CNO: Delay or No Delay, DOL Rule to Have Little Impact

A delayed fiduciary rule will have little or no impact on the middle market business segments served by CNO Financial Group. That's according to a top company executive who discussed the rule Wednesday in a conference call with analysts.

CNO Financial Group is a holding company for Colonial Penn Life Insurance, Washington National Insurance, Bankers Life and 40/86 Advisors, a fixed income investment advisor.

“Bankers Life could be the most affected segment. However, we do not anticipate any material adverse impacts to our business at Bankers Life, or our recently launched brokers/dealers' product portfolios,” said Gary C. Bhojwani, CNO Financial president.

President Donald Trump's administration is committed to killing the Department of Labor fiduciary rule. Trump requested last week that the DOL provide an updated economic and legal impact analysis of the rule.

Legal experts and analysts were predicting earlier this week that the rule’s implementation would be delayed by as much as 180 days.

For opponents of the rule, a delay has taken on new urgency after a third federal judge late Wednesday upheld the rule, which is scheduled for implementation April 10.

New Take: Unwinding Costs of Scrapping Rule

CNO Financial last year said the fiduciary rule will cost the company an estimated $8 million to $10 million in implementation expenses in 2017.

Asked by one analyst how much it would cost CNO Financial to “unwind” any DOL-related initiatives in the event that the rule is scrapped, Chief Financial Officer Erik Helding said the company didn’t have any estimates.

“I’m not sure we have to unwind anything given where we are right now,” Helding said in the fourth quarter earnings call.

The fiduciary rule raises investment advice standards for financial advisors selling advice and financial products into retirement accounts. However, it is expected to have no impact on Colonial Penn and only “immaterial” impact on Washington National, Bhojwani said.

Colonial Penn sells term life and whole life through direct mail, online and telephone channels. Washington National sells supplemental life and health products. Bankers Life sells life and health products through career agents.

“As previously discussed, the diversity of our distribution channels and products, and our robust compliance culture have lessened any meaningful disruption to our business model as a result of adopting the rule,” Bhojwani told analysts.

In a separate announcement Wednesday, A.M. Best affirmed the financial strength and long-term issuer credit ratings of CNO Financial’s life and health subsidiaries.

CNO Falls Short of Expectations

On Tuesday, the company reported fourth-quarter profit of $234.2 million and net income of $1.34 per share.

Earnings, adjusted for non-recurring gains, came to 35 cents per share. This was 4 cents below the average estimate of four analysts surveyed by Zacks Investment Research.

The insurance holding company posted revenue of $1 billion during the quarter.

For the year, the company reported profit of $358.2 million, or $2.01 per share. Revenue was $4 billion.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.
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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 cyril.tuohy@innfeedback.com.