10-K: CNO Financial Group Reports Mixed 2025 Results Amid Strategic Shifts

Sentiment:

Annual Report 24 February 2026 4:54 PM

📋All filings for Cno Financial Group, INC

CNO Financial Group's 2025 net income declined significantly due to one-time charges, though operating income saw a modest increase, driven by strong premium collections and strategic business exits.

Summary

Net income for 2025 was $229.3 million, a decrease from $420.8 million in 2024, primarily due to non-operating losses.
Operating net income increased to $439.2 million in 2025 from $429.3 million in 2024, reflecting improved core business performance.
Total premium collections rose to $4,591.3 million in 2025, up from $4,378.7 million in 2024, with growth across annuity, health, and life segments.
The company announced its intention to exit the fee services business within its Worksite Division, expected to be substantially complete in the first half of 2026, which is projected to reduce annual fee revenue by approximately $30.0 million but increase annual pre-tax income by roughly $20 million.
Goodwill and other asset impairment charges totaled $101.9 million in 2025, related to the Optavise, LLC business within the fee income segment.
Expenses related to the TechMod initiative, a three-year technology modernization project, amounted to $20.3 million in 2025, with an expected $76 million in 2026.
The company's operating return on equity (ROE), excluding significant items, was 11.4% in 2025, consistent with 2024, and is targeting a 200 basis point improvement through 2027 from a 2024 run-rate of approximately 10%.
The consolidated statutory Risk-Based Capital (RBC) ratio for U.S. based insurance subsidiaries was 380% at December 31, 2025, within the target range of 360% to 390%.
The company repurchased 8.1 million shares of common stock for $319.9 million in 2025, with remaining repurchase authority of $420.4 million.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as moderately positive. While net income was significantly impacted by one-time charges, the underlying operating performance and strategic moves to divest non-core businesses and modernize technology suggest a positive trajectory for future profitability and efficiency.

Positives

Operating net income increased to $439.2 million in 2025, indicating strength in core insurance operations.
Total premium collections grew by 4.9% to $4,591.3 million in 2025, driven by strong performance in fixed indexed annuities, supplemental health, and long-term care.
Medicare supplement sales were very strong in Q4 2025, reflecting a shift in consumer preferences and expected positive impact on 2026 results.
The strategic decision to exit the Worksite fee services business is expected to increase annual pre-tax income by approximately $20 million.
The company's consolidated statutory RBC ratio of 380% remains within the targeted healthy range of 360% to 390%.
Alternative investment income improved significantly in 2025 compared to prior years.
The company increased its quarterly common stock dividend to $0.17 per share in May 2025, demonstrating confidence in future cash flows.

Negatives

Net income significantly decreased to $229.3 million in 2025 from $420.8 million in 2024, primarily due to non-operating charges.
Goodwill and other asset impairment charges of $101.9 million were recognized in 2025, indicating underperformance of the Optavise, LLC business.
Expenses related to the TechMod initiative, a three-year technology modernization project, incurred $20.3 million in 2025 and are projected to be $76 million in 2026, impacting non-operating earnings.
A net loss of $17.3 million was incurred in Q4 2025 related to the divested Worksite fee services business.
Fee income decreased by $14.8 million in 2025, partly due to unfavorable experience adjustments and lower persistency assumptions for Medicare Advantage products.
The company's expense ratio, while improving, remains a focus area for efficiency.

