CNO Financial Group, Inc. (CNO) Earnings Call Transcript & Summary

Good morning, and welcome to CNO Financial Group's investor briefing focused on our Consumer division. I'm Adam Auvil, Vice President, Investor Relations and Sustainability. Thank you for joining us today, and a warm welcome to our in-person audience. It's great to see you all. Our goal with these investor briefings is to provide investors with a deeper understanding of who we are and why you should invest in CNO Financial Group. We received great feedback from our investment briefings back in June. If you haven't had a chance to review that yet, you can find it on the Investor Relations section of the website. I'd like to lead the session off with a reminder of our purpose. We secure the future of middle-income America. Our Consumer division that you'll hear from today is the front line on delivering on our purpose. Before handing off to the Consumer division team, I have some housekeeping to take care of. This morning's presentation is available in the Investors section of our website and was filed in an 8-K this morning. 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. Finally, 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. I'd now like to introduce Scott Goldberg, President of the Consumer division. Scott, over to you.

Thank you, Adam. Welcome, everyone, and thank you for joining us. I'm Scott Goldberg. I'm the President of CNO's Consumer division. I've been with the company just over 20 years. I've been leading Bankers Life for the past 12 years, and I've been overseeing our Consumer division since we formed it roughly 5 years ago. The Consumer division is CNO's primary production engine. And I think we have a great story to share. So my goal today is to give you a better understanding of what we do, how we do it and why we're so bullish about the road ahead. Now I'm going to be joined today by several members of my team, Steve, Nate and Cheryl. And these are some really terrific folks, experienced leaders who are well aligned with our vision, and we're really fortunate to have them. I'll tell you a little bit more about each of them and their areas as we get further into the presentation. But as you listen to each of us speak, there's a few items I want you to really key in on because I think they go a long way to explaining our success. First, we control our distribution channels. This is a really big deal. Unlike other carriers who sell through intermediaries, we are, in many ways, a distribution company. We distribute our products through channels that we own, operate or have some type of exclusivity with. And this is a strategic differentiator because it gives us guaranteed shelf space. There's less pressure on price. It avoids some of the broker-initiated churn you see at other carriers. It reduces our sales volatility. And it's why we are so resilient as a company. Second, we offer both health and wealth solutions. Now this is more unique than it sounds. A lot of carriers and a lot of agencies don't. They tend to specialize in one or the other. But it's really important for us because we are able to use health-based demand-driven products to acquire consumers and open up households. And then as we build trust and create a more enduring relationship and deliver a whole lot of value, we were able to extend the relationship to financial planning, holistic retirement planning and in essence, become a one-stop shop for our consumers as they age. And then finally, we've had great results. Our model is working. And more so, when you look at a number of the trends shaping our space, they favor our business, and they point to higher demand for our products and services in the future. So let's get into it. And to really understand who we are, you have to begin with our target market because this is also unique. We serve the middle market. We work with everyday Americans who make up about half the country. A lot of carriers, they focus on the upper end of the market because their distribution takes them there. But it's these middle-class households that have the greatest need for what we do. They can't afford to self-insure against adverse health events or investment losses or the risk of outliving their assets, and they know it. They want practical guidance and an ongoing relationship with someone they trust, and we see this play out as they approach Medicare. Medicare is complicated. People have to make a decision on which program they're going to join, which medical plan they're going to select, which prescription drug plan they're going to choose, and all of these things change every year. Our agents are able to meet with folks, help them navigate Medicare, deliver a whole lot of value. And then as the relationship blossoms, help them with their retirement planning, helping them make sure that they don't outlive their assets. We offer a sound approach to retirement planning that blends insurance and investments. When we meet with someone, we can always reduce their risk. We can always improve their financial outlook, and that resonates with our markets. And we have thousands upon thousands of customer reviews, 5-star customer reviews to prove it. Let me talk about what we provide to these consumers. We meet the needs of our market by providing a broad and diverse set of products. Now most of the products that we sell, we manufacture, meaning we underwrite them and we take the risk. We essentially perform all the functions of product management. We set price, we pay claims. We collect premium. We earn both underwriting and distribution profits. But not all of the products that our market needs line up with our capabilities. And in those cases, we in-source products from third parties. So for instance, we don't manufacture any registered products. We don't manufacture variable annuities or mutual funds. We also don't sponsor our own Medicare Advantage