Hello, everyone, and thank you for joining us today for the CNO Financial Group Third Quarter Earnings Call. My name is Sami, and I'll be coordinating your call today. [Operator Instructions] I would now like to hand over to your host, Adam Auvil, from CNO to begin. Please go ahead, Adam.

Good morning, and thank you for joining us on CNO Financial Group's Third Quarter 2025 Earnings Conference Call. Today's presentation will include remarks from Gary Bhojwani, 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 8-K yesterday. 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-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 presentation, we'll be making performance comparisons, and unless otherwise specified, any comparisons made will refer to changes between third quarter 2025 and third quarter 2024. And with that, I'll turn the call over to Gary.

Thanks, Adam. Good morning, everyone, and thank you for joining us. Starting on Slide 4. CNO once again delivered a strong quarter, demonstrating our capabilities to generate consistent, repeatable results and execute on our strategic plan. We remain focused on growing earnings and improving profitability. To do so, we have taken action on 2 items that we expect will accelerate operating ROE improvement through 2027 by an additional 50 basis points. First, the execution of a second Bermuda treaty; and second, changes to our Worksite Division's fee services business. Further details will be provided later in our prepared remarks. Sales results in the quarter were excellent, including record total new annualized premiums of $125 million, up 26% and double-digit insurance sales growth in both divisions. We also delivered our 13th consecutive quarter of strong insurance sales and our 11th consecutive quarter of growth in Producing Agent Comp. I'll cover these results in more detail in each division's comments. Operating earnings per diluted share were $1.29, up 16%. Earnings continue to benefit from favorable insurance product margin and solid investment results, reflecting growth in the business and expansion of the portfolio book yield. New money rates have exceeded 6% for 11 consecutive quarters now, while maintaining portfolio quality. Capital and liquidity remained above target levels. We returned $76 million to shareholders in the quarter and $310 million year-to-date. Book value per diluted share, excluding AOCI, was $38.10, up 6%. Paul will go into greater detail on our financial performance. Turning to Slide 5. Nearly all of our growth scorecard metrics were up for the quarter. As a reminder, our growth scorecard focuses on 3 key drivers of our performance: production, distribution and investments in capital. I'll discuss each division in the next 2 slides. Paul will cover investments and capital in…

Thank you, Gary, and good morning, everyone. Before turning to my remarks on the quarter, I'd like to first comment on our second reinsurance treaty with our Bermuda affiliate. Effective October 1, we have ceded approximately $1.8 billion of Supplemental Health U.S. statutory reserves and we'll see 50% of new Supplemental Health business from our Indiana domiciled Washington National Insurance Company to our Bermuda reinsurance company. We are proud to deepen our commitment to the Bermuda insurance community with this transaction. We are actively exploring additional transactions with our U.S. and Bermuda regulators, which, in aggregate, position us better to carry out our mission of serving middle-income consumers. Turning to the financial highlights on Slide 8. We had another strong quarter across both operating earnings and capital, reflecting favorable trends in insurance product margins, investment income, and continued expense and capital discipline. The expense ratio was 18.6% in the quarter and 19.0% on a trailing 12-month basis. The income was modestly unfavorable to expectations due to underperformance in our Worksite fee services business. We continue to manage to our capital and holdco liquidity targets while deploying $60 million of excess capital on share repurchases in the quarter. This contributed to an 8% reduction in weighted average diluted shares outstanding. On a trailing 12-month basis, operating return on equity was 12.1% and 11.2%, excluding significant items. For the third quarter, we are recording an impairment of $96.7 million in nonoperating income on the goodwill and intangibles associated with the acquisitions of Web Benefit Design and DirectPath. This impairment reflects updated financial projections for the fee services side of our Worksite business, considering recent performance and an increasingly competitive market. Additionally, as Gary previously discussed, in October, we decided to exit the Worksite fee services business. We anticipate that decision will result…

Thanks, Paul. CNO delivered another strong quarter. Our performance continues to demonstrate the strength of our business model and our capabilities to generate consistent, repeatable results. We remain well positioned to grow sales across both divisions, drive improved profitability and importantly, keep delivering on our promises to customers and stakeholders. We entered the fourth quarter with meaningful momentum and we once again expect to end the year strong. Thank you to everyone who joined us in September for our CNO Investor Briefing on the Consumer Division. As a reminder, the webcast and materials from that session are available in the Investor Relations section of our website cnoinc.com. We thank you for your support of and interest in CNO Financial Group. We will now open it up to questions. Operator?

