CNO Financial Group, Inc.

Today's conference is scheduled to begin shortly. Please continue to stand by. Thank you for your patience. Thank you. good day and thank you for standing by welcome to the cno financial group fourth quarter 2021 earnings conference call at this time 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 will need to press star 1 on your telephone please be advised that today's conference is being recorded If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Ms. Jennifer Child, Vice President of Investor Relations and Sustainability. Please go ahead, ma'am.

Thank you, operator. Good morning, and thank you for joining us on CNO Financial Group's fourth quarter 2021 earnings conference call. Today's presentation will include remarks from Gary Bourgeoisne, 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 10K and post it on our website on or before February 25th. 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 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 fourth quarter 2020 and fourth quarter 2021. And with that, I'll turn the call over to Gary.

Thank you, Jennifer. Good morning, everyone, and thank you for joining us. Turning to slide four and our full year performance. We delivered another strong year of results, reinforcing the strength and resiliency of our business. We reported operating earnings per share growth of 10%, generated free cash flow of $380 million, and returned $468 million to shareholders, including record share repurchases of $402 million, reflecting 13% of our market cap as of the beginning of 2021. Operating earnings per share grew 9%, excluding significant items and COVID impacts in both periods. Our results reflect the strength of our overall franchise, the stability of our operations, the diversity of our product suite and distribution channels, the impacts from our strategic transformation, and most importantly, the expertise and dedication of our associates and agents. In 2021, we made significant progress against our strategic priorities. Within our consumer division, we strengthened the integration between our direct-to-consumer and field agent channels. We meaningfully enhanced our online health insurance marketplace and generated agent productivity gains in each quarter of the year. Within our worksite division, we acquired DirectPath in February, significantly improving the attractiveness and capabilities of our worksite offerings. further integrated our worksite businesses and began executing on a cross-sale playbook, and piloted initiatives to position us for growth in the hybrid work environment. At the enterprise level, we prudently managed our operating expenses while investing in technology and digital tools to enhance our virtual sales and customer service capabilities. We also made significant progress with our ESG program. Last week, MSCI upgraded our ESG score by two notches to single A, We are now ranked in the top quartile of life insurance peers. In January of this year, AMBEST upgraded the financial strength rating of C&O's life and health subsidiaries from A- to A. We are very pleased with this recognition of our strong balance sheet, operating performance, and high-quality investment portfolio. Turning to slide five and our results for the quarter. For the fourth quarter, operating earnings per share were up 26 cents, or 43%. Excluding COVID impacts and significant items in both periods, operating earnings per share were up 13 cents or 28%. Our production metrics were strong and continue to exceed pre-pandemic levels in most areas, particularly within our direct-to-consumer business. Our worksite business is making continued progress, but has not yet returned to pre-pandemic levels. Total collected premiums remained robust, exceeding pre-pandemic levels. Our underlying insurance margins, excluding COVID impacts, performed well and we managed expenses prudently. Our capital and investment portfolio remained conservatively positioned with ample liquidity. We ended the quarter with an RBC ratio of 386% and $249 million in cash at the holding company. This is after returning $116 million to shareholders through a combination of share repurchases and dividends. Turning to slide six and our growth scorecard. All five growth scorecard metrics were up compared to the fourth quarter and full year of 2020. And most production metrics are higher relative to pre-pandemic 2019 levels. Life sales were up for the quarter compared to 2020, fueled largely by continued momentum in our direct-to-consumer channel. For the full year, life sales were up 12%. Overall health sales were down 3% for the quarter, reflecting a continuing shift by consumers away from Medicare supplements. But health sales were up 6% for the full year. Total collected life and health premiums were up 1% for the quarter. This reflects solid 5% growth in life collected premiums offset, as expected, by lower Medicare supplement premiums. For the full year, life and health premiums were also up 1%. Annuity collected premiums were up 15% for the quarter and up 20% for the year. Relative to 2019, annuities were up 7%. Client assets in our brokerage and advisory grew 25% year over year to $2.9 billion, fueled by new accounts, which were up 17%, net client asset inflows, and market value appreciation. Sequentially, client assets grew 8%. Fee revenue was up 54% for the quarter to $56 million, reflecting significant growth in our distribution of third-party products, expansion of our broker-dealer and registered investment advisor, and our 2021 acquisition of DirectPath. Turning to our consumer division on slide seven. I continue to be pleased with how we're executing against our transformation objectives to drive synergies between our agent and direct-to-consumer businesses. Life sales were up 4% for the quarter, driven by continued director-to-consumer sales momentum, which was up 21%. Life sales generated by our exclusive field agents were down 12% as the tight labor market slowed recruitment of first-year agents who tend to sell a higher proportion of life policies. Health sales were down 4% with strong long-term care sales offset by continued weakness in Medicare supplements. As a reminder, our long-term care policies have short durations. The average benefit period is 12 months. 