plans. In these cases, we earn distribution fees from a third party without taking any risk or putting up any capital. And that shields us from some of the turbulence that might be impacting these products and allows us to earn fees and leverage our distribution structure that are accretive to our return on equity. I want to talk about how we go to market because if there's such a thing as a secret sauce, it's right here. As I said, we only distribute our products through channels that we own, operate or have arranged some type of exclusivity. Let's go through them. And I'll start with our direct business. So we primarily market our Colonial Penn brand through a direct channel. This is our flagship guaranteed acceptance life insurance product. It's relatively low face whole life policies that are designed to help someone with their final expenses, and we've had a lot of success with this business. It's a very well-established brand. We have unique pricing that you might be familiar with at $995 per unit, and it generates a whole lot of consumer engagement for us. In the middle of the page, you have our career agency, which is our largest channel with nearly 6,000 producers. Now these are individuals that we recruit and train from the ground up, and we have been a perennial winner of top training awards. They are Medicare experts. But even more so, we have a growing force of individuals who are registered to sell securities and have become financial advisers. And I'll tell you more about that as we get deeper into the presentation. And then we have our third channel, which is our smallest, our independent agents who primarily sell under our Washington National brand, and they're selling supplemental health products. So think fixed indemnity health plans like cancer insurance, critical illness insurance, hospital and so forth. Now to a large extent, each of these channels operate independently. But we've created integration points that unlock a whole lot of value. Let me take you through it. Here's how it works. We use media, TV, digital, direct mail and a whole lot of other sources to generate and stimulate consumer demand. As consumers come in, ringing our phone, going to our websites, we direct them to our digital properties where we can engage them, we can educate them about our products and in many cases, make a direct sale. But here's what's powerful. Whether we make a sale or not, all of those consumers are funneled to local agents who can build trust, meet in person and develop an enduring relationship that leads to higher premium sales, oftentimes holistic retirement planning and a relationship that persists over time. It's a synergistic model because it allows us to get a higher conversion on our lead spend by using our field agents to convert leads. And it also provides our agents with a proprietary lead source that generates over 1 million leads annually. Let me give you a quick fact here. Today, roughly 1/3 of our life field sales come from leads generated by Colonial Penn. And by having these integrated capabilities, the abilities to work across digital, our tele agents and our field agents, we are able to respond to any shifts in channel preferences that may emerge over time. So we are very well set up for the future. When you look at a breakdown of our life and health new annualized premium across these channels, what you see is that our career agency drives most of our NAP production. It also generates all of our annuity sales and third-party product sales, which are not included in NAP. So it is a very large and important channel for us. But as you look, our direct and independent channels are also growing and our direct channel, in particular, has become very meaningful over time. Steve Janoson oversees both our direct and independent channels. Steve has been with the company about 10 years. He's worked very closely with our Colonial Penn brand over this time, and he and his team have done an excellent job of increasing our digital engagement and extending this brand and our offering to third-party partners, digital and tele agencies, and it's had a big impact on our business. What I'd like to do next is to turn this over to Steve to share some thoughts with you. Take it away, Steve.

Good morning. My name is Steve Janoson, and I lead our direct-to-consumer and independent sales distribution through our Colonial Penn and Washington National brands. I've been with CNO now over 10 years. As you can see on the slide, over the last 6 to 7 years, the Colonial Penn business has grown meaningfully, exceeding comparable industry results. Importantly, our diversified demand generation has evolved with consumer preferences. And our technological enhancements have continued to drive improvements in our sales productivity. The leads that we generate can be fulfilled online through our telesales agents with third-party partners and through our Bankers Life field agents. When you think about conversion, this last mile of fulfillment is a real advantage for us at CNO. The direct-to-consumer market has changed in some ways and remain constant in others. For example, just a few years ago, we generated most of our sales from television advertising. Today, a majority of our engagement occurs digitally. And what hasn't changed is that brand matters. Our longevity in the guaranteed acceptance life insurance business has made us one of the most recognized such brands. It is a key aspect of both our offline and digital lead generation. We've leveraged that brand recognition by enabling strategic distribution partnerships to fulfill our leads and market our products. These partnerships have accelerated our new sales growth and expanded our market reach. The strong Colonial Penn brand, our diversified demand generation and our advantage in the last mile of sales fulfillment will remain key to driving success in the channel for years to come.

