ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
In this section, we review the consolidated financial condition of CNO and its consolidated results of operations for the years ended December 31, 2025, 2024 and 2023 and, where appropriate, factors that may affect future financial performance. Please read this discussion in conjunction with the consolidated financial statements and notes included in this Form 10-K.
OVERVIEW
We are 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. 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.
We view our operations as three insurance product lines (annuity, health and life) and the investment and fee income segments. Our segments are aligned based on their common characteristics, comparability of profit margins and the way the CODM makes operating decisions and assesses the performance of the business.
Our insurance product line segments (annuity, health and life) include marketing, underwriting and administration of the policies our insurance subsidiaries sell. The business written in each of the three product categories through all of our insurance subsidiaries is aggregated allowing management and investors to assess the performance of each product category. When analyzing profitability of these segments, we use insurance product margin as the measure of profitability, which is: (i) insurance policy income; and (ii) net investment income allocated to the insurance product lines; less (i) insurance policy benefits; (ii) interest credited to policyholders; (iii) amortization of deferred acquisition costs and present value of future profits, (iv) non-deferred commissions; and (v) advertising expense. Net investment income is allocated to the product lines using the book yield of investments backing the block of business, which is applied to net insurance liabilities for the block in each period. Net insurance liabilities for the purpose of allocating investment income to product lines are equal to: (i) policyholder account values for interest sensitive products; (ii) total reserves before the fair value adjustments reflected in accumulated other comprehensive income (loss), if applicable, for all other products; less (iii) amounts related to reinsured business; (iv) deferred acquisition costs; (v) the present value of future profits; and (vi) the value of unexpired options credited to insurance liabilities.
Income from insurance products is the sum of the insurance product margins of the annuity, health and life product lines, less expenses allocated to the insurance product lines. It excludes the income from our fee income business, investment income not allocated to product lines, net expenses not allocated to product lines (primarily holding company expenses) and income taxes. Management believes insurance product margin and income from insurance products provides an additional understanding of the business and a more meaningful analysis of the results of our insurance product lines.
We market our products through the Consumer and Worksite Divisions that reflect the customers served by the Company. The Consumer and Worksite Divisions are primarily focused on marketing insurance products, several types of which are sold in both divisions and underwritten in the same manner.
The Consumer Division serves individual consumers, engaging with them on the phone, virtually, online, face-to-face with agents, or through a combination of sales channels. This structure unifies consumer capabilities into a single division and integrates the strength of our agent sales forces with one of the largest direct-to-consumer insurance businesses with proven experience in advertising, web/digital and call center support.
The Worksite Division focuses on the sale of voluntary insurance benefits, including supplemental health and life insurance products in the workplace for businesses, associations, and other membership groups, interacting with customers at their place of employment and virtually.
The investment segment involves the management of our capital resources, including investments and the management of corporate debt and liquidity. Our measure of profitability of this segment is the total net investment income not allocated to the insurance products. Investment income not allocated to product lines represents net investment
Table of Contents
income less: (i) equity returns credited to policyholder account balances; (ii) the investment income allocated to our product lines; (iii) interest expense on notes payable, investment borrowings and financing arrangements; (iv) expenses related to the funding agreement-backed note ("FABN") program; and (v) certain expenses related to benefit plans that are offset by special-purpose investment income; plus (vi) the impact of annual option forfeitures related to fixed indexed annuity surrenders. Investment income not allocated to product lines includes investment income on investments in excess of amounts allocated to product lines, investments held by our holding companies, the spread we earn from our FHLB investment borrowing and FABN programs and variable components of investment income (including call and prepayment income, adjustments to returns on structured securities due to cash flow changes, income (loss) from Company-owned life insurance ("COLI") and alternative investment income not allocated to product lines), net of interest expense on corporate debt and financing arrangements. The spread earned from our FHLB investment borrowing and FABN programs includes the investment income on the matched assets less: (i) interest on investment borrowings related to the FHLB investment borrowing program; (ii) interest credited on funding agreements; and (iii) amortization of deferred acquisition costs related to the FABN program.
Our fee income segment includes the earnings generated from sales of third-party insurance products (primarily Medicare Advantage), services provided to employers through our Worksite division and the operations of our broker-dealer and registered investment advisor. In November 2025, we announced our intention to exit the fee services business within our Worksite Division to sharpen our focus on the core insurance business. As a result, beginning in fourth quarter of 2025, the net results of this business are no longer presented within the fee income segment, but are presented within net loss related to divested business within non-operating income. The resulting fee income metric is the fee income segment's measure of profitability.
Expenses not allocated to product lines primarily include the expenses of our corporate operations, excluding interest expense on debt.
Table of Contents
The following summarizes our earnings for each of the three years ended December 31, 2025 (dollars in millions, except per share data):
Insurance product margin
Annuity margin
Health margin
Life margin
Total insurance product margin
Allocated expenses
Income from insurance products
Fee income
Investment income not allocated to product lines
Expenses not allocated to product lines
Operating earnings before taxes
Income tax expense on operating income
Net operating income (a)
Net realized investment losses from disposals, impairments and change in allowance for credit losses
Net change in market value of investments recognized in earnings
Fair value changes related to agent deferred compensation plan
Changes in fair value of embedded derivative liabilities and market risk benefits
Expenses related to TechMod initiative
Goodwill and other asset impairment
Net loss related to divested business
Other
Net non-operating loss before taxes
Income tax benefit on non-operating loss
Net non-operating loss
Net income
Per diluted share:
Net operating income
Net non-operating loss
Net income
(a) Management believes that an analysis of net income applicable to common stock before: (i) net realized investment gains or losses from disposals, impairments and the change in allowance for credit losses, net of taxes; (ii) net change in market value of investments recognized in earnings, net of taxes; (iii) changes in fair value of embedded derivative liabilities and market risk benefits ("MRBs") related to our fixed indexed annuities, net of taxes; (iv) fair value changes related to the agent deferred compensation plan, net of taxes; (v) gains or losses related to material reinsurance transactions, net of taxes; (vi) loss on extinguishment of debt, net of taxes; (vii) changes in the valuation allowance for deferred tax assets and other tax items; (viii) costs related to our three-year project to modernize certain elements of our technology ("TechMod") that are incremental to normal spend and will not recur following implementation, net of taxes; (ix) goodwill and other asset impairment expenses, net of taxes; (x) gains or related to business, net of taxes; and (xi) other non-operating items including earnings attributable to variable interest entities, net of taxes ("net operating income," a non-GAAP financial measure) is important to evaluate the financial performance of the company, and is a key measure commonly used in the life insurance industry. The income tax expense or allocated to the items included in net non-operating income () represents the current and deferred income tax expense or allocated to the items included in non-operating earnings. Management believes this information provides a understanding of the
Table of Contents
business and a more meaningful analysis of results of our insurance product lines. The table above reconciles the non-GAAP measure to the corresponding GAAP measure.
In addition, management uses these non-GAAP financial measures in its budgeting process, financial analysis of segment performance and in assessing the allocation of resources. We believe these non-GAAP financial measures enhance an investor's understanding of our financial performance and allows them to make more informed judgments about the Company as a whole. These measures also highlight operating trends that might not otherwise be apparent. However, net operating income is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash flow from operating activities, as measures of liquidity, or as an alternative to net income as measures of our operating performance or any other measures of performance derived in accordance with GAAP. In addition, net operating income should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Net operating income has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under GAAP. Our definition and calculation of net operating income are not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of various assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as revenues and expenses during the reporting period. Management has made estimates in the past that we believed to be appropriate but were subsequently revised as actual experience developed differently than expected. If our future experience differs materially from these estimates and assumptions, our results of operations and financial condition could be materially affected.
We base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances. We continually evaluate the information used to make these estimates as our business and the economic environment change. The use of estimates is pervasive throughout our financial statements. The accounting policies and estimates we consider most critical are summarized below. Additional information on our accounting policies is included in the note to our consolidated financial statements entitled "Summary of Significant Accounting Policies".
Investment Valuation
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and, therefore, represents an exit price, not an entry price. We carry certain assets and liabilities at fair value on a recurring basis, including fixed maturities, equity securities, trading securities, investments held by VIEs, derivatives, separate account assets and embedded derivatives related to fixed indexed annuity products. We carry our COLI, which is invested in a series of mutual funds, at its cash surrender value which approximates fair value. In addition, we disclose fair value for certain financial instruments, including mortgage loans, policy loans, cash and cash equivalents, insurance liabilities for interest-sensitive products and funding agreements, investment borrowings, notes payable and borrowings related to VIEs.
The degree of judgment utilized in measuring the fair value of financial instruments is largely dependent on the level to which pricing is based on observable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information. Financial instruments with readily available active quoted prices would be considered to have fair values based on the highest level of observable inputs, and little judgment would be utilized in measuring fair value. Financial instruments that rarely trade would often have fair value based on a lower level of observable inputs, and more judgment would be utilized in measuring fair value. We categorize our financial instruments carried at fair value into a three-level hierarchy based on the observability of inputs. The three-level hierarchy for fair value measurements is described in the note to the consolidated financial statements entitled "Fair Value Measurements."
Table of Contents
The following summarizes investments on our consolidated balance sheet carried at fair value by pricing source and fair value hierarchy level as of December 31, 2025 (dollars in millions):
Quoted prices in active markets for identical assets
(Level 1)
Significant observable inputs
(Level 2)
Significant unobservable inputs
(Level 3)
Total fair value
Priced by third-party pricing services
Priced by independent broker quotations
Priced by matrices
Priced by other methods (a)
Total
Percent of total
(a) Primarily represents instruments that are modeled using market observable inputs, securities valued based on recent trades, or reports provided by third party asset managers.
