CNO Financial Group, Inc.

and thank you for standing by. Welcome to the CNO Financial Group Second Quarter 2021 Earnings Call. All participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, please press star 0. I want to hand the conference over to Jennifer Child, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, and thank you all for joining us on C&O Financial Group's second quarter 2021 earnings conference call. Today's presentation will include remarks from Gary Bujwani, Chief Executive Officer, and Paul McDonough, Chief Financial Officer. Following the presentation, we will also have other business leaders available for the question and answer period. During this conference call, we will be referring to information contained in yesterday's press release, You can obtain the release by visiting the Media section of our website at cnoinc.com. This morning's presentation is also available in the Investors section of our website and was filed in a Form 8K yesterday. We expect to file our Form 10Q and post it on our website on or before August 6th. Let me remind you that any forward-looking statements we make today are subject to a number of factors which may cause actual results to be materially different than those contemplated by the forward-looking statement. Today's presentations contain a number of non-GAAP measures which should not be considered as substitutes for the most directly comparable GAAP measures. You'll find a reconciliation of the non-GAAP measures to the corresponding GAAP measures in the appendix. Throughout the presentations, we will be making performance comparisons, and unless otherwise specified, Any comparisons made will be referring to changes between second quarter 2020 and second quarter 2021. And with that, I'll turn it over to Gary.

Good morning, everyone, and thank you for joining us. Turning to slide four, we reported operating earnings per share of 66 cents, which represents 20% growth over the prior period, or 60% growth excluding significant items in both periods. Sales activity remained strong. and we have exceeded pre-pandemic levels in a number of areas. Total life and health NAP was up 35% over the second quarter of 2020 and up 10% relative to 2019 levels. Our results also benefited from ongoing deferral of medical care, which boosts our health margins, solid alternative investment performance, and continued share repurchase activity. Premium collections remained strong, and our underlying margins, excluding COVID impacts, performed well, as expected. Our capital and liquidity remained conservatively positioned. We ended the quarter with an RBC ratio of 409% and $336 million in cash at the holding company, while also returning $105 million to shareholders through a combination of share repurchases and dividends. We continue to execute well against our strategic priorities. Specifically, successfully implementing our strategic transformation that we initiated in January of 2020, growing the business profitably, launching new products and services, expanding to the right to slightly younger, wealthier consumers within the middle-income market, and deploying excess capital to its highest and best use. Turning to slide five in our growth scorecard. As was the case for six consecutive quarters prior to the pandemic, all five of our scorecard metrics were up year over year. Life sales remained strong, fueled by continued momentum in both our direct-to-consumer and exclusive field agent channels. Overall health sales were up almost 90% over the prior period, which reflected the first full quarter of the pandemic when stay-at-home restrictions were first instituted. Total collected life and health premiums were up 1%, This reflects continued solid growth in life, NAP, and persistency of our customer base offset, as expected, by lower Medicare supplement premiums. Annuity collected premiums were up 42% year-over-year. Relative to the second quarter of 2019, annuity collected premiums were up 1%. Client assets in brokerage and advisory grew 33% year-over-year to $2.6 billion, fueled by new accounts, which were up 13%, net client asset inflows, and market value appreciation. Sequentially, client assets grew 8%. Fee revenue was up 50% year-over-year to $31 million, reflecting growth in third-party sales, growth within our broker-dealer and registered investment advisor, and the inclusion of direct path results. Turning to our consumer division on Flight 6, we continue to leverage our cross-channel sales program, Our hybrid sales and service model, which blends virtual engagement with our local field exclusive field agents, has led to significant improvements in lead conversion rates, customer acquisition costs, and sales productivity. Life and health sales were up 32% over the prior period and 19% over the same period in 2019. Life sales climbed 8% for the quarter to over $50 million, reflecting the sixth consecutive quarter of year-over-year growth. Direct-to-consumer life sales were level with the record production in the prior period. Life sales generated by our exclusive field agents were up 23% and comprised over 40% of our total life sales. Leads from our direct-to-consumer business supported this growth. Within our health product line, supplemental health and long-term care sales saw healthy growth over both the second quarter of 2020 