Risks

Exposure to interest rate risk, including volatility, may negatively impact results, financial position, or cash flow.
Future investment results, including realized losses, may diminish asset value and negatively impact profitability and liquidity.
The ultimate outcome of lawsuits and other legal/regulatory proceedings is uncertain and could have a material adverse effect.
Inability to obtain adequate and timely rate increases on health products, particularly long-term care, could adversely affect financial results.
Inaccurate actuarial models and assumptions could lead to significant gains or losses if actual results differ.
Policyholder surrender levels differing significantly from assumptions could result in losses and decreased revenues.
Credit risk with respect to reinsurance, as the company remains liable if reinsurers default on obligations.
Restrictive covenants and required financial ratios in debt agreements could limit operating flexibility and trigger defaults.
CNO's liquidity as a holding company depends on cash distributions from subsidiaries, which are subject to regulatory approvals and financial health.
Potential limitations on the use of existing Net Operating Losses (NOLs) due to ownership changes under Section 382 of the Code, which could result in a significant writedown of deferred tax assets.
Changes in tax laws could increase tax costs or reduce sales of insurance and annuity products.
Extensive regulation limits operating flexibility and could result in insurance subsidiaries being placed under regulatory control.
Operational risks, including fraud, errors, IT failures, and cybersecurity attacks, could lead to financial loss, business disruption, or reputational damage.
The use or anticipated use of AI technologies may increase operational risks or create new, unanticipated risks.
Difficulties arising from outsourcing relationships could interrupt or compromise business operations.
A decline in financial strength ratings of insurance subsidiaries could decrease sales, increase agent attrition, and increase policyholder lapses.
Competition from larger companies with greater resources and brand recognition may impair market share and profitability.
Inability to attract and retain agents and key personnel could reduce sales and adversely impact operations.
Inability to protect intellectual property or being subject to infringement claims could result in costly litigation or business disruption.
Major public health issues could adversely impact financial condition, results of operations, liquidity, and cash flows.
Natural or man-made disasters or climate change could adversely affect financial condition and results of operations.

Future Outlook

CNO Financial Group expects 2026 operating earnings per diluted share to be in the range of $4.25 to $4.45, excluding significant items. The expense ratio is projected to be between 18.8% and 19.2%, with a quarterly decline throughout the year. Net investment income not allocated to product lines is expected to improve due to higher returns on alternative investments. Fee income is anticipated to be approximately $30 million for the year, with benefits from the exit of the Worksite fee services business. The effective tax rate is estimated at 22.5%. The company targets a 200 basis point improvement in run-rate operating ROE through 2027, from a 2024 run-rate of approximately 10%. Free cash flows are expected to be in the range of $200 million to $250 million. The TechMod initiative is projected to cost approximately $76 million in 2026, mostly expensed as non-operating.

Management Comments

We focus on serving middle-income pre-retiree and retired Americans, which we believe are attractive, underserved, high growth markets.
We are disciplined with our marketing expenditures and will increase or decrease our marketing spend depending on the current economics of the purchase or other factors, including the effectiveness of advertising spend.
We have no present intention of exercising our right to defer payments of interest on the Debentures.
We continue to invest in both our Medicare supplement products and Medicare Advantage distribution to meet our customers' needs and preferences.
We continue to target an improvement in run-rate operating ROE of 200 basis points through 2027, off a 2024 run-rate of approximately 10 percent.
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.

Industry Context

StockSavvy.ai notes that CNO Financial Group operates in a highly competitive financial services industry, facing larger competitors with greater capital, technological, and marketing resources. The company's focus on middle-income pre-retiree and retired Americans positions it in an underserved, high-growth market. Regulatory changes, particularly in health insurance (Medicare supplement, long-term care) and the increasing scrutiny on AI and data privacy, are significant industry trends impacting CNO. The shift in consumer preferences from Medicare Advantage to Medicare Supplement, as observed in Q4 2025, presents a favorable trend for CNO's core Medicare supplement business. The industry is also grappling with the implications of climate risk and enhanced regulatory oversight of complex assets like CLOs, which CNO is actively addressing through its investment strategies and Bermuda reinsurance subsidiary.