When an available for sale fixed maturity security's fair value is below the amortized cost, the security is considered impaired. If a portion of the decline is due to credit-related factors, we separate the credit loss component of the impairment from the amount related to all other factors. The credit loss component is recorded as an allowance and reported in net investment gains (losses) (limited to the difference between estimated fair value and amortized cost). The impairment related to all other factors (non-credit factors) is reported in accumulated other comprehensive income (loss) along with unrealized gains (losses) related to fixed maturity investments, available for sale, net of tax and related adjustments. The allowance is adjusted for any additional credit losses and subsequent recoveries. When recognizing an allowance associated with a credit , the cost basis is not adjusted. When we determine a security is , the remaining amortized cost will be written off.
In determining the credit loss component, we discount the estimated cash flows on a security by security basis. We consider the impact of macroeconomic conditions on inputs used to measure the amount of credit loss. For most structured securities, cash flow estimates are based on bond-specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity, prepayment speeds and structural support, including over-collateralization, excess spread, subordination and guarantees. For corporate bonds, cash flow estimates are derived by considering asset type, rating, time to maturity, and applying an expected loss rate.
If we intend to sell an impaired fixed maturity security, available for sale, or identify an impaired fixed maturity security, available for sale, for which is it more likely than not we will be required to sell before anticipated recovery, the difference between the fair value and the amortized cost is included in net investment gains (losses) and the fair value becomes the new amortized cost. The new cost basis is not adjusted for any subsequent recoveries in fair value.
Future events may occur, or additional information may become available, which may necessitate future realized losses in our portfolio. Significant losses could have a material adverse effect on our consolidated financial statements in future periods.
For more information on our investment portfolio and our critical accounting estimates related to investments, see the note to our consolidated financial statements entitled "Investments".
Present Value of Future Profits and Deferred Acquisition Costs
Amortization of the present value of future profits and deferred acquisition costs is calculated using the same contract groupings (or cohorts), partial withdrawal rate, mortality, surrender and lapse assumptions that are used in calculating the liability for future policy benefits, and these assumptions are reviewed and updated at least annually.
Table of Contents
Present value of future profits and deferred acquisition costs are sensitive to unexpected terminations, due to higher mortality, surrender and lapse experience than expected. Such changes are recognized in the current period as a reduction of the capitalized balances. The effect of changes in assumptions related to future mortality and lapses are recognized prospectively over the remaining contract term. The carrying values of deferred acquisition costs are not subject to recovery testing.
Income Taxes
Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities and NOLs. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted.
A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, and tax planning strategies.
We evaluate the need to establish a valuation allowance for our deferred income tax assets on an ongoing basis using a deferred tax valuation model. Our model is adjusted to reflect changes in our projections of future taxable income including changes resulting from the Tax Cuts and Job Act, investment strategies, the impact of the sale or reinsurance of business, the recapture of business previously ceded and tax planning strategies. Our estimates of future taxable income are based on evidence we consider to be objectively verifiable. At December 31, 2025, our projection of future taxable income for purposes of determining the valuation allowance is based on our estimates of such future taxable income through the date our NOLs expire. Such estimates are subject to numerous risks and uncertainties and the extent to which actual impacts differ from the assumptions used in our deferred tax valuation model. Based on our assessment, we have concluded that it is more likely than not that our net deferred tax assets of $711.7 million will be realized through future taxable earnings.
Recovery of our deferred tax asset is dependent on achieving the level of future taxable income projected in our deferred tax valuation model and failure to do so could result in the recognition of a valuation allowance in a future period. The recognition of a valuation allowance would increase income tax expense and reduce shareholders' equity, and such an increase could have a significant impact upon our earnings in the future.
We had $976.4 million of federal NOLs as of December 31, 2025, as summarized below (dollars in millions):
Net operating loss
Year of expiration
carryforwards
2032 through 2035
No expiration date
Total federal NOLs
Our non-life NOLs with no expiration date of $832.4 million can be used to offset 35 percent of life insurance company taxable income and 80 percent of non-life company taxable income. Our non-life NOLs with expiration dates can be used to offset 35 percent of life insurance company taxable income and 100 percent of non-life company taxable income until all non-life NOLs are utilized or expire. Our life NOLs with no expiration date of $127.5 million can be used to offset 80% of life company taxable income, subject to certain limitations in the Code. In March 2025, the Company executed a consent agreement with the IRS that provided formal approval for the tax method change for allocating indirect costs (pursuant to the Code) to self-constructed real estate assets. As a result, the Company recharacterized the remaining $797.6 million of capitalized indirect costs under the prior accounting method to a NOL with no expiration date.
Table of Contents
Liabilities for Insurance Products
At December 31, 2025, the total balance of our liabilities for insurance products was $31.1 billion. These liabilities are generally payable over an extended period of time and the profitability of the related products is dependent on the pricing of the products and other factors. Liabilities for insurance products are calculated using management's best judgments, based on our past experience and standard actuarial tables, of mortality, morbidity, lapse rates, investment experience and expense levels. Differences between our expectations when we sold these products and our actual experience could positively or negatively impact future earnings.
Our liabilities for future policy benefits are measured using the net premium ratio approach as described in the note to the consolidated financial statements entitled "Summary of Significant Accounting Policies".
The liability for future policy benefits is determined based on numerous assumptions. The most significant assumptions for our life and annuity business are mortality and lapse/withdrawal rates which are based on our experience and, in cases of limited experience, industry experience. Mortality and lapse/withdrawal rates also take into consideration future expectations in policyholder behavior that may vary from past experience. For our health business, mortality rates, lapse rates, morbidity assumptions and future rate increases are based on our experience and, in cases of limited experience, industry experience. Such assumptions also consider future expectations in policyholder behavior that may vary from past experience. In addition, the liability for future policy benefits is measured using estimated discount rates. The assumptions and estimates that we use often depend on judgment regarding the likelihood of future events and are inherently uncertain. The liability for unpaid policy claims on health contracts is classified as future policy benefits on the consolidated balance sheet. The liability for unpaid policy claims on life insurance contracts is classified as the liability for life insurance policy on the consolidated balance sheet.
Cash flow assumptions related to our insurance contracts are established when a policy is issued and are evaluated each quarter to determine if assumption updates are required. A more detailed review of assumptions is performed annually. Changes to our cash flow assumptions are recognized in the liability for future policy benefits remeasurement (gain) loss in the consolidated statement of operations. Actual experience is reflected in the calculation of future policy benefits each quarter, and changes in the liability due to actual experience are also recognized in the liability for future policy benefits remeasurement (gain) loss in the consolidated statement of operations.
Discount rates used to calculate net premiums are locked in at policy inception and provide the basis to recognize interest expense in the consolidated statement of operations. Discount rates used to measure the carrying value of the liability for future policy benefits in the consolidated balance sheet are updated each reporting period, and differences between the liability balances calculated using the locked-in rate and the updated discount rates are recognized in accumulated other comprehensive income (loss). For additional discussion on the determination of discount rates, see the note to the consolidated financial statements entitled "Summary of Significant Accounting Policies".
The table presented below summarizes our estimates of the immediate impacts to pre-tax income resulting from hypothetical revisions to certain assumptions and is for illustrative purposes only as such hypothetical revisions are not currently required or anticipated. We have assumed that revisions to assumptions resulting in the adjustments summarized below would occur equally among policy types, ages and durations within each product classification. Any actual adjustment would be dependent on the specific policies affected and, therefore, may differ from the estimates summarized below. In addition, the impact of actual adjustments would reflect the net effect of all changes in assumptions during the period. The impacts also assume no management actions. For example, higher morbidity could result in higher expected rate increases, which would create some level of offset to the morbidity impacts.
Table of Contents
Change in assumptions
Estimated adjustment to income before income taxes based on revisions to certain assumptions
(dollars in millions)
Annuities
Fixed indexed and fixed interest annuity products:
5% increase to assumed mortality
5% decrease to assumed mortality
10% increase to assumed lapse rate
10% decrease to assumed lapse rate
50 basis point increase in interest rates (a)
50 basis point decrease in interest rates (a)
Other annuities:
5% increase to assumed mortality
5% decrease to assumed mortality
Health
Medicare supplement:
5% increase to assumed mortality
5% decrease to assumed mortality
10% increase to assumed lapse rate
10% decrease to assumed lapse rate
10% increase to assumed morbidity
10% decrease to assumed morbidity
Supplemental health:
5% increase to assumed mortality
5% decrease to assumed mortality
10% increase to assumed lapse rate
10% decrease to assumed lapse rate
10% increase to assumed morbidity
10% decrease to assumed morbidity
Long-term care:
5% increase to assumed mortality
5% decrease to assumed mortality
10% increase to assumed lapse rate
10% decrease to assumed lapse rate
10% increase to assumed morbidity
10% decrease to assumed morbidity
Life
Traditional life:
5% increase to assumed mortality
5% decrease to assumed mortality
10% increase to assumed lapse rate
10% decrease to assumed lapse rate
Interest-sensitive life products:
5% increase to assumed mortality
5% decrease to assumed mortality
10% increase to assumed lapse rate
10% decrease to assumed lapse rate
(a) The estimated impact of the hypothetical 50 basis point increase or decrease in interest rates related to our fixed indexed and fixed interest annuity products would be reflected in our pre-tax non-operating earnings.
Table of Contents
The following summarizes the persistency of our major blocks of insurance business summarized by line of business:
Years ended December 31,
Annuity:
Fixed indexed annuities (1)
Fixed interest annuities (1)
Other annuities (2)
Health:
Medicare supplement (3)
Supplemental health (3)
Long-term care (3)
Life:
Traditional life (3)
Interest-sensitive life (3)
(1) Based on the total amount of death benefits, surrender values and partial withdrawals divided by the average account value.
(2) Based on total reserves released at death divided by average account value.
(3) Based on number of inforce policies.