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 remain well-positioned to meet our customers' needs and preferences. For example, Later this year, we plan to launch a new Medicare supplement product that we believe is more aligned with consumer preferences. Total third-party sales grew 24%, and Medicare Advantage sales were up 20% during the fourth quarter's annual enrollment period. We attribute this growth to our high-touch model, which blends the digital capabilities of our growing online health platform, MyHealthPolicy.com, with the personal support of our teleagents and local bankers' life agents. Recent investments are driving meaningful increases to lead flow and customer engagement in our online marketplace. But what makes us different is the size and tenure of our professionally trained exclusive agent sales force. Bankers Life local field agents guided 95% of our Medicare Advantage customers with their purchases. This is a unique strength in how we acquire service and retain our clients, which we believe cannot be easily replicated. On a combined basis, the number of Medicare Advantage and Medicare Supplement policies sold was up 12% over the fourth quarter of 2020 and 2% over the full year of 2020. Annuity collective premiums were up 15% compared to the prior year quarter, and the average annuity policy size rose 12%. We continue to maintain strict pricing discipline on our annuities to balance sales growth and profitability. Participation and crediting rates are reviewed regularly to reflect current macro environment conditions. We remain very comfortable with the economics of our annuity book. Client assets in brokerage and advisory grew 25% year-over-year to $2.9 billion in the fourth quarter. Approximately two-thirds of the increase came from new accounts and one-third from market appreciations. Combined with our annuity account values, we now manage more than $13 billion of assets for our clients. As planned, this has fundamentally shifted the relationship we have with our customer base. Unlike some insurance products, which can be transactional in nature, investment products typically create deeper and longer lasting customer relationships. In recent years, we proactively shifted our agent recruiting strategy to focus more heavily on targeted approaches paired with strategies to boost the productivity levels of our existing agent base. While we recruit fewer new agents, the new agents that we do appoint are more likely to succeed and stay with us over time. The tight labor market impacted us during the fourth quarter and throughout 2021. Our total producing agent count declined 12% as we recruited fewer first-year agents. As a reminder, producing agent count represents the monthly average of agents that have submitted at least one policy during the quarter. Importantly, the total agent productivity is up over the prior year, and retention remains strong among our veteran agents, who typically generate higher premiums per policy. We continue to deploy various programs to boost our new agent recruiting, but expect near-term recruiting headwinds to remain. Turning to slide eight in our worksite division. Worksite sales were up 16% in the fourth quarter. We continue to see steady improvement in this business despite prolonged COVID disruption. We expect the pace of worksite recovery to improve in the coming quarters as COVID disruptions subside and worksites reopen more broadly. To respond to the new hybrid work environment, we continue to introduce new technologies to our field agents to improve virtual access to employer groups and their employees. We also have programs in place to generate new employer group leads and offer new products and services to our employer clients. Retention of our existing employer customers remains strong and employee persistency within these employer groups continues to be stable, as expected. Our producing agent count was down 11% year over year and down 1% sequentially. largely as a result of weaker first-year agent recruitment due to the challenging labor market. We recently launched a new field agent referral program that is generating promising results in its early stages. We have seen higher productivity levels across all agent groups, including first-year agents. Similar to previous quarters, retention and productivity levels among our veteran agents remained very strong. The integration of our fee-based businesses has progressed nicely. Fee revenue within Worksite more than doubled in the quarter due to the inclusion of direct pass results. We also saw a 20% increase in the average client size in our benefits administration business as a result of cross-sale activity. Market feedback on our unique combination of Worksite products and services remains positive. Turning to slide nine. A robust free cash flow enabled us to return $116 million to shareholders in the fourth quarter, including $100 million in share buybacks. 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.