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BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended
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Sep. 30, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES | BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES CNO Financial Group, Inc., a Delaware corporation ("CNO"), is a holding company for a group of insurance companies that develop, market and administer health insurance, annuity, individual life insurance and other insurance and financial services products. The terms "CNO Financial Group, Inc.", "CNO", the "Company", "we", "us", and "our" as used in these financial statements refer to CNO and its subsidiaries. Such terms, when used to describe insurance business and products, refer to the insurance business and products of CNO's insurance subsidiaries. We focus on serving middle-income pre-retiree and retired Americans, which we believe are attractive, underserved, high growth markets. We sell our products through exclusive agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing. Our unaudited consolidated financial statements reflect normal recurring adjustments that, in the opinion of management, are necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. As permitted by rules and regulations of the Securities and Exchange Commission (the "SEC") applicable to quarterly reports on Form 10-Q, we have condensed or omitted certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Results for interim periods are not necessarily indicative of the results that may be expected for a full year. The December 31, 2024 consolidated balance sheet data was derived from the audited consolidated financial statements included in our 2024 Annual Report on Form 10-K. Accordingly, these interim consolidated financial statements should be read together with the consolidated financial statements included in our 2024 Annual Report on Form 10-K. When we prepare financial statements in conformity with GAAP, we are required to make estimates and assumptions that significantly affect reported amounts of various assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods. For example, we use significant estimates and assumptions to calculate values for deferred acquisition costs, the present value of future profits, fair value measurements of certain investments (including derivatives), allowance for credit losses and other-than-temporary impairments of investments, assets and liabilities related to income taxes, liabilities for insurance products, liabilities related to litigation, guaranty fund assessment accruals, goodwill and intangible assets, and fee revenue. If our future experience differs from these estimates and assumptions, our financial statements could be materially affected. The accompanying financial statements are unaudited and include the accounts of the Company and its subsidiaries. Our consolidated financial statements exclude transactions between us and our consolidated affiliates, or among our consolidated affiliates. Goodwill and Intangible Assets In February 2021, we acquired DirectPath, LLC ("DirectPath", now known as Optavise, LLC ("Optavise") subsequent to its name change in April 2022). In April 2019, we acquired Web Benefits Design Corporation ("WBD"), which was subsequently merged into Optavise during 2023. Optavise provides personalized benefits education, advocacy and transparency, and communications services that help employers reduce healthcare costs and assist employees with making informed benefits decisions. Optavise goodwill and other intangible assets arising from the acquisitions are reflected in our Fee income segment. Intangible assets with definite lives are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise. When such indicators are present, intangible assets are first tested for recoverability in accordance with Accounting Standards Codification (ASC) 360, Property, Plant, and Equipment. If the assets are not recoverable, an impairment loss is recorded, measured as the difference between the assets' fair value and their carrying value. Goodwill is tested annually for impairment and whenever indicators of impairment arise in accordance with ASC 350, Intangibles - Goodwill and Other. The Company first performs a qualitative assessment to determine whether it is more likely than not a goodwill impairment exists, and if an indication of potential impairment results from the qualitative assessment, a quantitative assessment is performed. The Company prepares a quantitative assessment to determine the fair value of the reporting unit by using a combination of the present value of expected future cash flows and a market approach based on revenue-multiple data from peer companies and relevant observable market transactions, if available. If an impairment is identified, a write-off is recorded by the amount that the carrying value exceeds the fair value of the reporting unit up to the carrying amount of goodwill and intangible assets. Macroeconomic, industry and market conditions, both current and future expected financial performance, and relevant entity-specific events in the three months ended September 30, 2025 caused us to consider whether there were any interim indicators of impairment. As a result of this evaluation, we identified that the valuation of Optavise would more likely than not be impacted by the recent decline in value of comparable publicly traded companies. This, combined with lower than anticipated revenue in the quarter and trends for future periods led us to conclude that there were indicators of impairment and we accordingly prepared a quantitative assessment. The