[Operator Instructions] Our first question comes from Ryan Krueger from Keefe, Bruyette, & Woods.

My first question was on the really strong D2C sales. Can you give us a little bit more color on how much new partnerships are contributing and kind of how to think about those relative to your D2C volumes, excluding these newer partnerships?

Maybe I'll make some general comments, and then I'll let Paul fill in some of the precise numbers and growth rates and so on in terms of what we disclosed. As I mentioned in the prepared remarks, Ryan, we're very selective about who we work with. I'll give you an example. We believe there's a material opportunity in the Hispanic market. We don't think we're well positioned to tap that on our own. So we partnered with somebody to help us with that. It's those types of things that we are partnering with folks on. It is in addition to what we're doing relative to shifting from our dependence on television advertising. We expect that growth to continue very nicely. As we did reference because some of the growth in Q3 was due to a pull forward of some advertising expenses and so on by our partners, we don't think the fourth quarter will be quite as strong, but we do believe we will continue to see good solid growth there. Paul, do you want to backfill any of the numbers or percentage growth rates that we disclosed?

Ryan, consistent with our general practice of not providing specific guidance, I won't provide any here, but I would just echo Gary's comments directionally in terms of what you should expect.

Got it. And then just a quick one. Is the current roughly $20 million annual earnings loss from the services business, does that flow through the fee income line from a reporting standpoint?

It does. It's always been part of the fee income segment. And so you should see that segment, all else equal improve on an annualized basis by about $20 million.

Our next question comes from John Barnidge from Piper Sandler.

How do you view the opportunity? Just kind of following up on the comments about actively exploring additional transactions. The total addressable market for remaining health life and long-term care liabilities that could be available to Bermuda.

John, it's Paul. I'll take a first crack at that. So the question is how much more might we cede to Bermuda? I won't give you specific quantitative answer. But I will say that we are looking at opportunities to see additional business. We are looking at life in particular, which we think has some benefit, including, among other things, the diversification across products. As you know, we currently have FIAs, now we have Sup Health ceding some life reserves would increase the diversification. We continue to actively explore additional transactions with our U.S. and Bermuda regulators. And I would just emphasize the comment we made in our prepared remarks, which is that, in aggregate, the Bermuda platform positions us better to carry out our mission of serving more middle-income consumers in what are very often underserved markets.

And my follow-up, once DirectPath and Web Benefits Design fully wrapped up in the first half of '26, does it seem reasonable that the direct expense ratio should fall given that, that wasn't necessarily a profitable business?

So John, the $20 million annualized impact is really all in, including the expenses that were attached to that business. So that's really the expectation at a high level that you should see flow through in the wake of exiting that business.

Our next question comes from Joel Hurwitz from Dowling & Partners.

Paul, on the assumption review, any ongoing earnings benefits from the updates and any statutory impacts?

Sure. So on a GAAP basis, the only go-forward impact that's notable is in Sup Health, that $2 million quarterly. And then on a stat basis, I'll invite Jeremy to weigh in, our Chief Actuary.

Yes. Thanks, Paul. No, there's no statutory impacts related to any of the unlocking.

Okay. Got it. And then just 2 quick ones on the fee service exit. One, how much of your Worksite insurance business is linked to these platforms that you're shutting down? And then in terms of that $20 million of a GAAP loss, is that equivalent to sort of what the cash impact was from those businesses?

Yes, I'll take the first question, Joel. We don't expect any material adverse impact to our Worksite insurance sales. I would point out, indeed, that's part of the reason we're exiting this business. It just hasn't delivered enough cross-selling and support and so on. We've been able to grow the insurance business and expect to continue to grow the insurance business without the support or the cross-sell of the fee business. So we expect minimal impact to the insurance sales in Worksite. Paul?