Market Risk Benefits
MRBs are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk and expose the Company to other-than-nominal capital market risk. Many of our fixed indexed annuity products include a GLWB that is considered a MRB. MRBs are measured at fair value using an option-based valuation model based on amount of exposure, market data, company experience and other factors. Changes in fair value are recognized in earnings each period with the exception of the portion of the change in fair value due to a change in the instrument-specific credit risk, which is recognized in other comprehensive income (loss). MRBs in an asset position are presented separately from those in a liability position as there is no legal right of offset between contracts.
The cost of MRBs may rise in volatile or declining equity markets or in a low interest rate environment. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility, variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs, may result in significant fluctuations in the estimated fair value of the guarantees that could affect net income and changes in our nonperformance risk could materially affect other comprehensive income (loss).
Goodwill and Intangible Assets
In February 2021, we acquired DirectPath, LLC ("DirectPath", now known as Optavise, LLC subsequent to its name change in April 2022). In April 2019, we acquired Web Benefits Design Corporation ("WBD"), which was subsequently merged into Optavise, LLC during 2023. Optavise, LLC 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, LLC goodwill and other intangible assets arising from the acquisitions were 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
Table of Contents
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, an impairment is recorded by the amount that the carrying value exceeds the fair value of the reporting unit up to the carrying amount of goodwill.
Macroeconomic, industry and market conditions, both current and future expected financial performance, and relevant entity-specific events that occurred during the three months ended September 30, 2025 caused us to consider whether there were any interim indicators of impairment related to the Optavise, LLC business within our fee income segment. Optavise, LLC provides personalized benefits education, advocacy and transparency, and communications services that help employers reduce healthcare costs and assist employees with making informed benefit decisions. As a result of this evaluation, we identified that the valuation of Optavise, LLC 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. We recognized an additional impairment charge of $5.2 million related to other long-lived assets as a result of exiting the fee services side of the Worksite business during the fourth quarter of 2025, as previously announced. The total impairment charge of $101.9 million is included in the accompanying consolidated statement of operations for the year ended December 31, 2025. No material assets remain on Optavise, LLC after the effect of these impairments.
Table of Contents
RESULTS OF OPERATIONS
The following tables and narratives summarize the operating results of our segments (dollars in millions):
Insurance product margin
Annuity:
Insurance policy income
Net investment income
Insurance policy benefits
Interest credited
Amortization and non-deferred commissions (a)
Annuity margin
Health:
Insurance policy income
Net investment income
Insurance policy benefits
Amortization and non-deferred commissions (a)
Health margin
Life:
Insurance policy income
Net investment income
Insurance policy benefits
Interest credited
Amortization and non-deferred commissions (a)
Advertising expense
Life margin
Total insurance product margin
Allocated expenses:
Branch office expenses
Other allocated expenses
Income from insurance products
Fee income
Investment income not allocated to product lines
Expenses not allocated to product lines
Operating earnings before taxes
Income tax expense on operating income
Net operating income
(a) Amortization and non-deferred commissions are comprised of: (i) the amortization of deferred acquisition costs and present value of future profits; and (ii) commission expenses that are not directly related to the successful acquisition of new or renewal insurance contracts and, therefore, are not eligible to be deferred. Such non-deferred commissions are included in other operating costs and expenses on the consolidated statement of operations.
Table of Contents
General: CNO is the top tier 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. We view our operations by segments, which consist of insurance product lines. These products are distributed by our two divisions. The Consumer Division serves individual consumers, engaging with them on the phone, virtually, online, face-to-face with agents, or through a combination of sales channels. The Worksite Division focuses on the sale of voluntary benefit life and health insurance products in the workplace for businesses, associations, and other membership groups, interacting with customers at their place of employment and virtually.
Insurance product margin is management's measure of the profitability of its annuity, health and life product lines' performance and consists of insurance policy income plus allocated investment income less insurance policy benefits, interest credited, commissions, advertising expense and amortization of acquisition costs. Income from insurance products is the sum of the insurance product margins of the annuity, health and life product lines, less expenses allocated to the insurance product lines. It excludes the income from our fee income business, investment income not allocated to product lines, net expenses not allocated to product lines (primarily holding company expenses) and income taxes. Management believes insurance product margin and income from insurance products provides an additional understanding of the business and a more meaningful analysis of the results of our insurance product lines.
Net investment income is allocated to the product lines using the book yield of investments backing the block of business, which is applied to the average net insurance liabilities for the block in each period. Net insurance liabilities for the purpose of allocating investment income to product lines are equal to: (i) policyholder account values for interest sensitive products; (ii) total reserves before the fair value adjustments reflected in accumulated other comprehensive income (loss), if applicable, for all other products; less (iii) amounts related to reinsured business; (iv) deferred acquisition costs; (v) the present value of future profits; and (vi) the value of unexpired options credited to insurance liabilities. Investment income not allocated to product lines represents net investment income less: (i) equity returns credited to policyholder account balances; (ii) the investment income allocated to our product lines; (iii) interest expense on notes payable, investment borrowings and financing arrangements; (iv) expenses related to the FABN program; and (v) certain expenses related to benefit plans that are offset by special-purpose investment income; plus (vi) the impact of annual option forfeitures related to fixed indexed annuity surrenders. Investment income not allocated to product lines includes investment income on investments in excess of amounts allocated to product lines, investments held by our holding companies, the spread we earn from our FHLB investment borrowing and FABN programs and variable components of investment income (including call and prepayment income, adjustments to returns on structured securities due to cash flow changes, income () from COLI and alternative investment income not allocated to product lines), net of interest expense on corporate debt and financing arrangements. The spread earned from our FHLB investment borrowing and FABN programs includes the investment income on the matched assets less: (i) interest on investment borrowings related to the FHLB investment borrowing program; (ii) interest credited on funding agreements, and (iii) amortization of deferred acquisition costs related to the FABN program.
Comprehensive Annual Actuarial Review: We perform an annual review of our experience and assumptions including, but not limited to, assumptions related to mortality rates, morbidity rates, surrender rates, earned rates, credited rates and expenses. In addition, we also review and update our assumptions on a more frequent basis to the extent current conditions or circumstances warrant changes that could be significant to our operating results. The impacts of the review have had a significant impact on our earnings.
We performed our 2025 comprehensive annual actuarial review, resulting in a net favorable impact of $21.4 million to net income, including a net favorable impact of $41.3 million to insurance product margins included in pre-tax operating income. The most significant insurance product margin impacts related to fixed indexed annuities, supplemental health and Medicare supplement products, which were favorably (unfavorably) impacted by $13.8 million, $24.8 million, and $(9.2) million, respectively. The fixed indexed annuities changes primarily related to higher surrender assumptions on the MRB liability. The supplemental health changes primarily related to lower persistency assumptions. The Medicare supplement changes primarily related to higher morbidity. In addition, the comprehensive annual actuarial review unfavorably impacted pre-tax non-operating income by $14.3 million related to changes in the fair value of embedded derivative liabilities on our fixed indexed annuities. The primary changes related to increases in the surrender rate assumptions.
We performed our 2024 comprehensive annual actuarial review, resulting in a net unfavorable impact of $12.1 million to net income, including a net favorable impact to insurance product margins included in pre-tax operating income of $27.3 million. The most significant impacts related to fixed indexed annuities and Medicare supplement products which were favorably (unfavorably) impacted by $36.2 million and $(9.4) million, respectively. The primary fixed indexed
Table of Contents
annuities changes related to higher mortality assumptions. The primary Medicare supplement changes related to higher morbidity and higher persistency assumptions. In addition, the comprehensive annual actuarial review unfavorably impacted pre-tax non-operating income by $42.8 million related to changes in the fair value of embedded derivative liabilities and market risk benefits on our fixed indexed annuities. The primary changes related to higher earned rate assumptions.
We performed our 2023 comprehensive annual actuarial review, resulting in a net favorable impact of $16.7 million to net income, including a net favorable impact to insurance product margins included in pre-tax operating income of $33.9 million. The most significant impacts related to supplemental health and Medicare supplement products which were favorably (unfavorably) impacted by $41.9 million and $(10.6) million, respectively. The primary supplemental health changes related to lower morbidity and higher surrender assumptions. The primary Medicare supplement changes related to higher near-term morbidity and higher persistency assumptions. In addition, the comprehensive annual actuarial review unfavorably impacted pre-tax non-operating income by $12.4 million related to changes in the fair value of embedded derivative liabilities and market risk benefits on our fixed indexed annuities.
The following tables summarize the favorable (unfavorable) impacts of our comprehensive annual actuarial reviews on pre-tax operating income for the years ended December 31, 2025, 2024 and 2023 (dollars in millions):
Insurance policy benefits
Line of business
Fixed indexed annuities
Other annuities
Supplemental health
Medicare supplement
Long-term care
Traditional life
Interest-sensitive life
Impact on pre-tax operating income
Summary of Operating Results: Net operating income was $439.2 million in 2025, compared to $429.3 million in 2024 and $356.1 million in 2023.
Operating return on equity ("operating ROE") (a non-GAAP measure) is equal to the trailing four quarters of net operating income divided by average shareholders' equity, excluding accumulated other comprehensive loss and net operating loss carryforwards. Our operating ROE, excluding significant items, was 11.4 percent, 11.4 percent, and 8.6 percent for the years ended December 31, 2025, 2024, and 2023, respectively. We continue to target an improvement in run‑rate operating ROE of 200 basis points through 2027, off a 2024 run-rate of approximately 10 percent.
Insurance product margin was $1,067.6 million, $1,040.0 million and $959.0 million in 2025, 2024 and 2023, respectively. Excluding significant items primarily related to our comprehensive annual actuarial review, the insurance product margin was $1,019.5 million, $1,012.7 million and $925.1 million in 2025, 2024 and 2023, respectively. Fluctuations by product line are discussed in greater detail in the narratives that follow.