Company determined the fair value of the reporting unit by using a combination of the present value of expected future cash flows and a market approach based on earnings multiple data from peer companies, using unobservable level 3 inputs. As a result of the quantitative assessment performed, the Company concluded that goodwill of $69.5 million and other assets, primarily intangible assets, of $27.2 million were fully impaired as of September 30, 2025. The total impairment charge of $96.7 million is included in the accompanying consolidated statement of comprehensive income for the three and nine months ended September 30, 2025. Recently Adopted Accounting Standards We adopted Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07") effective January 1, 2024. ASU 2023-07 is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. Such requirements include: (i) disclosures on significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss on an annual and interim basis; (ii) disclosures of an amount for other segment items by reportable segment and a description of its composition on an annual and interim basis (the other segment items category is the difference between segment revenues less the segment expenses disclosed pursuant to the new guidance); (iii) providing all annual disclosures on a reportable segment’s profit or loss and assets currently required by Financial Accounting Standards Board ("FASB") ASC Topic 280, Segment Reporting, in interim periods; and (iv) specifying the title and position of the CODM and an explanation of how the CODM uses the reported measures to assess segment performance and make decisions about allocating resources. The adoption of ASU 2023-07 did not have an impact on our financial position or results of operations, and did not have a material impact on our disclosures. The adoption was made retrospectively. Recently Issued Accounting Standards In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06"). This update removes all references to prescriptive and sequential software development stages, and adds that entities are required to start capitalizing software costs when both of the following occur: 1) management has authorized and committed to funding the software project, and 2) it is probable that the project will be completed and the software will be used to perform the function intended. The update also removes Subtopic 350-50, Website Development Costs, and incorporates that guidance within Subtopic 350-40. ASU 2025-06 is effective for annual periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Early adoption is permitted. Entities will have the option to apply the updates prospectively, under a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption, or retrospectively. We are currently evaluating the effect of ASU 2025-06 on our consolidated financial statements and related disclosures. In July 2025, the FASB issued Accounting Standards Update 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update provides a practical expedient for entities when estimating expected credit losses to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-05 is effective for annual periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. Early adoption is permitted. ASU 2025-05 should be applied prospectively. We are currently evaluating the effect of ASU 2025-05 on our consolidated financial statements and related disclosures. In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disclosure of additional information about specific expense categories in the notes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 may be applied retrospectively or prospectively. The adoption of ASU 2024-03 will modify our disclosures but will not have an impact on our financial position or results of operations. We do not expect the impact to our disclosures to be material. In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 is intended to improve the effectiveness of income tax disclosures by requiring, among other things, the disclosure on an annual basis of: (i) specific categories in the rate reconciliation; and (ii) additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires disclosure (on an annual basis) of the following information about income taxes paid: (i) the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes; and (ii) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). ASU 2023-09 is effective for annual periods beginning after December 15, 2024, to be applied prospectively with an option for retrospective application (with early adoption permitted). The adoption of ASU 2023-09 will modify our disclosures but will not have an impact on our financial position or results of operations. Revision of Prior Period Amounts As previously disclosed, certain amounts presented in the prior years’ consolidated statement of operations for the three and nine months ended September 30, 2024, consolidated balance sheet as of December 31, 2024, consolidated statement of shareholders’ equity as of December 31, 2024 and related footnotes thereto have been corrected to conform with the current period presentation. During the fourth quarter of 2024, the Company corrected certain immaterial errors that resulted in misclassifications related to market risk benefits. Upon the adoption of Accounting Standards Update 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, the Company recorded the fair value of the market risk benefit ("MRB") in policyholder account balances, resulting in no initial MRB presented separately on the consolidated balance sheet. MRBs are required to be presented separately in the consolidated balance sheet. Subsequent to transaction