Thank you, Steve. We really appreciate the great work that you and your team have done in extending this brand and extending our market reach. Now I want to focus on our largest channel, our career agents. We have over 230 sales offices with nearly 6,000 active producing agents. I like to say that our branches aren't on our balance sheet, but they are a tremendous asset. Our ability to serve consumers in person nationwide is powerful. And as you can see on the map, our coverage is wide and well diversified. We are where the population is. We also have a farm and rural team that travels throughout the Midwest and adjacent states, connecting with farmers and ranchers in towns that are too small to even support a branch. We have a tremendous culture, and it's led by a tenured management team who truly care about our policyholders. I just want to take a moment and recognize them and acknowledge any of our field agents and managers who might be listening today on this call. Thank you for what you do. Now as I said, oftentimes, we approach consumers when they're entering retirement and they need help with Medicare. In recent years, Medicare Advantage has grown in popularity, and we've participated in that growth, but without disrupting our model. So we launched MyHealth Policy, an online insurance -- health insurance marketplace that allows agents and consumers to compare and enroll in a variety of health plans, Medicare Advantage plans, prescription drug plans and others and it's been a big part of our success. As you can see, we've grown our Medicare Advantage policies sold at a CAGR of 7% over the last several years. And even more importantly, we have built a meaningful block of enrollees that are persistent and speak to our agents sold model. When you combine our Medicare Advantage sales with our Medicare Supplement sales, what you see is our blocks continue to trend higher. Medicare policies sold are up with a CAGR of almost 9% over the last several years. And our overall base of Medicare enrollment is up as well several points, and it's a big part of our business because, as I said, these are the households that allow us to begin to sell other products. As we grow more Medicare households, we're able to increase the product sales of our annuities, of our higher premium life sales and so forth. Now rather than just continue to hear it from me, what I'd like to do next is to turn this over to Nate Richardson. Nate grew up in our business, and he now leads our career sales. He has done a tremendous job. I want you to hear his perspective. Nate?

Great. Thanks, Scott. Yes, as he said, I'm Nate Richardson, Senior Vice President of Sales for the consumer field. I've been with the company now for 33 years. I started as an agent in our Boston office and was in the field selling for the next 20 years before moving into executive leadership. During that time, a lot of things have changed, as you would imagine. But one thing that hasn't changed is our commitment to getting out there and visiting with folks as they join Medicare. In 33 years ago, I was out there talking to folks about their Medicare supplement and starting the relationship there. So our folks have grown up in this culture and are real experts around Medicare, Medicare Supplement, Medicare Advantage as well as prescription drug programs. So you can see it gives them the opportunity to really build trust, build a strong relationship, go back year after year and make sure their prescriptions are right so that they can continue to build that relationship. Then when customers need future products, it's a natural thing to go to our agent who's been their helper and their expert for so long. So as you can see, we've really done a nice job in producing agents. By adding to agents through recruiting as well as retention improvements, our retention and number of agents producing has gone up significantly since the pandemic. Along with that, we've added to our number of financial advisers. This is a big change in our business. Within the last 10 years, we have our own broker-dealer and we've had financial advisers. These are our best salespeople. The top of the top become our financial advisers and are really able to help customers at a different level, both with their health and with their wealth. What this has done for us, having this financial adviser program has given us the ability to recruit people that we weren't able to recruit before. Folks that come in want to be an adviser. They didn't want to be an insurance agent. Now we can talk to those folks and they come in. And as you can see, our population now is very diverse. It's not just old folks like me, it's young folks in all of the generations, Gen X, Gen Z, millennials as well as baby boomers. So we've done a nice job of really rounding out the agents and the advisers at the company, and that really is what makes us special. It's the people in the Bankers Life and the PMA field that make us special. Thank you. I'm going to now introduce a video. We have a little snippet of the day of the life of one of our Bankers agents actually out in the field. So enjoy. [Presentation]