Comparison to Industry Standards

CNO's primary insurance subsidiaries hold strong financial strength ratings: 'A' from Fitch, 'A-' from S&P, 'A3' from Moody's, and 'A' from AM Best, indicating a strong capacity to meet policyholder obligations, though some major competitors have higher ratings.
In the 2024 Medicare Supplement Earned Premium report, CNO ranked seventh with a market share of 1.7%, significantly behind the top writer's 34.2% market share, indicating room for growth but also intense competition.
One of CNO's subsidiaries (Bankers Life) ranked second in new annualized premiums for individual long-term care insurance in 2024, with a market share of 25.8%, demonstrating a strong position in this niche, though still behind the top writer's 37.2%.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Accounting Officer	NA	Joel T. Koehneman	January 2025	Appointment
President, Worksite Division	NA	Karen J. DeToro	January 2024	Promotion from Chief Actuary and Chief Risk Officer
Chief Actuary	Karen J. DeToro	Jeremy D. Williams	January 2024	Promotion from Senior Vice President of Valuation
Chief Operations Officer	NA	Jeanne L. Linnenbringer	January 2023	Promotion from Senior Vice President of Operations
Chief Information Officer	NA	Michael E. Mead	January 2023	Promotion from Senior Vice President and Chief Information Officer
Chief Executive Officer (Employment Agreement Amendment)	NA	Gary C. Bhojwani	February 23, 2026	Amendment to clarify maximum annual bonus opportunity to 200% of Target Bonus.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Amendment to Certificate of Incorporation	Stockholders approved an amendment (NOL Protective Amendment) to preserve the value of Net Operating Losses (NOLs) by restricting direct or indirect stock transfers that could trigger a 50% ownership change under Section 382 of the Code. This amendment expires on July 31, 2028.	May 8, 2025	Enhances protection of tax assets, but could be deemed to have an anti-takeover effect by restricting accumulation of substantial blocks of common stock without board approval.
Fifth Amended and Restated Section 382 Rights Agreement	CNO entered into this agreement to help protect the company's tax NOLs by deterring any person from becoming a beneficial owner of 4.99% or more of common stock without board approval. Each common stock share has a right to purchase Series F Preferred Stock.	November 13, 2023	Acts as a deterrent to hostile takeovers and helps preserve valuable tax assets, potentially limiting shareholder flexibility in accumulating large stakes.
Revolving Credit Agreement Amendment	The company entered into a sixth amendment and restatement agreement for its $250.0 million Credit Agreement, updating covenants including a debt to total capitalization ratio not exceeding 35.0% and a minimum consolidated net worth.	May 8, 2025	Maintains financial flexibility while ensuring compliance with lender requirements, but restrictive covenants could limit future operating flexibility.
Board Oversight of Cybersecurity	The Audit and Enterprise Risk Committee (AERC) of the Board of Directors receives regular reports on the cybersecurity program and potential risks. One AERC member holds a CERT Certification in Cybersecurity Oversight, and another has significant technology experience.	Ongoing	Strengthens oversight of cybersecurity risks, aligning with increasing regulatory focus on data security and privacy.

Legal Proceedings

The company is involved in various legal actions, including class action suits and derivative suits from policyholders and/or shareholders, with claims for compensatory and punitive damages.
In the Burnett v. Conseco Life Ins. Co. case, a jury returned a notional verdict of approximately $0.2 million in favor of class representatives on June 18, 2025. A bench trial on alter ego liability was held from August 26 to September 2, 2025, with no ruling yet. The outcome of all trials will be subject to appeal.
Regulatory investigations and actions are ongoing, focusing on sales, marketing, claims payment practices, and product issues, which could result in monetary penalties, business restrictions, or reputational harm.
Guaranty fund assessments for insolvent insurers are accrued at $6.6 million as of December 31, 2025, with estimated recoveries of $15.3 million through future premium tax reductions.

Related Party Transactions

CNO and CDOC (holding companies) depend on operating subsidiaries for cash, receiving dividends, distributions, interest payments on surplus debentures, and tax-sharing payments.
40|86 Advisors (wholly-owned subsidiary) receives fees from insurance subsidiaries for investment services.
CNO Services, LLC receives fees from insurance subsidiaries for administrative services.
CDOC holds surplus debentures from Conseco Life Insurance Company of Texas (CLTX) with an aggregate principal amount of $749.6 million, and from Colonial Penn Life Insurance Company with a principal balance of $160.0 million.
CNO Bermuda Re, Ltd. (indirect wholly-owned subsidiary) has a Capital and Liquidity Maintenance Agreement (CLMA) with CDOC, requiring CDOC to contribute funds if CNO Bermuda Re's capital or liquidity falls below certain thresholds.
CNO Bermuda Re may not pay dividends or make capital distributions to its parent within five years of the 2023 reinsurance transaction without BMA approval.

