CNO Financial Group, Inc.

Hello everyone and thank you for joining the CNO Financial Group second quarter 2022 earnings results call. My name is Darius and I'll be moderating your call today before handing over to your host Adam Oval. I would like to remind you if you would like to ask a question during a Q&A session at the end of the call please press star file number one on your telephone keypad. I now have the pleasure of handing you over to your host Adam Oval. Please go ahead.

Good morning, and thank you for joining us on CNO Financial Group's second quarter 2022 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 5th. 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 statements. Today's presentation contains a number of non-GAP measures, which should not be considered as substitutes for the most directly comparable GAP measures. You'll find a reconciliation of the non-GAP measures to the corresponding GAP measures in the appendix. Throughout the presentation, we will be making performance comparisons, and unless otherwise specified, any comparisons made will be referring to changes between second quarter 2022 and second quarter 2021. And with that, I'll turn the call over to Gary.

Thanks, Adam. Good morning, everyone, and thank you for joining us. Turning to slide four in our second quarter performance, we reported strong earnings and solid overall sales for the quarter. operating earnings per share were 85 cents, up 29% over the prior year. Excluding significant items, operating earnings per share were up 3%. Variable investment income results performed well in the quarter, showing resilience during a period of continued market volatility. Our underlying business results remain strong, with insurance product margins performing as expected. The value of recent strategic investments to accelerate growth and enhance agent productivity were on display in the quarter. We were especially pleased with the performance of our annuities, our direct-to-consumer businesses, and our worksite insurance sales. We continue to advance key strategic initiatives in both the consumer and worksite divisions. Notably, we introduced our new Medicare supplement product and launched Optivise, our new worksite brand, in the quarter. We returned $77 million to shareholders and reduced the weighted average shares outstanding by 12%. Our capital position remains within risk tolerance levels and our balance sheet is well positioned to respond to changing macroeconomic conditions. We increased book value for diluted share excluding AOCI by 15%. Turning to slide five and our growth scorecard. The strength and value of our diversified product portfolio and distribution channels contributed to solid overall sales in the quarter. I'll touch on the specifics by division in the next two slides. Beginning with the consumer division on slide six. Our results demonstrate continued improvement in agent productivity and reflect some pluses and minuses across our product portfolio. Life and health sales were down 9% as compared to the prior year. We expect to see this trajectory change in the second half of the year based on recent updates to our Medicare supplement portfolio and positive trends in agent recruiting. Direct-to-consumer life sales were up 9%. This channel continues to benefit from investments in opportunistic advertising spend and enhanced distribution. Turning to Medicare supplement. By the end of August, we expect to have launched our new MedSupp plant in 44 states. These states represented 96% of our 2021 MedSub sales. This is a competitive product that squarely addresses the needs of our middle income consumers. Early results are encouraging. We are seeing strong momentum with a significant increase in application submissions and new sales, which we expect to be reflected in our results in the third and fourth quarters. Please recall that the Medicare Annual Enrollment Period, or AEP, occurs in the final months of the year, making the fourth quarter the most telling marker for this product launch. Third-party Medicare Advantage sales were up 32% year-over-year in the second quarter and up 21% over the last 12 months. As a reminder, fee business is not reflected in NAP. We continue to expand the number of Medicare Advantage carrier plans available for sale through our My Health Policy platform, which enables customers to buy plans through direct enrollment, online, or through our field agents. Our omnichannel model is a unique strength in how we acquire service and retain our clients. We expect the combination of our new Medicare supplement plans and our growing Medicare Advantage plan options to position us well to grow market share in this important market segment. Our annuity sales remain robust. Annuity collected premiums were up 26% compared to the prior year, and the average annuity policy size rose by 6%. Fixed index annuity products tend to perform well in an environment of rising interest rates and uncertain equity markets. The need for reliable retirement income combined with the increased riskiness of pure equity investments continues to make these attractive products to our customers client assets and brokerage and advisory were down three percent year over year to 2.6 billion dollars in the second quarter driven by declining equity impacts on account balances new accounts however were up 10 percent which partially offset the decline in asset values producing agent count was down nine percent for the quarter However, the softening macro environment appears to be helping our recruiting and retention efforts. Sequentially, we recorded 2% growth in recruiting, leading to a slight increase in producing agent counts from the first quarter. Our results, plus our leading indicators, signal we are at an inflection point on agent recruiting. Veteran agent retention remains stable. Agent productivity was up 10%, and registered agent count was up 6% from the prior year. Turning to slide seven and our worksite division performance. This quarter, we announced the launch of Optivise. The move unified our three existing worksite brands into a single brand. Through Optivise, we now offer employees and employers a unique combination of expert guidance from our agents, benefit educators, and healthcare advocates, voluntary benefits, year-round communications and advocacy services, and benefits administration technologies. Our worksite distribution footprint operates nationwide through a network of 10,000 broker partners and more than 600 dedicated agents. Through Optivise, we're serving nearly 20,000 businesses and employers from small and medium-sized businesses to Fortune 100 companies. We reported considerable growth in worksite in the quarter with insurance sales up 33%, albeit off a low base. Our access to on-site workplace enrollment is steadily increasing as more employees return to the office. Growth in the quarter was driven by a healthy mix of both re-service business and growth in new client acquisition. With the rollout of our hybrid enrollment platform last quarter, our agents can now reach employees however they choose. Separately, we launched new dental and vision distribution partnerships to broaden our product portfolios. This coverage is popular with employees, and we expect it to drive higher attendance at our enrollment events. Retention of our existing employer customers remains strong, and employee persistency within these employer groups continues to be stable. Our producing agent count was down 9% year over year, but grew 13% sequentially. We reported our strongest recruiting quarter since the start of the pandemic. These results suggest we are on a path of sustained recruiting growth similar to the consumer division. We are also encouraged to see increased momentum in our field recruiting, driven in large part by the field agent referral program that we launched in the fourth quarter of 2021. The integration of our fee-based businesses is progressing well and should accelerate with the single Optivise brand. Fee revenue within Worksite was flat due to fewer off-cycle enrollments in the quarter. We continue to see cross-sale success between our fee-based businesses. Turning to slide eight, we returned $77 million to shareholders in the second quarter, including $60 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.