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CNO Financial (CNO) Q1 Earnings Miss, Revenues Surpass

CNO Financial Group, Inc.’s CNO first-quarter 2016 net operating earnings of 27 cents per share missed the Zacks Consensus Estimate by 15.6%. The bottom line also declined 10% year over year.

The deterioration was attributable to higher expenses and weak segmental performances.

Including the impact of one-time items, CNO Financial reported net income of 25 cents per share, down 3.8% year over year.

CNO Financial’s first-quarter revenues dipped 1.8% year over year to $960.4 million. However, the top line beat the Zacks Consensus Estimate of $957 million by 0.4%.

Total new annualized premiums increased 2% year over year to $107.8 million. Moreover, collected premiums came in at $896.3 million, up 11% year over year.

Total benefits and expenses increased 2.7% year over year to $919.9 million.

Segment Update

Pre-tax operating earnings at the Bankers Life segment declined 5.5% year over year to $77.6 million in the reported quarter.

Washington National’s pre-tax operating earnings decreased 7.7% year over year to $26.3 million in the quarter. The underperformance was attributable to lower investment income from alternative investments than the year-ago quarter.     

Pre-tax operating loss at Colonial Penn was $6.8 million, wider than the year-ago loss of 5.9 million. The deterioration can be attributed to higher seasonal marketing costs and investments in new business.

The Corporate Operations segment includes investment advisory subsidiary and corporate expenses. Pre-tax operating loss in this segment was $8.1 million, much wider than the year-ago loss of $1.3 million. Higher expenses and less favorable investment returns in the reported quarter led to the deterioration.

Financial Update

As of Mar 31, 2016, the consolidated statutory risk-based capital ratio of CNO Financial was 441%. This reflects statutory operating earnings of $80 million and dividend of $88.7 million paid to the holding company during the first three months of 2016.

Additionally, unrestricted cash and investments of CNO Financial’s holding company was $375 million as of Mar 31, 2016, down 1.8% from $382 million as of Dec 31, 2015. This included dividends from subsidiaries, share repurchases and dividend payments.

As of Mar 31, 2016, CNO Financial’s debt-to-total capital ratio, excluding accumulated other comprehensive income (loss), deteriorated 20 basis points to 19.8% from year-end 2015. Book value per common share, excluding accumulated other comprehensive income (loss), increased 1.6% to $20.38 as of Mar 31, 2016 from $20.05 as of Dec 31, 2015.

As of Mar 31, 2016, CNO Financial had total assets worth $31.5 billion, up 1.1% from $31.1 billion as of Dec 31, 2015. Shareholder equity of $4.2 billion increased 2.1% from $4.1 billion as of Dec 31, 2015.

Securities Repurchase Update

CNO Financial spent $90.0 million to buy back 5.3 million shares. The company intends to spend $275–$375 million on share repurchases in 2016. As of Mar 31, 2016, CNO Financial had = $365.7 million worth remaining under its authorization.    

Dividend Update

CNO Financial spent $12.7 million as dividend payment during the reported quarter.

Zacks Rank and Performance of Other Multiline Insurers

CNO Financial currently carries a Zacks Rank #3 (Hold). Some other multi line insurers too recently released their first-quarter earnings results. While the bottom line at Assurant, Inc. AIZ and Radian Group Inc. RDN beat their respective Zack Consensus Estimate, MGIC Investment Corp. MTG missed the same in the first-quarter.

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RADIAN GRP INC (RDN): Free Stock Analysis Report
 
ASSURANT INC (AIZ): Free Stock Analysis Report
 
MGIC INVSTMT CP (MTG): Free Stock Analysis Report
 
CNO FINL GRP (CNO): Free Stock Analysis Report
 
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