Profit machinery upgraded while volume still arriving

CNO Financial Group, Inc. (CNO) — this company's answers

The model's full reasoning — Q1 2016 call → NOWe need to determine if management conveys both: (1) a realized, company-made step-up in per-unit economics, and (2) volume arriving now and early, with most not yet flowed. Let's examine the transcript. Key points: - Ed Bonach: "We are pleased with our first quarter results and encouraged by the signs of growth in our business." NAP growth 2%, Colonial Penn up 14%, Washington National up 4%, Bankers Life down 2% but recruiting stabilized. - Collected premium growth 11%, policies in-force up 1%, annuity account values up 2%. - Bankers Life: NAP down 2% due to lower life and Med supp sales, but higher annuities and LTC with shorter benefit periods. Collected premiums up 13% due to annuity sales and persistency. Total policies in-force up 1% including 10% increase in third-party policies. New agent recruiting encouraging. Average producing agents down 6% but productivity up 4%. - Washington National: sales up 4%, worksite up 27% driven by PMA, individual down 7%. PMA agent count up 9%. - Colonial Penn: NAP up 14%, record quarterly sales. Higher lead generation, direct mail, digital. Sales productivity higher. EBIT loss due to seasonal TV ad spend. In-force EBIT up 20%. - DOL rule: not definitive. - Erik Helding: operating EPS $0.26 down 13% due to alternative investments. ROE 8.3%. RBC 441%. Repurchased $90M. - Alternative investments underperformed, prior year outperformed. $7M swing in Bankers, $3M in Washington National. Corporate down $3M due to COLI. - Bankers Life also impacted by favorable Med supp claim experience prior year vs in line this year, $7M reduction. - Colonial Penn loss $7M due to increased advertising spend. - Health benefit ratios in line. - Investment: put money to work at 4.9%. Call and prepayment income down sequentially but above prior year. Realized losses due to repositioning away from energy, CMBS, emerging markets. - Ed: "CNO's management team is committed to achieving our 2016 priorities and longer term objectives. At the top of the list is reenergizing growth at Bankers Life and Washington National including the national rollout of the Bankers Life broker/dealer and registered investment advisor later this quarter." So that's a future initiative. - Gary Bhojwani: new president, just joined.

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