So that's one of our recruiting videos. And I hope one of the things that you took away from Nate's comments and watching this video is that we have a very accessible on-ramp for individuals who want to pursue a career in financial services. And we work as a team, and you saw some of that in the video. The frontline agent brings in the more experienced agent who has become a financial adviser over time. And together, they can provide a higher level of service to our clients. As Nate said, developing agents into advisers has become a big part of our story. It's had an outsized impact on our annuity sales and our overall agent productivity. And with only 15% to 20% of our producers currently registered to sell securities, we got a lot of runway with this approach. What I want to do next is introduce you to Cheryl Heilman. Cheryl runs our securities program. She joined us shortly after we launched our own broker-dealer and registered investment adviser, and Cheryl and her team have done an amazing job of scaling our operations. Our clients now have access to professionally managed investment portfolios. We generate fees for ourselves and our advisers. And we have built a source of client funds for additional product sales as our clients age. Let me turn it over to Cheryl.

Hello. I'm Cheryl Heilman. I've led Bankers Life Securities and Bankers Life Advisory Services since 2019. Our wealth management platform is a key growth driver. Our clients rely on us for all of their retirement income planning needs from medical protection to retirement income planning. Together, our broker-dealer and our registered investment adviser manage more than $4 billion in client assets with momentum accelerating. We earn commissions on third-party products like mutual funds and variable annuities and we earn fees on our assets under management. While these entities aren't yet material to CNO earnings, they are essential to delivering client value through annuity sales and persistency. Our annuities perform best when integrated into a holistic plan. Our clients want both market exposure and guarantees. This blend drives adoption and retention. All told, we manage more than $17 billion in client assets for middle market consumers, and we see significant growth potential ahead.

Thank you, Cheryl, and I echo her sentiments. Our wealth management program has been a big driver of our results, and it's poised to deliver much more, and Cheryl and her team deserve a lot of credit. So thank you. The simple truth is this. The more we capture and grow our clients' retirement assets, the more our insurance sales increase, the greater productivity we have for our agents, and that drives greater persistency. Here, you see our new sales results, our new annualized premium results across our products, and it's pretty good. '23 to '24, our life and health sales were up 5% and our annuity sales were up 13%. This year, our life and health sales are up 8% and annuities are up 16%. We are off to a really good start. Put it all together, add our new sales with our renewal premiums, and we're collecting over $4 billion annually. And that's not counting client assets going into securities or payments for third-party products. And here's what's most compelling. If you look on the left side of the slide and go product by product, every one of our lines is growing, higher new sales, growing blocks of business. And if you look on the right side of the page, the same pattern holds true for our fee revenues, our security sales and the fees we earn on our Medicare Advantage and prescription drug plans. This is the sign of a healthy and growing business, and we think that should be compelling for any investor. And that brings me to my last point, which as a long-time leader here at CNO, I find incredibly energizing. And that is as much momentum as we have now. If you think about some of the biggest trends impacting our space, they favor our business. The aging of America and more people becoming Medicare eligible, the 401(k) generation beginning to retire and needing help with their assets and their investments, facing risk like no previous generation without a pension, with greater market volatility, with greater market concentration. People are living longer and they are at more risk than ever of outliving their assets. And let me tell you a truth that I think we all know. Our government cannot afford to be the solution. We have the people, the products, the distribution and the leadership to meet this moment and drive extraordinary value for both our consumers and our stakeholders. So let me close out where I started. We like where we sit and we like what we see. We have defensible channels to reach consumers. We have a set of offerings that fit the market need. And in many respects, we are swimming with the current because the prevailing trends favor our business, and we are set to benefit from a number of these secular trends. I am excited about CNO, and I hope you are, too. And with that, I'll turn it back to Adam, and shortly, we'll move to questions. Thank you.