The effective tax rate for 2025, 2024 and 2023 was 21.9 percent, 22.0 percent and 22.5 percent, respectively.
Table of Contents
Total allocated and unallocated expenses are summarized in the table below. Expenses not allocated to product lines include certain significant items listed in the table below. Total allocated and unallocated expenses as adjusted for the significant items are summarized below (dollars in millions):
Expenses allocated to product lines
Expenses not allocated to product lines
Net recoveries (expenses) related to significant legal and regulatory matters
Unfavorable impact related to a fixed asset impairment
Adjusted total
Our expense ratio was 18.9 percent, 19.2 percent, and 19.4 percent for the years ended December 31, 2025, 2024 and 2023, respectively. The expense ratio is defined as total allocated and unallocated expenses (excluding any significant items) divided by the sum of insurance policy income and net investment income allocated to products.
The fee income segment is summarized below (dollars in millions):
Consumer Division fee income:
Fee revenue
Operating cost and expenses
Net Consumer Division fee income
Worksite Division fee income:
Fee revenue
Operating cost and expenses
Net Worksite Division fee income
Total fee income segment:
Fee revenue
Operating cost and expenses
Net fee income
Net fee income decreased $14.8 million in 2025 as compared to 2024 primarily from decreased fee income recognized on Medicare Advantage third-party products, including unfavorable experience adjustments of $4.1 million in 2025 compared to favorable experience adjustments of $2.6 million in 2024. The experience adjustments are largely reflected in the first quarter. In addition, we updated our Medicare Advantage assumptions in the fourth quarter of 2025 to primarily reflect lower persistency, including higher exchanges between carriers, resulting in an unfavorable impact to income of $5.6 million.
Beginning in the fourth quarter of 2025, as a result of exiting the fee services business within our Worksite Division, the net results of this business are no longer reflected within operating income, but are reflected within non-operating income.
Table of Contents
Margin from Annuity Products (dollars in millions):
Annuity margin:
Fixed indexed annuities
Insurance policy income
Net investment income
Insurance policy benefits
Interest credited
Amortization and non-deferred commissions
Margin from fixed indexed annuities
Average net insurance liabilities
Margin/average net insurance liabilities
Fixed interest annuities
Insurance policy income
Net investment income
Insurance policy benefits
Interest credited
Amortization and non-deferred commissions
Margin from fixed interest annuities
Average net insurance liabilities
Margin/average net insurance liabilities
Other annuities
Insurance policy income
Net investment income
Insurance policy benefits
Interest credited
Amortization and non-deferred commissions
Margin from other annuities
Average net insurance liabilities
Margin/average net insurance liabilities
Total annuity margin
Average net insurance liabilities
Margin/average net insurance liabilities
Table of Contents
The favorable impacts of our comprehensive annual actuarial review (reflected in insurance policy benefits) on annuity product margins are summarized below (dollars in millions):
Fixed indexed annuities
Fixed interest annuities
Other annuities
Margin, excluding impact of comprehensive annual actuarial review:
Fixed indexed annuities
Fixed interest annuities
Other annuities
Margin from fixed indexed annuities was $196.0 million in 2025 compared to $215.8 million in 2024 and $192.2 million in 2023. The margin adjusted to exclude the favorable impacts of the comprehensive annual actuarial review previously discussed was $182.2 million, $179.6 million and $182.8 million in 2025, 2024 and 2023, respectively. The adjusted margin increased in the current period primarily due to growth in the block, partially offset by higher amortization. Growth in the block is being partially offset by spread compression driven by increased surrenders of higher spread products. The adjusted margin decreased from 2023 to 2024 primarily due to additional amortization resulting from higher surrenders partially offset by increased surrender charge income. Net insurance liabilities (equal to (i) policyholder account values for interest sensitive products; (ii) total reserves before the fair value adjustments reflected in accumulated other comprehensive income (loss), if applicable, for all other products; less (iii) amounts related to reinsured business; (iv) deferred acquisition costs; (v) the present value of future profits; and (vi) the value of unexpired options credited to insurance liabilities) were $10,582.5 million, $9,848.9 million and $9,337.3 million in 2025, 2024 and 2023, respectively. The growth in net insurance liabilities was driven by deposits and reinvested returns in excess of withdrawals, which results in higher net investment income allocated. The earned yield was 4.84 percent in 2025, up from 4.66 percent in 2024 and 4.39 percent in 2023, reflecting higher portfolio yields.
Net investment income and interest credited exclude the change in market values of the underlying options supporting the fixed indexed annuity products and corresponding offsetting amount credited to policyholder account balances. Such amounts were $106.5 million, $231.8 million and $118.3 million in 2025, 2024 and 2023, respectively.
Margin from fixed interest annuities was $32.8 million in 2025 compared to $31.6 million in 2024 and $33.9 million in 2023. The margin increased in 2025 primarily due to growth in the block and decreased in 2024 primarily due to additional amortization from higher policy surrenders. The reduction in the size of the block in 2024 was largely offset by increased yields. Average net insurance liabilities were $1,591.4 million, $1,578.3 million and $1,612.0 million in 2025, 2024 and 2023, respectively, driven by withdrawals in excess of deposits and reinvested returns. The earned yield increased to 5.46% percent in 2025, reflecting higher portfolio yields compared to 5.33 percent in 2024 and 5.19 percent in 2023.
Margin from other annuities was $9.8 million in 2025 compared to $26.8 million in 2024 and $8.9 million in 2023. The margin adjusted to exclude the favorable impacts of the comprehensive annual actuarial review previously discussed was $7.0 million in 2025, $26.8 million in 2024, and $5.4 million in 2023. The margin on this relatively small block of business is sensitive to annuitant mortality related to contracts with life contingencies. An increase in mortality in this block will result in a decrease in insurance liabilities and insurance policy benefits. The adjusted margin decreased in the current period due to higher mortality in 2024.
Table of Contents
Margin from Health Products (dollars in millions):
Health margin:
Supplemental health
Insurance policy income
Net investment income
Insurance policy benefits
Amortization and non-deferred commissions
Margin from supplemental health
Margin/insurance policy income
Medicare supplement
Insurance policy income
Net investment income
Insurance policy benefits
Amortization and non-deferred commissions
Margin from Medicare supplement
Margin/insurance policy income
Long-term care
Insurance policy income
Net investment income
Insurance policy benefits
Amortization and non-deferred commissions
Margin from long-term care
Margin/insurance policy income
Total health margin
Margin/insurance policy income
The favorable (unfavorable) impacts of our comprehensive annual actuarial review (reflected in insurance policy benefits) on health product margins are summarized below (dollars in millions):
Supplemental health
Medicare supplement
Long-term care
Margin, excluding impact of comprehensive annual actuarial review:
Supplemental health
Medicare supplement
Long-term care
Margin from supplemental health business was $305.4 million in 2025 compared to $269.8 million in 2024 and $294.4 million in 2023. The margin adjusted to exclude the favorable impacts of the comprehensive annual actuarial review previously discussed was $280.6 million, $269.5 million and $252.5 million in 2025, 2024 and 2023, respectively. The adjusted margin as a percentage of insurance policy income was 38 percent in 2025 compared to 37 percent in 2024 and 36 percent in 2023. The increase in the supplemental health adjusted margin in 2025, compared to 2024 and 2023, reflects growth in the block and lower morbidity.
Our supplemental health products (including specified disease, accident and hospital indemnity products) generally provide fixed or limited benefits. For example, payments under cancer insurance policies are generally made directly to, or at the direction of, the policyholder following diagnosis of, or treatment for, a covered type of cancer. Approximately two-thirds of our supplemental health policies inforce (based on policy count) are sold with return of premium or cash value riders. The return of premium rider generally provides that after a policy has been inforce for a
Table of Contents
specified number of years or upon the policyholder reaching a specified age, we will pay to the policyholder, or a beneficiary under the policy, the aggregate amount of all premiums paid under the policy, without interest, less the aggregate amount of all claims incurred under the policy. The cash value rider is similar to the return of premium rider, but also provides for payment of a graded portion of the return of premium benefit if the policy terminates before the return of premium benefit is earned. Accordingly, the net cash flows from these products generally result in the accumulation of amounts in the early years of a policy (reflected in our earnings as reserve increases which is a component of insurance policy benefits) which will be paid out as benefits in later policy years (reflected in our earnings as reserve decreases which offset the recording of benefit payments). As the policies age, insurance policy benefits will typically increase, but the increase in benefits will be partially offset by investment income earned on the accumulated assets.
Margin from Medicare supplement business was $106.1 million in 2025 compared to $113.9 million in 2024 and $116.9 million in 2023. The Medicare supplement margin adjusted to exclude the impacts of the comprehensive annual actuarial review previously discussed was $115.3 million, $123.3 million and $127.5 million in 2025, 2024 and 2023, respectively. The adjusted margin as a percentage of insurance policy income was 18 percent, 20 percent and 21 percent in 2025, 2024 and 2023, respectively. Insurance policy income was $627.0 million in 2025 compared to $620.5 million in 2024 and $619.9 million in 2023. The decrease in the adjusted margin in 2025, as compared to 2024, is primarily due to modestly higher claims in 2025 compared to 2024, partially offset by growth in the block. The decrease in the adjusted margin in 2024 compared to 2023, was primarily due to higher claims in 2024 compared to 2023. Claim experience will fluctuate from period to period. We are able to re-rate our Medicare Supplement business annually. Each year we review experience and regulatory requirements to arrive at appropriate rate actions. We file rate increase requests with individual states and historically have received approvals generally aligned with our requests.
