to as guaranteed living withdrawal benefits ('GLWB').
In recent years, a significant portion of the company’s new annuity sales were ‘premium bonus’ products. These products specify a bonus rate, that is applied to the premium deposited. This provides an immediate increase in the account value, but the premium bonus becomes eligible for withdrawal, or vests, over a number of years. In 2023, the company launched a flexible premium bonus indexed annuity (FPBIA) product that offers a premium bonus (expressed as a percentage of the premium deposit) for each premium deposit made, subject to contractual terms. The current range for the premium bonus is 4-5 percent.
The company has generally been successful at hedging increases to policyholder benefits resulting from increases in the indices to which the product's return is linked.
Fixed Interest Annuities: These products include fixed rate single-premium deferred annuities (‘SPDAs’) and flexible premium deferred annuities (‘FPDAs’). The company’s fixed rate SPDAs and FPDAs typically have a crediting rate that is guaranteed by the company for the first policy year, after which the company has the ability to change the crediting rate to any rate not below a guaranteed minimum rate. As of December 31, 2024, the average crediting rate on the company’s outstanding traditional annuities was 3.13 percent.
For subsequent adjustments to crediting rates, the company takes into account current and prospective yields on investments, annuity surrender assumptions, competitive industry pricing and the crediting rate history for particular groups of annuity policies with similar characteristics.
Withdrawals from fixed interest annuities the company is selling are generally subject to a surrender charge of 8 percent to 10 percent in the first year, declining to zero over a five-to-10-year period, depending on issue age and product. Surrender charges are set at levels intended to protect the company from loss on early terminations and to reduce the likelihood that policyholders will terminate their policies during periods of increasing interest rates. This practice is intended to lengthen the duration of policy liabilities and to enable the company to maintain profitability on such policies.
Penalty-free withdrawals from fixed interest annuities of up to 10 percent of either premiums or account value are available in most fixed interest annuities after the first year of the annuity's term.
Other Annuities: These products include single premium immediate annuities ('SPIAs'). 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. 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. The implicit interest rate on SPIAs is based on market conditions when the policy is issued. The implicit interest rate on the company’s outstanding SPIAs averaged 6.6 percent at December 31, 2024. Other annuities also include closed blocks of structured settlements, which were last sold over 25 years ago.
Health
Supplemental Health: Cancer insurance and heart/stroke products are guaranteed renewable individual accident and health insurance policies. Payments under cancer insurance policies are generally made directly to, or at the direction of, the policyholder following diagnosis of, or treatment for, a covered type of cancer. Heart/stroke policies provide for payments directly to the policyholder for the treatment of a covered heart disease, heart attack or stroke. Accident products combine insurance for accidental death with limited benefit disability income insurance. Hospital indemnity products provide a fixed dollar amount per day of confinement in a hospital. The benefits provided under the supplemental health policies do not necessarily reflect the actual cost incurred by the insured as a result of the illness, or accident, and benefits are not reduced by any other medical insurance payments made to or on behalf of the insured.
The company's supplemental health products include a critical illness insurance product that pays a lump sum cash benefit directly to the insured when the insured is diagnosed with a specified critical illness. The product is designed to provide additional financial protection associated with treatment and recovery, as well as cover non-medical expenses such as: loss of income; at home recovery or treatment; experimental and/or alternative medicine; co-pays, deductibles and out-of-network expenses; and childcare and transportation costs. In addition, these products include a hospital indemnity product that provides payment in the event of a hospital stay. The product is designed to help cover expenses which may not be covered by private insurance or Medicare such as deductibles and co-payments.
Medicare Supplement: Medicare is a federal health insurance program for disabled persons and seniors (age 65 and older). Part A of the program provides protection against the costs of hospitalization and related hospital and skilled nursing facility care, subject to an initial deductible, related coinsurance amounts and specified maximum benefit levels. The deductible and coinsurance amounts are subject to change each year by the federal government. Part B of Medicare covers doctor's bills and a number of other medical costs not covered by Part A, subject to deductible and coinsurance amounts for charges approved by Medicare. The deductible amount is subject to change each year by the federal government.
Medicare supplement policies provide coverage for many of the hospital and medical expenses which the Medicare program does not cover, such as deductibles, coinsurance costs (in which the insured and Medicare share the costs of medical expenses) and specified losses which exceed the federal program's maximum benefits. The company's Medicare supplement plans automatically adjust coverage to reflect changes in Medicare benefits. In marketing these products, the company concentrates on individuals who have recently become eligible for Medicare by reaching the age of 65. Approximately 58 percent of new sales of Medicare supplement policies in 2024 were within the seven-month open enrollment period that begins three months before an individual reaches age 65.
Long-Term Care: Long-term care products provide coverage, within prescribed limits, for nursing homes, home healthcare, or a combination of both. The company sells long-term care plans primarily to retirees, and to a lesser degree, to older self-employed individuals in the middle-income market.