Thank you, Scott. Great job to you and team. As you just heard, our business fundamentals remain strong as a result of what the Consumer division is doing for us. This success has enabled us to grow the franchise while also growing earnings and improve profitability. We are in a unique and differentiated position to serve our clients through our products, distribution and track record of execution.

We'll now move to the Q&A portion of the event. I'm joined by Scott, Nate and our CEO, Gary Bhojwani [Operator Instructions] Wes? Got a mic behind you.

Wes Carmichael, Autonomous Research. First question I had on direct marketing, particularly on TV. I think if I looked at Slide 13, the lead mix has changed a heck of a lot over the last 6 or 7 years. Just going forward, how do you think about conversion and spend there relative to what you get in digital?

Yes. So let me start. We have relied on TV for a lot of obvious reasons. We're able to broadcast and reach a diverse group of consumers. It's been very effective for us over decades of time, and we've built a very well-established brand. But TV has become expensive in part because of dwindling audience sizes, more types of channels and outlets for people to watch media. And there's still a lot of companies reliance on that channel for their customer acquisition. So it has driven up rates. The quality of TV leads remains good, but expensive. On digital, we are able to reach consumers much more cost effectively. We're able to reach a broader reach of consumers, of course, because we're able to do it across a variety of digital properties, and that's been very healthy for our business. So the net conclusion of that is we believe that, that's going to help us drive over time, greater margins to that business and higher returns because of the cost and effectiveness of being digital.

Suneet?

Suneet Kamath from Jefferies. So you talked about the intersection of health and wealth, which makes a lot of sense. But do you have any statistics on how much of your customer base you've cross-sold to just so we get a sense of how real this opportunity is because it sounds like it should be, but just some stats on where you are would be helpful.

Yes. I'll give you a little bit of idea around that. As a rule of thumb, roughly 1/3 of our Medicare Supplement consumers will purchase another product from us. Look, on the order of things, we sell a lot more life and health products than we're going to sell annuities. But our average annuity size is over 6 figures. So when you break down the math, we're selling hundreds of thousands of life and health policies, we only need to sell or we're only selling 10,000 to 20,000 of our annuity policies. But at that average size, it makes us a meaningful player in the fixed indexed annuity business.

Jack Matten, BMO. Just a question on the kind of recruiting outlook for agents today. It seems to be kind of a weaker or weakening U.S. employment backdrop. Is that something you see being a tailwind for agent count growth? And historically, has there been a meaningful kind of correlation in those factors?

Let me start, and then I'll turn it to Nate and he can add some color. We have always had a reverse correlation, if you will, with the employment market. So a little bit to your point. I was here back in 2009 after the great financial crisis, and our recruiting reached over 9,000 agents because there were more individuals willing to take on a career that offered them some risk when they started. This is -- being an agent is very much like having your own business and not all the agents will make it and succeed in developing a career. But when the market turns and individuals realize that corporate America isn't what it's always made out to be, we see a much higher demand in terms of our ability to recruit. So you're absolutely right, there is that type of correlation. And while we've had relatively low unemployment over the last stretch, I think we all know that there are signs of that changing. And we can already begin to feel that starting to come through in our career briefings and our candidate outreach. Nate, do you want to build on that at all?

Yes, sure. I think additionally, where we're recruiting younger folks today than we were years ago, we see a lot of people coming out of college looking for careers where they weren't in the past. And this has really helped us both adding in the financial adviser opportunity and talking with folks that are younger additionally to help our recruiting.

Ryan?

Ryan Krueger, KBW. Can you talk a little bit more about the Colonial Penn partners that you're adding? And do you see a lot more opportunity to add more partners? And can you give us an example of kind of who these partners are?