Medicare supplement sales were very strong in the fourth quarter, reflecting a growing shift in consumer preferences from Medicare Advantage to Medicare Supplement, reversing a decade-long trend. Most of these sales were on policies with effective dates in January 2026 and therefore, will be reflected in our 2026 results. We continue to invest in both our Medicare supplement products and Medicare Advantage distribution to meet our customers' needs and preferences. We receive fee income when Medicare Advantage policies of other carriers are sold, which is recorded in our Fee income segment.
Medicare supplement business consists of both individual and group policies. Government regulations generally require we attain and maintain a ratio of total benefits incurred to total premiums earned (excluding changes in policy benefits reserves which is a component of insurance policy benefits) of not less than 65 percent on individual products and not less than 75 percent on group products. The ratio is determined after three years from the original issuance of the policy and over the lifetime of the policy and measured in accordance with U.S. statutory accounting principles. Since the insurance product liabilities we establish for Medicare supplement business are subject to significant estimates, the ultimate claim liability we incur for a particular period is likely to be different than our initial estimate. Changes to our estimates are reflected in insurance policy benefits in the period the change is determined.
Margin from Long-term care products was $145.1 million in 2025 compared to $133.1 million in 2024 and $83.0 million in 2023. The margin adjusted to exclude the impacts of the comprehensive annual actuarial review previously discussed was $139.6 million, $132.2 million and $92.0 million in 2025, 2024 and 2023, respectively. The adjusted margin as a percentage of insurance policy income and excluding the impacts of the annual actuarial review was 48 percent, 48 percent and 35 percent in 2025, 2024 and 2023, respectively. The increase in margin in 2025 is primarily due to growth in the business from sales of our short duration Long-Term Care Fundamental product and continued favorable claims experience. The increase in margin from 2023 to 2024 was due to higher claim experience in 2023. Claim experience will fluctuate from period to period. The average benefit period for policies sold in 2025 is 13 months and 99 percent are policies with two years or less in benefits. In addition, effective October 1, 2024, we retain 100 percent of our long-term care new business as we discontinued ceding 25 percent of long-term care new business under a reinsurance agreement (this did not impact the inforce business that we previously ceded). As a result, margins increased modestly in 2025 and we expect to grow more in future years as earnings emerge from the sales.
Table of Contents
Margin from Life Products (dollars in millions):
Life margin:
Interest-sensitive life
Insurance policy income
Net investment income
Insurance policy benefits
Interest credited
Amortization and non-deferred commissions
Margin from interest-sensitive life
Average net insurance liabilities
Interest margin
Interest margin/average net insurance liabilities
Underwriting margin
Underwriting margin/insurance policy income
Traditional life
Insurance policy income
Net investment income
Insurance policy benefits
Interest credited
Amortization and non-deferred commissions
Advertising expense
Margin from traditional life
Margin/insurance policy income
Margin excluding advertising expense/insurance policy income
Total life margin
The favorable (unfavorable) impacts of our comprehensive annual actuarial review (reflected in insurance policy benefits) as well as a model refinement during the first quarter of 2025 impacting life product margins are summarized below (dollars in millions). The model refinement related to traditional life reserves, which increased margins $6.8 million.
Interest-sensitive life
Traditional life
Margin, excluding impact of comprehensive annual actuarial review and other adjustments:
Interest-sensitive life
Traditional life
Margin from interest-sensitive life business was $94.3 million in 2025 compared to $97.9 million in 2024 and $98.7 million in 2023. The interest-sensitive life margins adjusted to exclude the impacts of the comprehensive annual actuarial review previously discussed were $91.5 million, $94.1 million and $94.8 million in 2025, 2024 and 2023, respectively. The decrease in the adjusted margin in 2025 and 2024 compared to 2023 reflects higher insurance policy benefits.
The interest margin was $2.7 million in 2025 compared to $2.3 million in 2024 and $2.8 million in 2023. Allocated net investment income reflects earned yields of 5.02 percent, 4.99 percent and 4.96 percent in 2025, 2024 and 2023, respectively. The fluctuating interest margin reflects growth in the block and compressed spreads in 2024, which lessened
Table of Contents
in 2025. Interest credited to policyholders may be changed annually but is subject to minimum guaranteed rates and, as a result, any reduction in our earned rate may not be fully reflected in the rate credited to policyholders.
Net investment income and interest credited excludes the change in market values of the underlying options supporting the fixed indexed life products and corresponding offsetting amount credited to policyholder account balances. Such amounts were $12.5 million, $21.9 million and $13.2 million in 2025, 2024 and 2023, respectively.
Margin from traditional life business was $178.1 million in 2025 compared to $151.1 million in 2024 and $131.0 million in 2023. The traditional life margins adjusted to exclude the impacts of the comprehensive annual actuarial review and a model refinement related to traditional life reserves previously discussed were $170.5 million, $155.6 million and $136.2 million in 2025, 2024 and 2023, respectively. The increase in the adjusted margin in 2025 compared to 2024 and 2023 primarily reflects lower advertising expense and growth in the business.
Allocated net investment income reflects earned yields of 4.74 percent, 4.68 percent and 4.71 percent in 2025, 2024 and 2023, respectively.
Advertising expense was $67.7 million in 2025 compared to $77.3 million in 2024 and $92.5 million in 2023. We are disciplined with our marketing expenditures and will increase or decrease our marketing spend depending on the current economics of the purchase or other factors, including the effectiveness of advertising spend. Lower advertising expenses reflect a shift to lower cost and more effective advertising alternatives, which include web, digital, and third-party distribution channels.
Table of Contents
Investment Income Not Allocated to Product Lines (dollars in millions):
Investment income not allocated:
Excluding variable components:
From general account assets
Other investment income
Spread income:
FHLB program:
Investment income
Interest expense (a)
Net spread income on FHLB program
FABN program:
Investment income
Expenses (a)(b)
Net spread income on FABN program
Interest expense on corporate debt (a)
Interest expense on financing arrangements (a)
Total excluding variable components
Variable components:
Net income from assets supporting deferred compensation plans:
Investment income
Expenses (a)
Net income from assets supporting deferred compensation plans
Alternative investment income (loss):
Total alternative income
Allocated to product lines
Allocated to FABN program
Excess alternative investment income (loss)
Trading account income
Hedge variance related to fixed indexed products (a)
Impact of annual option forfeitures related to fixed indexed annuity surrenders (a)
Impacts of change in projected cash flows, prepayment and call income and other
Total variable components
Total investment income not allocated to product lines
Reconciliation to net investment income:
Total investment income not allocated to product lines
Investment income on variable interest entities reported as non-operating income
Add back amounts reported as benefits and expenses
Change in market values of the underlying options supporting fixed indexed products
Amounts allocated to products
Net investment income
(a) Amounts reported as benefits and expenses
(b) Comprised of interest credited and amortization of deferred acquisition costs
Table of Contents
The above table reconciles investment income not allocated to product lines to net investment income. Such amounts will generally fluctuate from period to period based on the performance of our alternative investments (which are typically reported one quarter in arrears); the earnings related to the investments underlying our COLI; the spread we earn from our FHLB investment borrowing and FABN programs; the level of prepayment income (including call premiums) and trading account income; and the impact of annual option forfeitures related to fixed indexed annuity surrenders. Dividends of $12.3 million and $28.1 million were received in the fourth quarter of 2025 and 2024, respectively, related to a single equity investment. Alternative investment income improved significantly in 2025 compared to 2024 and 2024 compared to 2023. Interest expense increased in 2025 on higher average debt outstanding. Other fluctuations between periods are primarily related to fluctuations in other variable components including the level of prepayment income and the impact of annual option forfeitures resulting from surrenders of in-the-money options.
Net Non-Operating Income (Loss):
The following summarizes our net non-operating loss for each of the three years ended December 31, 2025 (dollars in millions):
Net realized investment gains (losses) from disposals, impairments and change in allowance for credit losses
Net change in market value of investments recognized in earnings
Fair value changes related to agent deferred compensation plan
Changes in fair value of embedded derivative liabilities and market risk benefits
Expenses related to TechMod
Goodwill and intangible asset impairment
Net loss related to divested business
Other
Net non-operating loss before taxes
Net realized investment losses were $69.0 million in 2025, net of an increase in the allowance for credit losses of $6.2 million which were recorded in earnings. Net realized investment losses were $72.7 million in 2024, net of reductions in the allowance for credit losses of $9.4 million which were recorded in earnings. Net realized investment losses were $62.7 million in 2023, net of reductions in the allowance for credit losses of $8.1 million which were recorded in earnings.
During 2025, 2024 and 2023, we recognized an increase (decrease) in earnings of $14.3 million, $22.8 million and $(6.3) million, respectively, due to the net change in market value of investments recognized in earnings. The change in value will fluctuate from period to period based on market conditions.
During 2025, 2024 and 2023, we recognized an increase (decrease) in earnings of $(1.7) million, $6.6 million and $(3.5) million, respectively, for the mark-to-market change in the agent deferred compensation plan liability which was impacted by changes in the underlying actuarial assumptions used to value the liability. We recognize the mark-to-market change in the estimated value of this liability through earnings as assumptions change.
During 2025, 2024 and 2023, we recognized an increase (decrease) in earnings of $(64.0) million, $46.3 million and $(29.9) million, respectively, resulting from changes in the fair value of embedded derivative liabilities and MRBs related to our fixed indexed annuities. Excluding the net unfavorable impacts of the annual actuarial review previously discussed, we recognized an increase (decrease) in earnings of $(49.7) million, $89.1 million and $(17.5) million in 2025, 2024 and 2023, respectively. Such amounts include the impacts of changes in market interest rates and equity impacts used to determine the estimated fair values of the embedded derivatives and MRBs.
During 2025, we incurred $20.3 million of expense related to TechMod, a three-year project beginning in 2025 to modernize certain elements of our technology, which was initially disclosed in February 2025.
