A Letter to Shareholders from CEO Gary C. Bhojwani

Gary C. Bhojwani
Chief Executive Officer
CNO Financial Group, Inc.

To my fellow shareholders:

2023 was marked by a renewed connection to our core business.  With the impacts of the pandemic largely behind us, consumers and businesses reprioritized their financial security and healthcare needs.  Consequently, we redoubled our focus on what we do best: helping middle-income America achieve financial security and plan for the future.  A welcome return to “normalcy.”

We cannot dismiss, nor downplay, the impacts of the world around us.  The heartbreaking humanitarian toll of global wars persists.  And at home, a divided American citizenship still struggles to find common ground, heightened by an election year.  Focusing on our “day jobs”—especially in this environment—is our duty.

Our business has real-world implications for working families, retirees and businesses.  We meet with and speak to thousands of people across the country every day—often assisting during the most challenging times in their lives.  Middle-income consumers need the financial security provided by our products, services and expert guidance.  When I speak with associates in our company-wide Town Halls, there is one message I share at every meeting: What we do matters.  Insurance truly is a noble enterprise.

I remain proud of our dedicated, capable associates, agents and independent partners who genuinely care about our company and the work we do.  Their commitment forms the foundation of our company.  Their talents delivered our strong performance in 2023.  Highlights from our year included:

  • Paid $2.0 billion in claims to our policyholders and processed 450,000 new applications.
  • Delivered operating earnings per diluted share (EPS)1 of $3.09.
  • Reached an all-time high share price.
  • Achieved multiple sales production records.
  • Returned more than $230 million to shareholders.
  • Increased our quarterly common stock dividend for the 11th consecutive year.
  • Established CNO Bermuda Re and completed its first reinsurance transaction.
  • Received an upgrade by Fitch on our financial strength rating from A- to A.
  • Named as one of the Best Workplaces in Financial Services & Insurance by Fortune.
  • Named as one of America’s Best Insurance Companies by Forbes.
  • Named as one of the Best Employers for Diversity by Forbes for the fourth year.
  • Recognized as one of the Healthiest 100 Workplaces in America® for the 10th year.

I extend my sincere gratitude to Board Chair Dan Maurer and the CNO Board of Directors for their continued support and counsel. I also offer my deep appreciation to Mr. Stephen David, who retires from the CNO Board of Directors at the conclusion of his term in May 2024.  Steve joined CNO's Board in 2017 and his extensive knowledge of strategic planning, sales, marketing, and technology has been invaluable to CNO throughout his tenure.  His contributions have left an indelible mark on our company, for which we are thankful.  On behalf of my fellow directors and the CNO management team, we wish him the best in his retirement.

In the fourth quarter of 2023, I was pleased to elevate two CNO leaders to new roles within our executive leadership group: Ms. Karen DeToro as president of our Worksite Division and Mr. Jeremy Williams as chief actuary.  Karen, formerly our chief actuary, is an exemplary leader with 30 years of industry experience and a strong understanding of the employee benefits and voluntary insurance space.  She succeeded Mr. Michael Byers upon his retirement in December 2023.  Jeremy has served in actuarial leadership positions at CNO for more than 20 years and brings a deep knowledge of our products and customers to the role.  These internal moves reflect our deep bench of leadership talent.

We also welcomed Ms. Michellen (Micki) Wildin as our chief accounting officer, succeeding Mr. John Kline, who retired after a distinguished 30-year career with the company.  Micki is an accomplished finance executive with a well-rounded background within the life insurance, annuity and investment management industries.  I am confident her leadership will contribute greatly to CNO.

Strong Performance

In 2023, CNO again delivered solid earnings results and exceptional operating performance.  We posted four quarters of consistent and balanced sales momentum, increased the number of agents across both Divisions and achieved record growth in multiple product categories.

When I wrote to you last year, I shared a perspective on the primary leading indicators of the future health of our business.  In 2022, we contended with significant headwinds that were largely outside of our control and affected our results.  Importantly, the factors that were within our influence (and repeatable) were trending positively—sales production, new products, agent recruiting, policyholder persistency, overall investment management, and capital management.  With solid execution in 2023, we converted these positive trends into accelerated growth.  I share my detailed observations later in this letter.

Our financial health remains strong.  We continued to report solid insurance product margins, bolstered by our diversified product offerings.  Net investment income continued to benefit from rising yields on new investments, which exceeded 6% in all four quarters.  We maintained cost control, effectively allocating resources between growth initiatives and technology investments while optimizing operational efficiency.

