CNO: 2Q Results Reveal Booming Annuity Sales

CNO Financial Group's fixed indexed annuity (FIA) with a lifetime income rider has squarely hit its mark with middle-market consumers -- helping CNO deliver better-than-expected second quarter results, the company reported.

CNO’s success with its single-premium Guaranteed Lifetime Income Annuity is also likely to blaze a new product trail around income protection and longevity for the company, Gary C. Bhojwani, CNO president, told analysts in a call.

“We have plans to continue to develop products that go after that particular need,” Bhojwani said. “So I would expect to see continued growth there.”

Many baby boomers want guaranteed income in the face of declining defined benefit pensions, analysts say. Boomers also want to protect assets from losing value in a declining market from which people in their 70s have less time to recover.

Speaking specifically to CNO’s second-quarter annuity sales, “I think we’ve tapped into something here, if we look at what this middle market consumer needs,” Bhojwani said.

The “vast majority” of annuity sales growth in the quarter came from the new product, he added.

Guaranteed Lifetime Income Annuity is available in all states except New York, the company said.

Bankers Life, which distributes life, health and retirement products through a captive agency sales force, is a subsidiary of CNO Financial.

CNO is a holding company for Bankers Life, Colonial Penn, Washington National and 40/86 Advisors.

CNO Bests Expectations

CNO reported second-quarter profit of $83.4 million on revenue of $1.06 billion, the company said. Earnings, adjusted for non-recurring gains, came to 45 cents per share.

The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 37 cents per share.

Second-quarter annuity sales did particularly well with new annuity premium rising 28 percent to $264.5 million, the company reported.

Last year FIAs were one of the fastest growth segments among fixed annuities and many other insurers have tacked on income riders to their FIAs.

FIA sales rose 10 percent to a record $58 billion in 2016 over 2015, according to industry tracker Wink’s Market & Sales Report.

Market analysts have questioned whether insurers and agents will surpass that level of sales in 2017 as new regulations from the Department of Labor take hold and make it more difficult for agents to sell FIAs.

Although CNO had to make some adjustments to meet the rule’s requirements, overall the DOL has very little impact on the company’s aggregate business, Bhojwani said.

Retirement investors like indexed annuities because they allow annuitants to participate in some of the gains delivered by a rising market, but prevent investors from losing any principal in a falling market.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].