Table of Contents
Macroeconomic, industry and market conditions, both current and future expected financial performance, and relevant entity-specific events that occurred during the three months ended September 30, 2025 caused us to consider whether there were any interim indicators of impairment related to the Optavise, LLC business within our fee income segment. Optavise, LLC provides personalized benefits education, advocacy and transparency, and communications services that help employers reduce healthcare costs and assist employees with making informed benefit decisions. As a result of this evaluation, we identified that the valuation of Optavise, LLC 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 as of September 30, 2025. We recognized an additional charge of $5.2 million related to other long-lived assets as a result of exiting the fee services side of the Worksite business during the fourth quarter of 2025, as previously announced. The total charge of $101.9 million is included in the accompanying consolidated statement of operations for the year ended December 31, 2025.
In the fourth quarter of 2025, we incurred a $17.3 million loss related to our exit from the fee services side of the Worksite business. In addition to exit costs, this loss includes operating losses for the quarter. Operating losses prior to the fourth quarter of 2025 were reported in operating income as a component of fee income. We expect the exit to be substantially complete in the first half of 2026.
In 2024, other non-operating items included a charge of $8.7 million primarily related to a five percent workforce reduction and transition costs for outsourcing certain operations activities. At the same time, we added roles to enhance support of our Consumer and Worksite divisions and that added technology expertise in areas such as AI, robotics and automation. Other non-operating items also include earnings attributable to VIEs that we are required to consolidate, net of affiliated amounts. Such earnings are not indicative of, and are unrelated to, the Company's underlying fundamentals.
PREMIUM COLLECTIONS
In accordance with GAAP, insurance policy income in our consolidated statement of operations consists of premiums earned for traditional insurance policies that have life contingencies or morbidity features. For annuity and interest-sensitive life contracts, premiums collected are not reported as revenues, but as deposits to insurance liabilities. We recognize revenues for these products over time in the form of investment income and surrender or other charges.
Agents, insurance brokers and marketing organizations who market our products and prospective purchasers of our products use the financial strength ratings of our insurance subsidiaries as an important factor in determining whether to market or purchase. Ratings have the most impact on our Worksite sales of supplemental health and life products since such ratings are often an important factor considered by employers. The current financial strength ratings of our primary insurance subsidiaries from Fitch, S&P, Moody's and AM Best are "A", "A-", "A3" and "A", respectively. For a description of these ratings and additional information on our ratings, see "Consolidated Financial Condition - Financial Strength Ratings of our Insurance Subsidiaries."
We set premium rates on our health insurance policies based on facts and circumstances known at the time we issue the policies using assumptions about numerous variables, including but not limited to, the actuarial probability of a policyholder incurring a claim, the probable size of the claim, and the interest rate earned on our investment of premiums. We also consider historical claims information, industry statistics, the rates of our competitors and other factors. If our actual claims experience is less favorable than we anticipated and we are unable to raise our premium rates, our financial results may be adversely affected. We generally cannot raise our health insurance premiums in any state until we obtain the approval of the state insurance regulator. We review the adequacy of our premium rates regularly and file for rate increases on our products when we believe such rates are too low. It is likely that we will not be able to obtain approval for all requested premium rate increases. If such requests are denied in one or more states, our net income may decrease. If such requests are approved, increased premium rates may reduce the volume of our new sales and may cause existing policyholders to their policies. If the healthier policyholders allow their policies to , this would reduce our premium income and in the future.
Table of Contents
Total premium collections were as follows (dollars in millions):
Premiums collected by product:
Annuities:
Fixed indexed (first-year)
Fixed indexed (renewal)
Subtotal - fixed indexed annuities
Fixed interest (first-year)
Fixed interest (renewal)
Subtotal - fixed interest annuities
Other annuities (first-year)
Total annuities
Health:
Supplemental health (first-year)
Supplemental health (renewal)
Subtotal – supplemental health
Medicare supplement (first-year)
Medicare supplement (renewal)
Subtotal - Medicare supplement
Long-term care (first-year)
Long-term care (renewal)
Subtotal - long-term care
Total health
Life insurance:
Interest-sensitive (first-year)
Interest-sensitive (renewal)
Subtotal - interest-sensitive
Traditional (first-year)
Traditional (renewal)
Subtotal - traditional
Total life insurance
Collections on annuity, health and life products:
Total first-year premium collections
Total renewal premium collections
Total collections on insurance products
Annuities include fixed indexed, fixed interest and other annuities sold to the senior market. Annuity collections were $1,943.3 million in 2025, compared to $1,790.6 million in 2024 and $1,583.2 million in 2023. Premium collections from fixed indexed annuities increased 12.8 percent to $1,739.9 million in 2025 compared to 2024. Premium collections from fixed interest annuities decreased 18.7 percent to $194.3 million in 2025 compared to 2024.
Health products include supplemental health, Medicare supplement and long-term care products. Premiums collected on supplemental health products (including specified disease, accident and hospital indemnity insurance products) were $744.5 million in 2025, compared to $725.7 million in 2024 and $706.6 million in 2023. Such increases are primarily due to new sales and steady persistency.
Table of Contents
Collected premiums on Medicare supplement policies were $626.8 million, $625.7 million and $609.4 million in 2025, 2024 and 2023, respectively. Medicare supplement sales were very strong in the fourth quarter of 2025, reflecting a growing shift in consumer preferences from Medicare Advantage to Medicare Supplement, reversing a decade-long trend. Most of these sales were on policies with effective dates of January 1, 2026 and will be reflected as collected premiums in 2026. We receive fee income when Medicare Advantage policies of other providers are sold, which is recorded in our Fee income segment. We continue to invest in both our Medicare supplement products and Medicare Advantage distribution to ensure we are well-positioned to meet our customers' needs and preferences. In addition, we have grown our Medicare supplement sales over the last several years.
Collected premiums on long-term care products were $292.2 million, $276.2 million, and $261.8 million in 2025, 2024, and 2023, respectively. The increase in collected premiums is driven by increased sales. In addition, we ceded 25 percent of most new sales to a third party under a reinsurance agreement from 2009 through September 30, 2024. Effective October, 1, 2024, we discontinued ceding 25 percent of long-term care new business under the reinsurance agreement.
Life products include interest-sensitive and traditional life products. Life premiums were $984.5 million, $960.5 million and $937.0 million in 2025, 2024 and 2023, respectively. Premiums collected reflect both recent sales activity and steady persistency.
INVESTMENTS
Our investment strategy is to: (i) provide largely stable investment income from a diversified high quality fixed income portfolio; (ii) mitigate the effect of changing interest rates through active asset/liability management; (iii) provide liquidity to meet our cash obligations to policyholders and others; (iv) manage capital efficiency through active strategic asset allocation and investment management; and (v) use outside managers in specialized investment classes to add value to our overall strategy. Consistent with this strategy, investments in fixed maturity securities and mortgage loans made up 91 percent of our $30.0 billion investment portfolio at December 31, 2025. The remainder of the invested assets were trading securities, investments held by VIEs, equity securities, policy loans and other invested assets.
The following table summarizes the composition of our investment portfolio as of December 31, 2025 (dollars in millions):
Carrying value
Percent of total investments
Fixed maturities, available for sale
Equity securities
Mortgage loans
Policy loans
Trading securities
Investments held by variable interest entities
Other invested assets
Total investments
The following table summarizes investment yields earned over the past three years on the investments allocated to our product lines. General account investments exclude the value of options.
(dollars in millions)
Weighted average investments at amortized cost allocated to product lines
Allocated investment income
Average yield on allocated investments
Insurance statutes regulate the types of investments that our insurance subsidiaries are permitted to make and limit the amount of funds that may be used for any one type of investment. In addition, we have internal management
Table of Contents
compliance limits on various exposures and activities which are typically more restrictive than insurance statutes. In light of these statutes and regulations and our capital management strategy, we generally seek to invest in (i) highly rated securities such as United States government and government-agency securities and corporate securities rated investment grade by established nationally recognized rating organizations; (ii) securities of comparable investment quality, if not rated; or (iii) a limited quantity of other investments which offer differentiated return characteristics.
Fixed Maturities, Available for Sale
The following table summarizes the carrying values and gross unrealized losses of our fixed maturity securities, available for sale, by category as of December 31, 2025 (dollars in millions):
Carrying value
Percent of fixed maturities
Gross unrealized losses
Percent of gross unrealized losses
States and political subdivisions
Commercial mortgage-backed securities
Banks
Asset-backed securities
Non-agency residential mortgage-backed securities
Insurance
Utilities
Collateralized loan obligations
Healthcare/pharma
Brokerage
Technology
Agency residential mortgage-backed securities
Cable/media
Food/beverage
Energy/pipelines
Transportation
Real Estate/REIT
Chemicals
Capital goods
Autos
Education
Metals and mining
Other
Total fixed maturities, available for sale
Table of Contents
The following table summarizes the gross unrealized losses of our fixed maturity securities, available for sale, by category and ratings category as of December 31, 2025 (dollars in millions):
Investment grade
Below-investment grade
AAA/AA/A
BBB
B+ and
below
Total gross
unrealized
losses
States and political subdivisions
Healthcare/pharmaceuticals
Insurance
Banks
Technology
Utilities
Commercial mortgage-backed securities
Non-agency residential mortgage-backed securities
Cable/media
Food/beverage
Brokerage
Education
Asset-backed securities
Transportation
Energy
Chemicals
Real estate/REITs
United States Treasury securities and obligations of United States government corporations and agencies
Retail
Capital goods
Consumer products
Aerospace/defense
Building materials
Autos
Telecom
Foreign governments
Metals and mining
Entertainment/hotels
Paper
Business services
Packaging
Collateralized loan obligations
Other
Total fixed maturities, available for sale
Table of Contents
Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organizations (Moody's, S&P or Fitch), or if not rated by such firms, the rating assigned by the NAIC. NAIC designations of "1" or "2" include fixed maturities generally rated investment grade (rated "Baa3" or higher by Moody's or rated "BBB-" or higher by S&P and Fitch). NAIC designations of "3" through "6" are referred to as below-investment grade (which generally are rated "Ba1" or lower by Moody's or rated "BB+" or lower by S&P and Fitch). References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above. The following table sets forth fixed maturity investments at December 31, 2025, classified by ratings (dollars in millions):
Estimated fair value
Investment rating
Amortized cost
Amount
Percent of fixed maturities
AAA
BBB+
BBB
BBB-
Investment grade
B+ and below
Below-investment grade
Total fixed maturity securities
We continually evaluate the creditworthiness of each issuer whose securities we hold. We pay special attention to large investments, investments which have significant risk characteristics and to those securities whose fair values have declined materially for reasons other than changes in general market conditions. We evaluate the realizable value of the investment, the specific condition of the issuer and the issuer's ability to comply with the material terms of the security. We review the historical and recent operational results and financial position of the issuer, information about its industry, information about factors affecting the issuer's performance and other information. 40|86 Advisors employs experienced securities analysts in a broad variety of specialty areas who compile and review such data.