Underpinning our solid financial results is a durable capital position, enhanced by our new Bermuda reinsurance structure.  Free cash flow generation is a core strength.  Book value per diluted share1,2 grew to nearly $34.  Our stock price reached an all-time high, underscoring the confidence in our business model.

The many positives in our earnings were offset in 2023 by lower alternative investment income (which is volatile by definition) and by elevated health claims during the second quarter (which moderated in the second half of the year, as expected).  We believe our earnings capacity is strong and improving.

I am pleased by the five-year performance of our stock as illustrated in our proxy statement.  But I know we can do even better.  Overall, our results reinforce the health and strength of our business model and form the basis for sustained profitable growth over the long term.

Consumer Division

How our Consumer Division serves the middle-income market through our integrated distribution model remains a powerful competitive advantage and is essential to serving this market.  Our approach is effective, repeatable and a proven enabler of growth. 

Customers engage with us online, over the phone, virtually, or in-person with an agent.  Our unique ability to marry a virtual connection with our established, in-person agent force—who complete the critical “last mile” of sales and service delivery—remains a key differentiator.

Our well-established, exclusive agent force operates at a scale that would be nearly impossible to build anew today.  Agents serve customers from our offices in more than 230 communities nationwide, bringing local knowledge and experience to every customer they assist.  The personal sales and service provided by agents create enduring relationships with our customers and their families.  Additionally, millions of prospective customers engage with our leading direct-to-consumer (D2C) life insurance business each year.

By deepening the integration between our agent force and D2C channel, we are enhancing the customer experience and generating unique and sustainable lead-sharing capabilities.  CNO is one of the only companies in the industry blending D2C with exclusive agents to better serve customers.  As a result, one-third of our Field agent-sold Life sales in 2023 originated from D2C leads.

The Consumer Division delivered a strong production year, with meaningful growth in nearly all product categories: Field agent-sold Life insurance (up 9%), direct-to-consumer (D2C) Life insurance (up 3%), and Health insurance (up 8%).  Long-term care insurance was up 27% on the strength of our new limited benefit period product.  A strong Medicare Annual Enrollment Period capped off the year, with total Medicare policies sold up 5%.

Agent recruiting was up 23% for the year, which marked six consecutive quarters of growth.  Ongoing investments in our agent referral, productivity and retention systems underpin this success. Strong agent metrics and accelerated top-line growth are interconnected.  We expect this momentum to carry into 2024.

Worksite Division

2023 marked the Worksite Division’s first full selling cycle under the Optavise brand.  As a reminder, through Optavise, we offer a single source for employers and employees to access voluntary benefits insurance products and fee-based services, including expert guidance, advocacy services and benefits administration technology.  We serve a wide range of clients and industries with our diversified distribution through exclusive agents, brokers and independent agents.

Worksite insurance sales were up 29% for the full year, underscoring the positive reception from the employer benefits market.  In five of the past six quarters, insurance sales delivered 20% growth or more.  Sales results were bolstered by significant agent count growth (up 27%), building upon seven consecutive quarters of steady increases.  Investments in new products and geographic expansion into new territories accelerated our momentum.

While I am pleased with our insurance sales production, we have yet to live up to the full potential of the fee-based services business.  A sizable opportunity exists to generate more value.  By continuing to strengthen the integration across our sales channels and service offerings, we expect to drive meaningful improvements in our client service capabilities and cross-sale opportunities.

Solid Investments and Capital Management

Our high-quality investment portfolio continued to perform well, with solid credit performance.  We remain well-positioned to maximize the benefits from favorable interest rates.  Leveraging the proven experience of our seasoned investments team, we continue to be opportunistic—yet disciplined—in our approach to portfolio management.  We benefit from strong, long-standing relationships with asset managers in select, specialized areas whose performance is additive to our results.

Our consolidated RBC ratio for our U.S.-based insurance subsidiaries and our holding company liquidity well exceeded our stated target levels.  We generated $311 million of free cash flow in 2023, bolstered by our Bermuda reinsurance captive.  Fitch also upgraded our financial strength rating in November 2023, which reconfirmed the value of our solid balance sheet, strong cash flows and disciplined capital management.