Yes. So the second part of your question, Joel, I think, is the $20 million pretax GAAP earnings a reasonable proxy for cash flow. And just thinking out loud, honestly, that I haven't thought of the specific question. But I think there aren't any significant delays in the cash impact as opposed to the GAAP accruals. So I think so, Joel.

Our next question comes from Wilma Burdis from Raymond James.

Is there any way you could help us think a little bit more through the forward cash benefit or impact from the Supplemental Health business? And maybe if you can talk about -- I know that relates to a specific sub, but just give a little bit more detail there on the portion of that business that will be going through that sub.

Wilma you were breaking up quite a bit there. I'm not sure I got your question. I think you're asking about the go-forward impacts of the Sup Health assumption update.

Yes. On cash.

On cash, okay. Jeremy, do you want to take that one?

Sure. So certainly, on a cash basis, with the movement of the new business, the flow piece, there's certainly some reduction in strain there. I don't know the exact numbers specific to that, but certainly you would see some reduction in strain and some additional cash flows related to that.

Okay. And then can you guys hear me?

Yes, I can hear you Wilma but you're just breaking up a little bit.

Breaking up a little bit, sorry. Along the lines of my -- similar lines of my first question, is the $20 million freed up from the fee services business? Is that going to also be a cash impact? I guess what I'm trying to get at here is just maybe help us think a little bit about the forward cash benefits from these 2 actions.

Got it. Yes, so similar to Joel's previous question. I think that certainly, the expenses supporting the fee services business are real-time cash. And on the revenue side, there aren't material deltas between the cash flow and the GAAP accruals. So I think the simple answer to your question, Wilma is yes.

Our next question comes from Jack Matten from BMO.

I had one more on the Bermuda transaction and more around the uses of kind of the additional cash flow you're seeing this year. Is something you're kind of planning to earmark for shareholder returns next year? Or are there incremental, I guess, investments in the business and growth or capabilities that you're planning to make?

Sure. So Jack, clearly, we'll have elevated cash at the holdco in the fourth quarter in the wake of their new Bermuda treaty. And we will nevertheless be measured in our level of share repurchases as we continue to invest in sales growth and in the previously announced 3-year tech modernization project. We view these to be an attractive strategic trade-off as both will contribute over time to earnings growth and improved return on equity. Directionally, I would say that you should view our 3Q '25 share repurchase levels as more indicative of go-forward levels than the more elevated levels that we had in 4Q of last year and the first half of this year. Absent, of course, more compelling uses of that capital, we haven't changed in any way, how we think about deploying excess capital. We'll put it to the best and highest use in practice that has and will likely continue to translate to some level of share repurchase activity.

Got it. And on the revised or raised ROE target, just on the cadence of that, should we think about the, I guess, more of a step-up next year since a big driver is just the divestiture of the fee business and then maybe a smaller step in 2027. I guess any other kind of puts and takes we should think about regarding the -- just the cadence of the ROE uplift?

Yes, that's the right way to think about it, Jack. Initially, we said expect 150 basis points of '25 to '27 off of a run rate of approximately 10% to '24. And we said, including 50 basis points in 2025. We're on track to deliver that. The benefit from the exit of fee services together with the second Bermuda treaty will begin to emerge in the fourth quarter, but won't really have a material impact until we begin to move through 2026. So yes, the incremental 50 bps is really in the '26, '27 period.

Jack and Paul, I'd just like to add one other perspective on that. I think it's important to note that even when we hit that 12% ROE that is not a stopping point. We have to continue to improve. Right now, we've made public commitments to our shareholders about things we have line of sight for. But I want to emphasize, even when we get there, and hopefully, we get there sooner, and we're able to, again, increase the target and again, talk about instead of '27 talk about '28, '29, we have to continue to improve. So this team is geared around continuing to look for ways to improve. It's just at the moment, we're only willing to commit to things we have line of sight for. But you should not interpret that as accepting that number and the stopping point. It's anything but it's nothing more than a way point. We have to continue to get better. And so we're constantly looking for things. And if we're lucky, we're good and we're lucky, we'll be able to say something about that before 2027 and increase that target. Again, that is our goal.

[Operator Instructions] Our next question comes from [ Joseph Bamllero ] from Jefferies. Joseph, your line is open.

Operator, we're not hearing anything. I don't know if you can hear something, but we cannot.