Yes. So this is a strategy that we embarked on about 5 years ago, and it really came from a very simple principle, which is we have a terrific brand. We own the paper, but we don't always have to do the fulfillment. By bringing in third-party partners, it just naturally extends our reach. Sometimes they're able to add the product into a shopping cart while they're selling another product, if you will. So they might be selling some type of supplemental health product and they're able to pitch our product and add it in and has a guaranteed issue plan. It's very easy to do that. Some are going to market on their own using our approved digital, but their spin on where and how they market it. By having this group of third-party partners, it gives us an enormous amount of diversity in the type of consumers we reach. It gives us an experimental petri dish, if you will, of partners who are trying different things. It allows us to set up our economics with them based on what their conversions are, what their persistency is, et cetera. So it gives us a lot of room to build this business, and it's been very effective for us. We have not publicly named who our partners are, and we don't like to do so without their permission. So I don't want to do so now. But I will tell you that we have north of 10 different partners. They are exclusively digital marketing agencies and tele agencies.

One other thing to build on there. I think I agree with everything Scott said. I would also remind folks one of the really great ways and cost-effective ways for us to access certain, say, ethnic markets, say Hispanic market is to partner with folks like this. So there's a lot of natural reasons for us to want to do this. And I would just remind folks, it's also consistent with our overall approach to the market. We want to serve the middle market, whether that means we do all the distribution ourselves or we manufacture or we distribute a third party or we work with third-party partners to distribute the products we manufacture. Our view, again, is to serve that middle market, and we're not so hung up on how we do it. Our real goal is to meet their needs. And so to us, this is just an extension of that strategy that we use elsewhere in the organization.

[Operator Instructions] Next, we'll go back to Wes.

I got a question, Joel Hurwitz, Dowling & Partners.

Joel. Sorry.

No problem, Adam. If I look at your consumer sales, right, they've grown quite well. And it looks like there's been some pretty sizable productivity gains since where you were pre-pandemic levels. I just want to see if you could elaborate on sort of what's driving those outsized productivity gains and how you see that going forward?

Yes, I'll give you a few answers, and Nate or Gary can certainly chime in. Look, we built some new tools during the pandemic that we've been able to use. We have the ability to work with individuals virtually. Now I will tell you that our agents and consumers prefer to meet in person. Look at -- if you were going to write a check to someone for 6 figures, I think you would, too. But once we establish a relationship, we're able to use these tools to build on that relationship, which helps us with our productivity. So new tools is part of it. Second, as we've talked about extensively, growing and developing agents into financial advisers has been just a natural lift in productivity. Gary has said this a number of times. It's just absolutely true. When we work with someone and it's around a life and health insurance product, it's natural for them to think -- for a consumer to think of that as an expense. But when we work with someone around their financial planning, and we're putting assets into our annuities or into marketable securities, they think of it as an investment. So we go from being a sales agent to being a true adviser, and that has had a natural productivity lift. The last thing I'll say is we've adjusted our model over the years. We are leaning in towards recruiting higher-caliber agents who are capable of making this transition from being an insurance agent to becoming a financial adviser, which means passing a series of securities exams. Those folks are just naturally more productive because they have some natural competencies. Nate, anything to add?

Yes. I think specifically, we have over 1/3 of our recruits coming from personal referrals now and recruits that come in that way with somebody that's already in the business are naturally more productive and move, like Scott says, over to the financial adviser role more quickly. Additionally, we've done a nice job of releasing new products to the field over the last 5 years. And the field has taken advantage of the new products and been able to be more productive because of it.

Wes Carmichael, Autonomous Research again. I had a question on Medicare Advantage. And I know you don't manufacture the product, but you do have fee arrangements with third parties. Just in 2025, there's been a lot of activity from carriers exiting various states, certain regions. When you think about that in your business, does that have an impact if there are lapses or any impact from carriers leaving?

So we've seen a lot of this over the last couple of years where carriers who went after market share earlier are now shifting towards a focus on profitability and they're shedding underperforming plans, getting out of counties, making plans noncommissionable and so forth. And look, that does impact us because that means that we have consumers that may have been enrolled in plans that are changing, and we spend time going out and helping them get into a new plan. That energy doesn't necessarily result in higher fees for us because we're preserving our renewal fee. Having said that, any time we get back in the home, it's an opportunity for us. We also have been able to continue to grow our Medicare Advantage sales even while spending a portion of our time working with in-force, if you will, members on switching plans. So yes, the more activity there is, it does absorb some of our energy, but it also has a lot of upside because we like opportunities to get with our consumers and engage with them.