Life
Life products include traditional and interest-sensitive life insurance products. During 2024, the company collected life insurance premiums of 22 percent of its 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 6 percent of the company’s total collected premiums in 2024. The principal differences between universal life products and other interest-sensitive life products are policy provisions affecting the amount and timing of premium payments. Universal life policyholders may vary the frequency and size of their premium payments, and policy benefits may also fluctuate according to such payments. Premium payments under other interest-sensitive policies may not be varied by the policyholders. 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 16 percent of the company’s total collected premiums in 2024. Traditional life policies, including whole life, graded benefit life, term life and single premium whole life products, are marketed through independent producers, exclusive agents and direct response marketing. Under whole life policies, the policyholder generally pays a level premium over an agreed period or the policyholder's lifetime. The annual premium in a whole life policy is generally higher than the premium for comparable term insurance coverage in the early years of the policy's life but is generally lower than the premium for comparable term insurance coverage in the later years of the policy's life. 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. The policyholder may also choose to surrender the policy and receive the accumulated cash value rather than continuing the insurance protection. Term life products offer pure insurance protection for life with a guaranteed level premium for a specified period of time - typically five, 10, 20, or 30 years. In some instances, these products offer an option to return the premium at the end of the guaranteed period.
Traditional life products also include graded benefit life insurance products. Graded benefit life insurance products are offered on an individual basis primarily to persons age 50 to 85, principally in face amounts of $400 to $50,000, with limited or no medical examination or evidence of insurability. Premiums are paid as frequently as monthly. Benefits paid are less than the face amount of the policy during the first two years, except in cases of accidental death.
Traditional life products also include single premium whole life insurance. This product requires one initial lump sum payment in return for providing life insurance protection for the insured's entire lifetime.
Investments
40|86 Advisors, Inc. (‘40|86 Advisors’, a registered investment advisor and wholly owned subsidiary of CNO) manages the investment portfolios of the company’s insurance subsidiaries.
The company’s 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 the company’s investment income and the yields the company pays 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 the company’s investment portfolio and the financial characteristics of the company’s insurance liabilities, such as durations and cash flows; manage the capital efficiency of the company’s investments through active strategic asset allocation and investment management; and use outside managers in specialized investment classes to add value to the company’s overall strategy.
Investment activities are an important and integral part of the company's business because investment income is a significant component of the company's revenues.
Competition
The company’s main competitors for agent-sold long-term care insurance products include Northwestern Mutual, Mutual of Omaha and New York Life.
The company’s main competitors for agent-sold Medicare supplement insurance products include United HealthCare, Blue Cross and Blue Shield Plans, and Mutual of Omaha.
The company’s main competitors for life insurance sold through direct marketing channels include Mutual of Omaha, Globe Life, Inc., TruStage, Gerber Life, and AAA Life Insurance.
The company’s main competitors for supplemental health products sold through its Worksite Division include AFLAC, subsidiaries of Unum, MetLife and subsidiaries of Globe Life Inc.
Governmental Regulation
The company's insurance subsidiaries are licensed to transact insurance business and are subject to extensive regulation and supervision by insurance regulators of the jurisdictions in which they operate. The company's insurance subsidiaries are domiciled in Illinois, Indiana, New York, Pennsylvania, Texas, and Bermuda, and are collectively licensed in all 50 states of the United States, the District of Columbia, in four U.S. territories, and Bermuda.
In addition to state regulations, the company is subject to federal laws, regulations and guidelines issued by the Centers for Medicare & Medicaid Services ('CMS') that place a number of requirements on plan sponsors and their agents in connection with the marketing and sale of Medicare Advantage plans.
The U.S. federal government does not directly regulate the business of insurance, although the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the ‘Dodd-Frank Act’) generally provides for enhanced federal supervision of financial institutions, including insurance companies in certain circumstances, and financial activities that represent a systemic risk to financial stability or the U.S. economy. The 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 the company's insurance subsidiaries, although the FIO is not empowered with any direct regulatory authority over insurers.
CNO's and the insurance subsidiaries' AML programs also establish and enforce customer identification programs and provide for the monitoring and the reporting to the Department of the Treasury of certain suspicious transactions.
In 2023, the company formed CNO Bermuda Re, Ltd. ('CNO Bermuda Re'), a Bermuda exempted company, which is an indirect wholly owned subsidiary of CNO. CNO Bermuda Re is registered by and subject to the supervision of the Bermuda Monetary Authority (the 'BMA') as a Class C insurer under the Bermuda Insurance Act 1978 and its related rules and regulations, each as amended (the 'Insurance Act').
The asset management activities of 40|86 Advisors and Bankers Life Advisory Services, Inc. are subject to various federal and state securities laws and regulations. The SEC is the principal regulator of the company’s asset management operations.
The company’s broker-dealer subsidiary, Bankers Life Securities, Inc., 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’). Agents and employees registered or associated with the company’s broker-dealer subsidiary are subject to the Securities Exchange Act of 1934 and to examination requirements and regulation by the SEC, FINRA and state securities commissioners. The SEC and other governmental agencies, as well as state securities commissions in the United States, have the power to conduct administrative proceedings that can result in censure, fines, the issuance of cease-and-desist orders or suspension and termination or limitation of the activities of the regulated entity or its employees.
History
The company was founded in 1979. It was incorporated in 2003. The company was formerly known as Conseco, Inc. and changed its name to CNO Financial Group, Inc. in 2010.