Maintaining our commitment to capital return, we returned $233 million to shareholders in 2023.  In the past 10 years, we returned $3.1 billion to shareholders in the form of securities repurchases ($2.5 billion) and dividends ($0.6 billion).  We reduced our share count by 50% during this time.

In May of 2023, we raised our quarterly dividend to $0.15 per share, our 11th consecutive annual increase.  Our commitment to enhancing long-term shareholder value is steadfast.

Why Invest in CNO

CNO is a growth story that offers compelling long-term shareholder value creation.  As shared in previous letters and forums, our diverse business model—in markets, distribution channels and products—is unique and valuable.  It lowers our risk profile and establishes natural hedges, creating stability and resilience in our performance.

We operate in the middle-income market—a growing, yet underserved demographic—that presents a significant, enduring opportunity.  Over the last several decades, the responsibility for funding retirement has shifted from employers onto individuals.  Retirement requires proactive planning.  As such, middle-income customers need and deserve access to professional guidance and critical insurance and retirement products as do more affluent consumers.  We are there to serve them.

And we do not foresee market demand subsiding anytime soon.  Between 2024 and 2027, more Americans will turn age 65 than during any previous point in history.3  In fact, approximately 11,000 Americans will reach traditional retirement age every day through 2027—more than 4.1 million people every year.3

Our distribution and product capabilities are designed to serve this market, at home and at the workplace.  Our diverse and multichannel distribution model, including exclusive agents, D2C and independent partners, provides choice in how our customers interact with us.  How we integrate these channels is a key differentiator and a reason our proven ability to reach the middle-income market is all but unmatched.

Customers are also looking to supplement human interaction with technology.  Strategic investments in technology-enabled tools (our myHealthPolicy.com Medicare marketplace and instant decision accelerated underwriting) and AI capabilities are improving customer experience and operational efficiency.

The combination of both manufactured and distributed products lends balance to our portfolio of insurance, securities and services.  Whether it is our manufactured products or a high-quality policy from a third-party partner, the hallmark of our offerings is that they are straightforward, well-priced and designed for the middle-market consumer.

Investing in products was a priority in 2023, as demonstrated by five new introductions and refreshments in our product portfolio.  We also expanded third-party Medicare Advantage plan offerings to bring more high-quality plan choice to our clients, especially during the critical Medicare Annual Enrollment Period.

When asked what sets CNO apart and drives our success, the answer always starts with our people. Our associates and agents meet with customers, answer phone calls from policyholders and their loved ones, develop products and pay claims, among many other services. How our team executes, and the way they deliver on behalf of all our stakeholders, makes CNO an attractive investment opportunity. Details on our corporate social responsibility commitments are available on our website www.CNOinc.com.

What to Expect in 2024

We expect 2024 to benefit from a backdrop of favorable interest rates and improving market demographics that will help minimize macroeconomic disruptions.  At this time last year, the banking crisis began to unfold and impacts to the markets and the U.S. economy were unknown.  While this crisis ultimately did not materially affect our business, we cannot predict the future any more than we could have last March.  What I do know is that the strength and resilience of our company is proven.  I know we can navigate the roughest waters, a fact which we have demonstrated.

Our sales engine has momentum, and our agent force is growing.  Your company’s strong financial position is built on a solid balance sheet and bolstered by our disciplined expense and capital management.  Together, they lay the foundation for sustained profitable growth.

CNO is an exceptional company that I am fortunate to lead.  I am grateful and proud to work alongside our dedicated, compassionate team of associates, agents and independent partners.  We say what we will do—and then we do what we say.  And we back our commitments with a proven record of execution.  I remain confident in the shareholder value our business will deliver in 2024 and for years to come.

Please join me in expressing hope for peace and global security in 2024.  Thank you for your continued support of, and interest in,
CNO Financial Group.


Gary C. Bhojwani
Chief Executive Officer
CNO Financial Group, Inc.

March 22, 2024

A non-GAAP measure. "See Annex A—Information Related to Certain Non-GAAP Financial Measures” of our Proxy Statement filed on March 27, 2024, with the Securities and Exchange Commission for a description of this measure and a reconciliation to the corresponding GAAP measure.

2 Excluding accumulated other comprehensive income (loss).

3 CNBC, February 8, 2024. “As baby boomers hit ‘peak 65’ this year, what the retirement age should be is up for debate.”

This letter contains forward-looking statements. These statements are subject to significant risks and uncertainties, including those described in our Annual Report on Form 10-K that accompanies this letter.