I would add 2 other perspectives to that. I think that some of the transition that you see ongoing in this marketplace right now, number one, I believe it reaffirms the decision we made many years ago to distribute, not manufacture these products because we saw a secular shift, and we're seeing some of that get tempered right now. So I feel like it was wise of us not to invest the assets and the time necessary to build out our own manufactured Med Advantage offering. I think this supports that. I think that this also continues to help us in terms of the strength we have in the MedSup business and the decisions we took a few years ago to really refine those offerings and make those products more competitive. So I feel like what we're seeing here happen is a natural function of -- not a natural function, but it really reaffirms some of the decisions we've made at a corporate level. So I like very much the execution that Scott and Nate and the rest of the team are bringing to it, and it also lays up nicely against the broader strategy we've had for some time. Sorry, one last thing I do want to add on that. I think this also makes clear why this whole notion of providing in-person service and the last mile and so on the point of emphasis that we have. Not all consumers want that, but a lot of them do. And I think the more transition you see in this marketplace, the more that's going to continue. The more those services that we have and that willingness and the resources we have to meet face-to-face, the more valuable those will continue to be perceived by our customers.

Suneet?

Suneet Kamath from Jefferies. So you talked about, Scott, 15% to 20%, I think, of the agents are licensed. So can you talk about where you see that going in the future? And then are there some costs associated with that? I would imagine the compliance related to having more of an advisory business is going to be higher than insurance business. But just some thoughts on expenses related to that opportunity.

Yes. So I'd say less concerned about the expense side because we think we have a very scalable operation. But in terms of where we're headed, today, 15% to 20% of our folks are registered. We are quickly on our way to that being 20% to 25%. So I'd expect to see that happen over the next few years. There are some models out there where you have to be registered to sell securities to pass go just to get started. I'm not sure we're headed there, at least not in the near-term horizon because our model works very well the way it's structured. It gives individuals an easier entry point. It's a little easier to pass an insurance exam than it is in a securities exam, gives them a chance to try out the role, meeting with clients, selling products, et cetera, before a full investment on their part to do that. And also by having some cohort of nonregistered producers, they become effectively bird dogs for our more experienced advisers. So we are a wonderful place to be a financial adviser because you have a team of people who are helping you open up households. And many times, you're being brought back in on a second appointment to make that higher premium sale. And as an adviser, that's exactly what you're looking for.

Ryan Krueger, KBW. I had a question on just the health of your middle market consumers. We've seen some companies cite some headwinds from just inflationary pressures on middle-income households. It's not clear that that's having a negative impact to you, but what are you seeing? Are you seeing any headwinds from that? And how are you overcoming it?

It's an interesting question. It's a relevant question. We certainly have seen a rise in property and casualty rates, which you would think would squeeze out some of the amount of wallet that's available for our types of products. But I'll key in on your comment that it doesn't appear to be showing up, and that's our perspective. And I think a lot of it is because when you think about the products that we sell, they're really not discretionary. I mean, you can't join original Medicare and not purchase a Medicare supplement plan and think that you've covered your risks. I mean there's unlimited exposure if you do that. Folks need life insurance protection for their family. They need some type of long-term care solution. They need and want some type of protection on their investments so that they're not susceptible to investment losses or other market-related adversities. So we find that our products are meeting a real demand, less of a discretionary demand than other products that are being impacted by inflation. And so far, it just hasn't shown up.

Any other questions from the audience?

You touched on it a little bit, but could you maybe go into a little more detail on the life cycle of an adviser that wants to become a -- or excuse me, of an agent that wants to become an adviser -- sorry about that. How long does it take? What are the key milestones that they need to hit to kind of get there?