Stakeholder Impact

Shareholders: Impacted by net income fluctuations, share repurchase programs, and dividend payments. The NOL Protective Amendment and Rights Agreement aim to protect shareholder value by preserving tax assets but may limit certain large acquisitions.
Policyholders/Contract Holders: Directly affected by the company's ability to pay claims and obligations, which is supported by strong financial strength ratings and regulatory oversight. Changes in premium rates and policy features can impact them.
Employees: Affected by human capital management practices, compensation, health and well-being programs, and flexible work arrangements. The 2024 workforce reduction and new roles indicate ongoing organizational adjustments.
Agents/Distribution Partners: Success is dependent on the company's ability to attract and retain productive agents and marketing organizations, influenced by financial strength ratings, support services, and compensation.
Creditors: Impacted by the company's ability to meet debt service obligations, which is supported by holding company liquidity and financial covenants in debt agreements.
Regulatory Authorities: The company is subject to extensive regulation and supervision, with compliance impacting operations and financial results.

Next Steps

Substantially complete the exit of the Worksite fee services business in the first half of 2026.
Continue the three-year TechMod initiative, with approximately $76 million in expenses expected in 2026.
Seek regulatory approval for future dividends from insurance subsidiaries.
Monitor and potentially revise the 'fiduciary' definition and related PTE amendments by the U.S. Department of Labor.
Evaluate the effect of new FASB accounting standards (ASU 2025-08, ASU 2025-06, ASU 2025-05, ASU 2024-03) on consolidated financial statements and disclosures.
Continue to manage to a consolidated RBC ratio in the range of 360% to 390% for U.S. based insurance subsidiaries.
Maintain minimum holding company liquidity of $150 million.
Manage to a target debt to total capital, excluding accumulated other comprehensive loss, in the range of 25% to 28%.
Continue to deploy free cash flow into investments for profitable growth, common stock dividends, and share repurchases.