During 2025, we recognized net investment losses of $54.7 million, which were comprised of: (i) $59.7 million of net losses from the sales of investments; (ii) $1.4 million of gains related to equity securities, including the change in fair value; (iii) the net increase in fair value of certain other invested assets and fixed maturity investments with embedded derivatives of $8.0 million; (iv) the increase in fair value of embedded derivatives related to a modified coinsurance agreement of $1.8 million; and (v) net increase in the allowance for credit losses and investment write-downs of $6.2 million.
During 2025, we sold $1,562.5 million of fixed maturity investments which resulted in gross realized investment losses (before income taxes) of $79.5 million. Securities are generally sold at a loss following unforeseen sector or issuer-specific events or conditions, shifts in perceived credit quality relative values, or in connection with strategic asset repositioning related to changes in market conditions.
Our investment portfolio is subject to the risk of declines in realizable value. However, we attempt to mitigate this risk through the diversification and active management of our portfolio.
The Company reports accrued investment income separately from fixed maturities, available for sale, and has elected not to measure an allowance for credit losses for accrued investment income. Accrued investment income is written off through net investment income at the time the issuer of the bond defaults or is expected to default on payments.
At December 31, 2025, the amortized cost and carrying value of fixed maturities that were non-income producing totaled $5.7 million and $3.5 million, respectively.
Table of Contents
Other Investments
At December 31, 2025, we held commercial mortgage loan investments with an amortized cost of $1,795.8 million (or 6.0 percent of total invested assets) and a fair value of $1,699.1 million. Our commercial mortgage loan portfolio is primarily comprised of large commercial mortgage loans. Approximately 16.1 percent, 6.8 percent, 5.9 percent, and 5.0 percent of the commercial mortgage loan balance were on properties located in California, Florida, Maryland, and Illinois, respectively. No other state comprised greater than five percent of the mortgage loan balance. At December 31, 2025, there were no commercial mortgage loans in process of foreclosure.
The following table shows the distribution of our commercial mortgage loan portfolio by property type as of December 31, 2025 (dollars in millions):
Number of loans
Amortized cost
Multi-family
Industrial
Retail
Office building
Other
Total commercial mortgage loans
The following table shows our commercial mortgage loan portfolio by loan size as of December 31, 2025 (dollars in millions):
Number of loans
Amortized cost
Under $5 million
$5 million to less than $10 million
$10 million to less than $20 million
$20 million and over
Total commercial mortgage loans
The following table summarizes the distribution of maturities of our commercial mortgage loans as of December 31, 2025 (dollars in millions):
Number of loans
Amortized cost
after 2030
Total commercial mortgage loans
Table of Contents
The following table provides the amortized cost by year of origination and estimated fair value of our outstanding commercial mortgage loans and the underlying collateral as of December 31, 2025 (dollars in millions):
Estimated fair
value
Loan-to-value ratio (a)
Prior
Total amortized cost
Mortgage loans
Collateral
Less than 60%
60% to less than 70%
70% to less than 80%
80% to less than 90%
90% or greater
Total
(a) Loan-to-value ratios are calculated as the ratio of: (i) the amortized cost of the commercial mortgage loans; to (ii) the estimated fair value of the underlying collateral.
At December 31, 2025, we held residential mortgage loan investments with an amortized cost of $1,481.9 million and a fair value of $1,497.8 million. Our primary credit quality indicator for these investments is whether the loan is current or non-current. We define non-current loans as those that are 90 or more days past due and/or in nonaccrual status. As of December 31, 2025, there were 31 residential mortgage loans that were non-current with an amortized cost of $20.7 million (of which five loans with an amortized cost of $2.6 million were in foreclosure). At December 31, 2024, we held residential mortgage loan investments with an amortized cost of $1,018.6 million and a fair value of $1,031.8 million.
The allowance for credit losses related to mortgage loans was $20.9 million at December 31, 2025, and increased $7.3 million in 2025.
At December 31, 2025, we held $294.8 million of trading securities. We carry trading securities at estimated fair value; changes in fair value are reflected in the statement of operations. Our trading securities include: (i) investments purchased with the intent of selling in the near term to generate income; and (ii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option. Investment income from trading securities backing certain insurance liabilities is substantially offset by the change in insurance policy benefits related to certain products and agreements.
Other invested assets include options backing our fixed indexed annuity and life insurance products, COLI, FHLB common stock and certain nontraditional investments, including investments in limited partnerships, limited liability companies and real estate investments.
At December 31, 2025, we held investments with an amortized cost of $294.1 million and an estimated fair value of $293.0 million related to VIEs that we are required to consolidate. The investment portfolio held by the VIEs is primarily comprised of commercial bank loans, the borrowers for which are almost entirely rated below-investment grade. Refer to the note to the consolidated financial statements entitled "Investments in Variable Interest Entities" for additional information on these investments.
2026 OUTLOOK
We expect operating earnings per diluted share to be in the range of $4.25 to $4.45, excluding any significant items in the year. We expect our expense ratio to be in the range of 18.8 percent to 19.2 percent, with a quarterly trend similar to 2025, starting on the high end in the first quarter of the year and then grading down throughout the year. We expect improved results in net investment income not allocated to product lines, which assumes higher returns on our alternative investments. We expect fee income of approximately $30 million for the year with roughly a third in the first quarter, minimal contribution in the second and third quarters, and the balance in the fourth quarter. Fee income will benefit from the exit of the Worksite fee services business as explained below. We expect the effective tax rate to be approximately 22.5 percent.
Table of Contents
In November 2025, the Company announced its intention to exit the fee services business within its Worksite Division to sharpen its focus on the core insurance business. The Worksite fee services business includes benefits administration technology, education, advocacy, and communications services. The exit is expected to be substantially complete in the first half of 2026. Once complete, the Company expects the exit from this business to reduce annual fee revenue by roughly $30.0 million (less than 1 percent of total revenue) and increase annual pre-tax income by roughly $20 million.
We continue to target an improvement in run-rate operating ROE of 200 basis points through 2027, off a 2024 run-rate of approximately 10 percent.
We expect free cash flows to be in the range of $200 million to $250 million. We expect to continue to manage to: (i) a consolidated RBC ratio in the range of 360 percent to 390 percent for our U.S. based insurance subsidiaries; (ii) minimum holding company liquidity of $150 million; and (iii) a target debt to total capital, excluding accumulated other comprehensive loss, in the range of 25 percent to 28 percent.
In the second quarter of 2025, we began TechMod, a three-year initiative to modernize certain elements of our technology, enabling continued growth of the business over the long-term. The initiative is expected to cost approximately $170 million over three years, including approximately $76 million in 2026. The substantial majority of the costs will be expensed as incurred, but will be excluded from operating earnings, and included as a component of non-operating earnings. The expenses excluded from operating earnings will be discrete expenses, one-time in nature, related to the three-year initiative, and largely paid to third parties as well as some asset write-offs. The remainder of the costs will either be expensed as incurred and included in operating earnings or capitalized and amortized through operating earnings. The outlook metrics previously described include the expected impact of this initiative.
LIQUIDITY AND CAPITAL RESOURCES
Changes in the Consolidated Balance Sheet
Changes in our consolidated balance sheet between December 31, 2025 and December 31, 2024, primarily reflect: (i) our net income for 2025; (ii) changes in accumulated other comprehensive income (loss); and (iii) payments to repurchase common stock of $319.9 million.
Our capital structure as of December 31, 2025 and December 31, 2024 was as follows (dollars in millions):
December 31,
December 31, 2024
Total capital:
Corporate notes payable
Shareholders' equity:
Common stock
Additional paid-in capital
Accumulated other comprehensive income (loss)
Retained earnings
Total shareholders’ equity
Total capital
Table of Contents
The following table summarizes certain financial ratios as of and for the years ended December 31, 2025 and December 31, 2024:
December 31,
December 31, 2024
Book value per common share
Book value per common share, excluding accumulated other comprehensive income (loss) (a)
Debt to total capital ratios:
Corporate debt to total capital
Corporate debt to total capital, excluding accumulated other comprehensive income (loss) (a)
(a) This non-GAAP measure differs from the corresponding GAAP measure presented immediately above, because accumulated other comprehensive loss has been excluded from the value of capital used to determine this measure. Management believes this non-GAAP measure is useful because it removes the volatility that arises from changes in accumulated other comprehensive loss. Such volatility is often caused by changes in the estimated fair value of our investment portfolio resulting from changes in general market interest rates rather than the business decisions made by management. However, this measure does not replace the corresponding GAAP measure.
The reduction in the debt to total capital ratios from December 31, 2024 was primarily due to the repayment of the 2025 Notes during the second quarter of 2025.