Yes. So I'll start. Nate can join in certainly. Things do vary, but prototypically, we like our agents to come in and spend somewhere between 9 months to 15 months with us learning how to be an insurance agent, learning the business. Now during that time, we encourage individuals and we support them in getting their first securities exam, which today is the SIE. It's kind of an introduction to the investment essentials. After that, depending on the path they go, they may need to get a Series 7 and a 66. They might get a Series 6 and a 63, they might get a Series 65. So it does depend a little bit on what the individual wants to pursue. But typically, our registered agents are individuals who are in their second year or beyond. And that's, as I said, for all the surrounding reasons is a really good model for us. It gives individuals a way to get into the industry and see what it's all about before they're making a full and deeper investment. And frankly, it allows us to do the same on our side. The process of becoming registered does take energy. It does take time. And during that period of time, it could impact an individual's earnings, which can be profound depending on what level they're at and what their resources are. So we pay a lot of attention to when is the right time to promote this with our producers, and we provide them with just the right amount of support to get them through it on a timely basis.

I think additionally, the folks that we're recruiting are coming from different places, like I mentioned earlier, a lot of personally referred agents. Those agents push us a little bit to allow them to get started earlier whether that's moving into a path of leadership. We have a lot of people that go into leadership after about a year or moving down the path of becoming a financial adviser or both. But really, like Scott mentioned, around the 9-month mark, we start to talk to them about what their path is going to look like and where they want to go.

Other questions? All right. Well, there is one virtual question, but I've been holding on to it because I felt like it was a good wrap. What are you most excited about over the next 3 to 5 years?

Okay. I'll start and everyone can chime in on that. Look, we have tremendous momentum. As I said at the beginning, I've been here 20 years. And given the history of our organization, look at, there were things that we needed to get place over the years. And we've done it. Nate mentioned new products. We talked extensively about our securities program. We've made changes to our recruiting process. Years ago, if you tuned into one of these presentations, you heard me talk about all the technology and new systems that we were bringing to bear. Today, we've done most of that heavy lifting, and it puts us in an incredible position. One of the things that I like to say to our agency managers when they look back over the last decade is we made a lot of good decisions 5, 7 years ago and today, you can really see the momentum that we're having as a result of those decisions. So I feel like we are in the best place we've ever been as a company. The deck is set for us to have really good cycles ahead, and I think you're already beginning to see it in the numbers.

I would just say that I think now is the best time for an agent to join our company. We've done a lot of work, like Scott mentioned, with new products, with training, with systems. So people can come in and be really successful as new agents with us. And we'll see that grow into the future as they become advisers down the road. So now is really the best time to join our company.

I think what I would add to that, the nature of the role I have is obviously very different than what these 2 guys do. And so because of that, I think my perspective maybe slightly different. Scott mentioned that we've put in place a number of processes and systems and products and all the things you need to win, and we spent several years doing that. We have a number of those types of things that are still coming. We've talked about the tech modernization investments we're making. We've talked about our new operations in Bermuda. There are a number of things like that, like the products and systems that Scott talked about that took a few years to show their worth. There are a number of other things like that, that are coming. And they've contributed in large part to some of the commitments we've made about our return on equity and other things that we're doing. And I can tell you, as I sit here today and I look out forward, we have so much more potential to continue to drive those results. I think our investors have been appropriately patient as we've put these pieces in place, but in the chair I have, I get to see how those things are yet to come, and there's tremendous opportunity. As long as we do all the right things with our people, which I think we have, we have a tremendous team. Scott and Nate are just a couple of examples of that. A lot of longevity in the team, a lot of investments that have taken place that I think have been generally more right than wrong. We haven't been perfect, but more right than wrong. And I think what those investments have yet to yield, I think our investors will be quite pleased with the things yet to come. And I think with that, I stayed just clear of what makes the attorneys nervous. But there's a lot of really good things yet coming, and I'm very excited for that.

Well, thank you for joining us today for the briefing. I hope you found it valuable and informative. If you have any further questions, please reach out to the Investor Relations team around this session or around anything about CNO. We thank you for your support of and interest in CNO Financial Group. We hope you have a great rest of the day.