No, I don't believe Joseph is there.

We can skip to the next question, operator.

No problem at all. Our next question comes from Jack Matten from BMO.

Just one more on the Medicare Supplement business. I guess can you talk about what you're seeing regarding claims trends and what the assumption review impact this quarter? I think in the last quarter, you talked about expecting a 10% average rate increase in your filings with some moving into next year. Is that still roughly your expectation?

Jack, yes, so the annual actuarial assumption update did incorporate the trends that we've seen. So no real surprise there and no real change in those trends. And as you've pointed out, we have the opportunity each year to address claim trends with pricing and trying to get to that information. So let me circle back on that once I put my finger on it.

Yes. This is Jeremy. I'll go ahead and jump in. We've certainly filed something around the neighborhood of the 10 and expect to get something in that realm. So you're correct.

Our next question comes from [ Joseph Bamllero ] from Jefferies.

It's Suneet Kamath from Jefferies. I think we might have an issue with me using his passcode. Can you hear me?

Yes. Hi Suneet, we can hear you.

Okay. Perfect. Sorry about that. My first question, just on acknowledging the strong NAP in consumer. We did notice that the producing agent count was sort of flattish, maybe up just a little less than 1%. And I guess I'm just curious if we're running into sort of a tough comp issue there. And if that continues, does that start to put some pressure on the consumer NAP? Or are you going to be able to continue to grow as you have been?

Suneet, this is Gary. We expect to continue to grow. You are correct that the comps are getting tougher, but we do continue to expect to grow. Conventional wisdom has always held that as employment market softens, more people are interested in trying out a commission-only career. So we expect that to start to help us in coming quarters based on what we're seeing. We also like the results we're getting from a number of our efforts to bring agents in. All of that said, Suneet, if you force me to pick, I've been consistent about this for a few years, I'm still way more focused on productivity. Productivity is way more important than agent count. So ideally, we try and do both. But if I had to prioritize, I'd prioritize productivity and that continues to move nicely.

Got it. Okay. And then I guess on the impairments, I know the numbers aren't huge, but you did reference that you've invested in these businesses and now are exiting them. Does this episode make you think differently about inorganic growth as a use of capital? Or do you just kind of feel like this one kind of got away from you and you're going to continue to look for inorganic opportunities?

This is Gary again, Suneet. Let me, I guess, be plainspoken about it. There are clearly some lessons we need to take from this. So I want to make sure that you and our shareholders do not think that we are simply saying this is just one that got away. We have to get better. We have to learn from this. And the responsibility for that is mine. So it doesn't sound like we're making excuses or anything like that. So there's definitely is causing us to rethink how we want to handle acquisitions. We'll be presenting a pretty detailed analysis to our Board about lessons learned. So we're taking this very seriously. It will definitely impact the way we move forward. All that said, I do want to make sure that our shareholders also don't lose sight of some of the things that have gone really well. I mean we've got minority stakes we've taken in partners like Tennenbaum and Rialto and Victory Park and so on that have done very, very well for us. So there are some good skills here. Some people have done some really good work. There are some lessons that need to be learned from these particular investments. And you can rest assured, we're taking that very seriously and it will definitely give me pause as we think about other inorganic opportunities. There's no question about that.

That's good to hear. If I could sneak one more in just on the Bermuda, should we be thinking about sort of the cadence of you guys thinking about reinsuring in-force business as maybe one deal a year, and that's kind of what you're shooting for? Is that a reasonable way to think about it?

Suneet, I think that's reasonable. Yes. I don't think it would be reasonable to expect that we would do more than that. And at some point, with our existing book other than new business will probably hit the right amount of in-force reserves that are ceded. There is a balance, and it's certainly not 100% ceded to Bermuda. So we're not there yet, but at some point, we would reach that sort of right balance. But for the time being, yes, as we mentioned, we're exploring an additional business that we might see to Bermuda.

We currently have no further questions. So I'd like to hand back to Adam for some closing remarks.

Thank you, operator. Thank you all for participating in today's call. If you have any further questions, please reach out to the Investor Relations team. Have a great rest of your day.

This concludes today's call. We thank everyone for joining. You may now disconnect your lines.