inception, the resulting accumulated change in the fair value of the MRBs was recorded as market risk benefits within the consolidated balance sheet. Additionally, the transaction’s resulting policyholder account balance discount was accreted in change in fair value of MRBs. This accretion should have been recorded in insurance policy benefits within the consolidated statement of operations. To correct for the error, the Company increased insurance policy benefits and decreased change in value of market benefits by $4.8 million within the consolidated statement of operations for the three months ended September 30, 2024, and the Company increased insurance policy benefits and decreased change in fair value of market risk benefits by $15.6 million within the consolidated statement of operations for the nine months ended September 30, 2024. In addition, the Company identified an immaterial overstatement of its policy holder account balances and insurance policy benefits recorded for the year ended December 31, 2024 and the quarter ended March 31, 2025 related to the calculation of the embedded derivative for its flexible premium bonus indexed annuity product. This error caused the embedded derivative to be overstated as of these periods by $21.6 million and $31.7 million, respectively. The correction of these errors had no impact on our statement of cash flows or segment results for the periods reported. Finally, the consolidated balance sheet for the year ended December 31, 2024 has been revised to correct immaterial errors related to the classification of non-redeemable preferred stock and to reflect an unsettled investment trade by one of our variable interest entities ("VIEs"). To correct for these errors, fixed maturities, available for sale, at fair value was decreased by $110.4 million with a corresponding increase to equity securities at fair value, and investments held by variable interest entities increased $1.5 million with a corresponding increase to other liabilities. The Company assessed the materiality of these errors on prior period consolidated financial statements and determined that such financial statements were not materially misstated. Accordingly, the Company corrected these immaterial errors in this Quarterly Report on Form 10-Q. The following tables present the impact of the correction of the immaterial errors related to the overstatement of policy holder account balances and insurance policy benefits recorded, the classification of non-redeemable preferred stock and to reflect an unsettled investment trade by one of our variable interest entities for the year ended December 31, 2024 and for the three months ended March 31, 2025 (in millions):
Consolidated Balance Sheet
|  | December 31, 2024
|  | As Previously Reported |  | Adjustments |  | As Revised
Investments |  |  |  |  |  |
Fixed maturities, available for sale, at fair value |  | $ | 22,840.5 |  |  | $ | (110.4) |  |  | $ | 22,730.1 |
Equity securities at fair value |  | 162.0 |  |  | 110.4 |  |  | 272.4 |
Investments held by variable interest entities |  | 432.3 |  |  | 1.5 |  |  | 433.8 |
Total investments |  | 27,872.1 |  |  | 1.5 |  |  | 27,873.6 |
Income tax assets, net |  | 818.9 |  |  | (4.8) |  |  | 814.1 |
Total assets |  | $ | 37,852.6 |  |  | $ | (3.3) |  |  | $ | 37,849.3 |
Liabilities: |  |  |  |  |  |
Policyholder account balances |  | $ | 17,615.8 |  |  | $ | (21.6) |  |  | $ | 17,594.2 |
Other liabilities |  | 1,161.8 |  |  | 1.5 |  |  | 1,163.3 |
Total Liabilities |  | 35,354.2 |  |  | (20.1) |  |  | $ | 35,334.1 |
Shareholders' equity: |  |  |  |  |  |
Retained earnings |  | 2,236.3 |  |  | 16.8 |  |  | 2,253.1 |
Total shareholders' equity |  | 2,498.4 |  |  | 16.8 |  |  | 2,515.2 |
Total liabilities and shareholders' equity |  | $ | 37,852.6 |  |  | $ | (3.3) |  |  | $ | 37,849.3 |
Consolidated Statement of Shareholders' Equity
|  | Retained earnings
Balance, December 31, 2024 |  | $ | 2,236.3 |
Correction of immaterial error |  | 16.8 |
Balance, December 31, 2024 (as revised) |  | $ | 2,253.1 |
Balance, March 31, 2025 |  | $ | 2,233.6 |
Correction of immaterial error |  | 24.6 |
Balance, March 31, 2025 (as revised) |  | $ | 2,258.2 |
The following tables present line items for prior period impacts to the Company’s consolidated statement of operations that have been affected by the immaterial error discussed above and that will be revised in conjunction with future filings (in millions):
|  | Year ended December 31, 2024
|  | As previously reported |  | Adjustments |  | As Revised
Insurance policy benefits |  | $ | 2,471.9 |  |  | $ | (21.6) |  |  | $ | 2,450.3 |
Total benefits and expenses |  | 3,931.2 |  |  | (21.6) |  |  | 3,909.6 |
Income before income taxes |  | 518.3 |  |  | 21.6 |  |  | 539.9 |
Income tax expense |  | 114.3 |  |  | 4.8 |  |  | 119.1 |
Net income |  | 404.0 |  |  | 16.8 |  |  | 420.8 |
Basic earnings per common share |  | $ | 3.81 |  |  | $ | 0.15 |  |  | $ | 3.96 |
Diluted earnings per common share |  | $ | 3.74 |  |  | $ | 0.15 |  |  | $ | 3.89 |
|  | Three months ended March 31, 2025
|  | As previously reported |  | Adjustments |  | As Revised
Insurance policy benefits |  | $ | 580.1 |  |  | $ | (10.1) |  |  | $ | 570.0 |
Total benefits and expenses |  | 986.4 |  |  | (10.1) |  |  | 976.3 |
Income before income taxes |  | 17.7 |  |  | 10.1 |  |  | 27.8 |
Income tax expense |  | 4.0 |  |  | 2.3 |  |  | 6.3 |
Net income |  | 13.7 |  |  | 7.8 |  |  | 21.5 |
Basic earnings per common share |  | $ | 0.14 |  |  | $ | 0.07 |  |  | $ | 0.21 |
Diluted earnings per common share |  | $ | 0.13 |  |  | $ | 0.08 |  |  | $ | 0.21 |

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