Key Dates

Date	Description
September 10, 2003	Effective date of predecessor company's plan of reorganization (Conseco, Inc. bankruptcy).
January 30, 2009	Record date for the initial dividend of one preferred share purchase right for each outstanding share of common stock.
June 12, 2019	Date of Indenture for 5.250% Senior Notes due 2029.
November 25, 2020	Issuance date of 5.125% Subordinated Debentures due 2060.
January 1, 2021	Effective date for certain discount rate calculations for future policy benefits.
January 1, 2023	California Privacy Rights Act (CPRA) came into effect.
September 1, 2023	Restated effective date for CNO Services, LLC Executive Severance Pay Plan.
November 10, 2023	Date of Fifth Amended and Restated Section 382 Rights Agreement and Second Amendment to Gary C. Bhojwani's Employment Agreement.
November 13, 2023	Effective date of Fifth Amended and Restated Section 382 Rights Agreement.
November 1, 2023	NYDFS adopted amendments to cybersecurity regulation, with certain provisions subject to other transition dates through November 1, 2025.
December 13, 2023	SEC adopted amendments requiring covered clearing agencies to clear eligible secondary market transactions in U.S. Treasury securities.
December 31, 2023	End of fiscal year 2023. Campus with six buildings listed for sale.
January 25, 2024	Delaware Chancery Court granted in part and denied in part CNO Parties' motion to dismiss in Platinum Partners lawsuit.
April 9, 2024	PGS filed a second amended complaint in the Platinum Partners lawsuit.
April 2024	U.S. Department of Labor issued a regulation intended to change the definition of 'fiduciary' for ERISA and Internal Revenue Code purposes.
May 13, 2024	Company issued $700.0 million of 6.450% Senior Notes due 2034.
June 24, 2024	S&P affirmed 'A-' financial strength ratings of primary insurance subsidiaries.
July 2024	NYDFS released a circular letter on external consumer data and AI systems in underwriting and pricing.
August 7, 2024	Date of Amended and Restated Bylaws of CNO Financial Group, Inc.
September 30, 2024	Company discontinued ceding 25% of long-term care new business under a reinsurance agreement.
October 1, 2024	Effective date for discontinuing ceding 25% of long-term care new business.
November 2024	NAIC adopted an amendment to the P&P Manual regarding SVO review of filing exempt securities.
December 31, 2024	End of fiscal year 2024.
January 1, 2025	New principles-based definition of a bond effective in certain statutory accounting guidance. Bermuda Personal Information Protection Act (PIPA) became fully effective.
February 2025	Board of Directors authorized repurchase of an additional $500.0 million of common stock. AM Best affirmed 'A' financial strength ratings of primary insurance subsidiaries.
March 2025	Company executed a consent agreement with the IRS for tax method change related to indirect costs, recharacterizing $797.6 million of capitalized indirect costs to an NOL with no expiration date.
May 8, 2025	Stockholders approved an amendment to the amended and restated certificate of incorporation (NOL Protective Amendment). Company entered into a sixth amendment and restatement agreement for its revolving credit agreement. Company increased its quarterly common stock dividend to $0.17 per share.
June 16, 2025	Three-day jury trial on causation and damages for class representatives in Burnett v. Conseco Life Ins. Co. commenced.
June 18, 2025	Jury returned a verdict in favor of class representatives in Burnett v. Conseco Life Ins. Co. for approximately $0.2 million.
June 24, 2025	S&P affirmed 'A-' financial strength ratings of primary insurance subsidiaries.
July 4, 2025	One Big Beautiful Bill Act of 2025 enacted in the United States.
August 13, 2025	NAIC adopted actuarial guideline (AG 55) requiring disclosure related to reserve adequacy for reinsured long-duration insurance business. NAIC adopted a PBR framework for non-variable annuities (VM-22).
August 26, 2025	Bench trial on alter ego liability in Burnett v. Conseco Life Ins. Co. commenced.
September 2, 2025	Bench trial on alter ego liability in Burnett v. Conseco Life Ins. Co. concluded.
October 1, 2025	CNO Bermuda Re reinsured $1.9 billion of inforce supplemental health statutory reserves from Washington National.
October 21, 2025	Fitch affirmed 'A' financial strength ratings of primary insurance subsidiaries and 'BBB+' and 'BBB' on issuer credit and senior unsecured debt ratings, respectively.
November 2025	Company announced intention to exit the fee services business within its Worksite Division. Company sold one of six buildings from its 77-acre campus.
November 25, 2025	Optional redemption date for 5.125% Subordinated Debentures due 2060.
December 2025	Post-trial briefing completed for Burnett v. Conseco Life Ins. Co. alter ego liability trial.
December 31, 2025	End of fiscal year 2025.
January 1, 2026	NAIC's Group Capital Calculation (GCC) annual filing requirement effective. NAIC's amendment to the P&P Manual regarding SVO review of filing exempt securities became effective. PBR framework for non-variable annuities (VM-22) effective.
February 17, 2026	Shares of common stock outstanding: 94,277,712.
February 23, 2026	Third Amendment to Gary C. Bhojwani's Amended and Restated Employment Agreement entered into.
February 24, 2026	Date of this 10-K filing.
November 13, 2026	Expiration date of the Fifth Amended Rights Agreement.
December 31, 2026	NAIC's interim statutory accounting guidance for negative IMR balance expires. Eligible cash market transactions in U.S. Treasury securities must be cleared by this date.
July 31, 2028	Expiration date for the 2025 Section 382 Charter Amendment.
May 8, 2030	Maturity date of the Revolving Credit Agreement.
November 25, 2060	Maturity date of 5.125% Subordinated Debentures.

Recommendation

hold

CNO Financial Group's core operating performance shows resilience and growth in premium collections, and strategic initiatives like the Worksite fee services exit are expected to improve future profitability. However, the significant one-time non-operating charges, including goodwill impairment and TechMod expenses, weighed heavily on net income in 2025. While the long-term outlook for operating ROE is positive, the immediate impact of these charges and ongoing regulatory and market risks suggest a 'Hold' recommendation. Investors should monitor the successful execution of the TechMod initiative, the benefits from the Worksite divestiture, and the resolution of legal proceedings for clearer future direction.

Keywords

Insurance, Annuities, Life Insurance, Health Insurance, SEC Filing, 10-K, Financial Services, CNO Financial Group, Risk Management, Corporate Governance, Net Operating Loss, NOL, Subordinated Debentures, Preferred Stock, Share Repurchase, Dividends, Actuarial Review, Cybersecurity, AI, TechMod, Goodwill Impairment, Reinsurance, Fixed Indexed Annuities, Medicare Supplement, Long-Term Care

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