and the second quarter of 2019. These results benefited from initiatives that enable our products to be sold through multiple channels. Our third-party Medicare Advantage policy sales were up 20% in the second quarter. Medicare supplement sales remained challenged. MedSupp sales were up modestly over the first quarter, however, As discussed in previous quarters, our market is experiencing a secular shift away from Medicare Supplement and towards Medicare Advantage. We continue to invest in both our Medicare Supplement and Medicare Advantage offerings to ensure we are well positioned to meet our customers' needs and preferences. Consistent with the first quarter, roughly 50% of our consumer division life and health sales were completed virtually. consumers selecting to engage virtually held steady even as communities reopened and vaccination rates increased. This is a profound change in how we connect with consumers and further validate the transformation we initiated in January of 2020. It will continue to have significant implications for our business going forward. Among other things, this change expands our agents' ability to interact with customers across a broader geographic area. As I mentioned, annuity collective premiums were up 42% as compared to the prior year and up 1% versus 2019. The number of new annuity accounts grew 16% and the average annuity policy size rose 14%. Our portfolio of indexed annuity products continues to be well received by our middle market consumers. Our recently launched guaranteed lifetime income annuity plus was a key contributor to our second quarter annuity sales growth. Of course, we continue to maintain strict pricing discipline on our annuities to balance sales growth and profitability. Participation rates and other terms are reviewed regularly to reflect current macro environment conditions. Client assets and brokerage and advisory grew 33% year-over-year and 8% sequentially to $2.6 billion in the second quarter. Combined with our annuity account values, we now manage $12.7 billion of assets for our clients. This has fundamentally shifted the relationship we have with our customer base. Unlike some insurance products, which can be transactional in nature, investment products tend to create deeper and longer-lasting customer relationships. We continue to reap the benefits of the shift in the agent recruiting strategy that we initiated several years ago. We now rely more heavily on targeted recruiting approaches, including personal referrals. This has periodically resulted in fewer new agent recruits. However, the new agents we appoint are more likely to succeed and stay with us over time. Relative to the year-ago period, our producing agent count increased 7%. Sequentially, our producing agent count was down slightly, but overall, our agent force remained stable. Our securities-licensed registered agent force was up 6%. Improvements in agent productivity have become a more important driver of our sales growth than agent count in recent quarters, and we have significant runway for future growth. Turning to slide seven in our worksite division. Worksite sales were up sharply in the second quarter as compared to the year-ago period. We expect to approach 2019 sales levels when access to workplaces improves. Ongoing pilots and programs to target new employer groups, offer new services, and capture new business continue to progress. Retention of our existing customers also remains strong with continued stable levels of employee persistence. Our producing agent count was up 15% year-over-year and 7% sequentially. Recall that we slowed our agent recruiting during the pandemic due to workplace restrictions. As a result, agent count remains down nearly 40% from pre-COVID levels. To help boost recruitment and support a return to pre-COVID production levels, we are rolling out a field agent referral program. This program is designed similarly to our successful consumer division program. Relative to 2019 levels, our veteran agent count is up 7%. Retention and productivity levels among our veteran agents who have been with us for more than three years remains very strong. These agents have been the driving force behind our recent sales momentum and are expected to be instrumental in helping to rebuild our overall agent force. Fee revenue generated from our business has more than doubled in the quarter due to the direct path acquisition. Feedback has been strong surrounding the unique combination of products and services we can now bring to the worksite markets. We are realizing early cross-sale successes between Web Benefits Design and DirectPath, and the pipeline continues to grow. Along with strong client retention, these businesses also generated double-digit increases over both 2020 and 2019 in various metrics. Turning to slide eight, a robust free cash flow enabled us to return $105 million to shareholders in the second quarter, including $87 million in share buybacks. We also raised our dividend 8% in May, the ninth consecutive annual increase. Our capital allocation strategy remains unchanged. We intend to deploy 100% of our excess capital to its highest and best use over time. While share repurchases form a critical component of our strategy, organic and inorganic investments also play an important role. And with that, I'll turn it over to Paul.