Contractual Obligations
The Company's significant contractual obligations as of December 31, 2025, were as follows (dollars in millions):
Payment due in
Total
Thereafter
Insurance liabilities (a)
Notes payable (b)
Investment borrowings (c)
Borrowings related to variable interest
entities (d)
Postretirement plans (e)
Operating leases
Commitments to purchase/fund investments
Financing arrangements
Other contractual commitments (f)
Total
(a) These cash flows represent our estimates of the payments we expect to make to our policyholders, without consideration of future premiums or reinsurance recoveries. These estimates are based on numerous assumptions (depending on the product type) related to mortality, morbidity, lapses, withdrawals, future premiums, future deposits, interest rates on investments, credited rates, expenses and other factors which affect our future payments. The cash flows presented are undiscounted for interest. As a result, total outflows for all years exceed the corresponding liabilities of $31.1 billion included in our consolidated balance sheet as of December 31, 2025. As such payments are based on numerous assumptions, the actual payments may vary significantly from the amounts shown.
Table of Contents
In estimating the payments we expect to make to our policyholders, we considered the following:
• For products such as immediate annuities and structured settlement annuities without life contingencies, the payment obligation is fixed and determinable based on the terms of the policy.
• For products such as universal life, ordinary life, long-term care, supplemental health and deferred annuities, the future payments are not due until the occurrence of an insurable event (such as death or disability) or a triggering event (such as a surrender or partial withdrawal). We estimated these payments using actuarial models based on historical experience and our expectation of the future payment patterns which is consistent with the assumptions used in our reserve calculations for these blocks of business.
• For insurance products such as Medicare supplement insurance, the future payments relate only to amounts necessary to settle all outstanding claims, including those that have been incurred but not reported as of the balance sheet date. We estimated these payments based on our historical experience and our expectation of future payment patterns which is consistent with the assumptions used in our reserve calculations for these blocks of business.
• The average interest rate we assumed would be credited to our total insurance liabilities (excluding interest rate bonuses for the first policy year only and excluding the effect of credited rates attributable to variable or fixed indexed products) over the term of the contracts was 4.3 percent.
(b) Includes projected interest payments based on interest rates, as applicable, as of December 31, 2025. Refer to the note to the consolidated financial statements entitled "Notes Payable - Direct Corporate Obligations" for additional information on notes payable.
(c) These borrowings represent collateralized borrowings from the FHLB and projected interest payments on such borrowings.
(d) These borrowings represent the securities issued by VIEs and include projected interest payments based on interest rates, as applicable, as of December 31, 2025.
(e) Includes benefits expected to be paid pursuant to our deferred compensation plan and postretirement plans based on numerous actuarial assumptions and interest credited at 5.25 percent.
(f) Includes obligations to third parties for information technology services, software maintenance and license agreements and consulting services.
It is possible that the ultimate outcomes of various uncertainties could affect our liquidity in future periods. For example, the following events could have a material adverse effect on our cash flows:
• An adverse decision in pending or future litigation.
• An inability to obtain rate increases on certain of our insurance products.
• Worse than anticipated claims experience.
• Lower than expected dividends and/or surplus debenture interest payments from our insurance subsidiaries (resulting from inadequate earnings or capital or regulatory requirements).
• An inability to meet and/or maintain the covenants in our Revolving Credit Agreement.
• A significant increase in policy surrender levels.
• A significant increase in investment defaults.
• An inability of our reinsurers to meet their financial obligations.
Table of Contents
While we actively manage the relationship between the duration and cash flows of our invested assets and the estimated duration and cash flows of benefit payments arising from contract liabilities, there could be significant variations in the timing of such cash flows. Although we believe our current estimates properly project future claim experience, if these estimates prove to be wrong, and our experience worsens (as it did in some prior periods), our future liquidity could be adversely affected.
Liquidity for Insurance Operations
Our insurance companies generally receive adequate cash flows from premium collections and investment income to meet their obligations. Life insurance, long-term care and supplemental health insurance and annuity liabilities are generally long-term in nature. Life and annuity policyholders may, however, withdraw funds or surrender their policies, subject to any applicable penalty provisions; there are generally no withdrawal or surrender benefits for long-term care insurance. We actively manage the relationship between the duration of our invested assets and the estimated duration of benefit payments arising from contract liabilities.
Three of the Company's insurance subsidiaries (Bankers Life, Washington National and Colonial Penn) are members of the FHLB. As members of the FHLB, our insurance subsidiaries have the ability to borrow on a collateralized basis from the FHLB. We are required to hold certain minimum amounts of FHLB common stock as a condition of membership in the FHLB, and additional amounts based on the amount of the borrowings. At December 31, 2025, the carrying value of the FHLB common stock was $109.3 million. As of December 31, 2025, collateralized borrowings from the FHLB totaled $2.4 billion and the proceeds were used to purchase matched variable rate fixed maturity securities. The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet. The borrowings are collateralized by investments with an estimated fair value of $3.5 billion at December 31, 2025, which are maintained in custodial accounts for the benefit of the FHLB.
Bankers Life has a FABN program pursuant to which Bankers Life may issue funding agreements to a Delaware statutory trust organized in series (the "Trust") to generate spread-based earnings. The maximum aggregate principal amount of funding agreements permitted to be outstanding at any one time under the FABN program is $4 billion. Bankers Life issued funding agreements each to a series of the Trust in a principal amount of $350 million and $400 million, respectively, in September and December 2025 and $750 million, $400 million, and $450 million, respectively, in June, September and December 2024. During January 2025, a $400 million funding agreement was repaid at maturity. The aggregate principal amount of funding agreements outstanding at December 31, 2025 was $3.4 billion. The activity related to the funding agreements is reported in investment income not allocated to product lines.
State laws generally give state insurance regulatory agencies broad authority to protect policyholders in their jurisdictions. Regulators have used this authority in the past to restrict the ability of our insurance subsidiaries to pay any dividends or other amounts without prior approval. We cannot be assured that the regulators will not seek to assert greater supervision and control over our insurance subsidiaries' businesses and financial affairs.
Our estimated consolidated statutory RBC ratio of our U.S. based insurance subsidiaries was 380 percent at December 31, 2025, compared to 383 percent at December 31, 2024. In 2025, the RBC ratio reflected: (i) our estimated consolidated statutory operating income of $48.8 million (ii) insurance company dividends, net of capital contributions to the holding company of $318.4 million; (iii) the impact of the reinsurance transaction with our Bermuda reinsurance subsidiary described below; and (iv) an increase in required capital primarily due to growth of our insurance business and expansion of the FABN program. Our RBC ratio at December 31, 2025, was within our targeted statutory RBC ratio range of 360 to 390 percent and the minimum 350 percent that is reflected in our risk appetite statement that we share and discuss with rating agencies and insurance regulators. We believe that the 360 to 390 percent RBC ratio target range continues to adequately support our financial strength and credit ratings.
In 2023, we formed CNO Bermuda Re, which is an indirect wholly owned subsidiary of CNO. CNO Bermuda Re is registered by and subject to the supervision of the BMA as a Class C insurer under the Bermuda Insurance Act 1978 and its related rules and regulations, each as amended. Pursuant to the CLMA (as amended), CDOC will contribute funds to CNO Bermuda Re in the event: (i) CNO Bermuda Re's statutory economic capital and surplus is less than 150 percent of its enhanced capital requirement at the end of any calendar quarter; or (ii) CNO Bermuda Re's liquid assets are insufficient to meet its contractual obligations to ceding insurers, in each case, unless one or more ceding insurers has provided notice of recapture pursuant to the terms of the applicable reinsurance agreement between it and CNO Bermuda Re and such recapture will cause CNO Bermuda Re to meet (i) and (ii). Further, CNO Bermuda Re may not pay any dividends or make
Table of Contents
any capital distributions to its parent within the five years following the 2023 reinsurance transaction unless approved by the BMA. CNO Bermuda Re is subject to regulation in Bermuda where the BMA has broad supervisory and administrative powers relating to granting and revoking licenses to transact reinsurance business, the approval of specific reinsurance transactions, capital requirements and solvency standards, limitations on dividends or distributions to shareholders, the nature of and limitations on investments, and the filing of financial statements in accordance with prescribed or permitted accounting practices. Future regulatory changes made by the BMA or other events may impact the capital efficiency of the reinsurance structures and could require the holding company to contribute additional capital to CNO Bermuda Re or the ceding reinsurers to recapture the ceded business.
CNO Bermuda Re executed its second transaction, reinsuring $1.9 billion of inforce supplemental health statutory reserves from our subsidiary, Washington National, effective October 1, 2025, under a coinsurance agreement. Additionally, 50 percent of new supplemental health business written by Washington National will be ceded to CNO Bermuda Re as part of the agreement.
During 2025, the financial statements of four of our U.S. based insurance subsidiaries prepared in accordance with statutory accounting practices prescribed or permitted by regulatory authorities reflected asset adequacy reserves. Total asset adequacy reserves for Bankers Life, Washington National, Bankers Conseco Life Insurance Company, and CLTX were $95.0 million, $51.0 million, $34.5 million, and $4.0 million, respectively, at December 31, 2025. Due to differences between statutory and GAAP insurance liabilities, we were not required to recognize a similar asset adequacy reserve in our consolidated financial statements prepared in accordance with GAAP. The determination of the need for and amount of asset adequacy reserves is subject to numerous actuarial assumptions and state requirements.
Our insurance subsidiaries transfer exposure to certain risk to others through reinsurance arrangements. When we obtain reinsurance, we are still liable for those transferred risks in the event the reinsurer defaults on its obligations. The failure, insolvency, inability or unwillingness of one or more of the Company's reinsurers to perform in accordance with the terms of its reinsurance agreement could negatively impact our earnings or financial position and our consolidated statutory RBC ratio.
Financial Strength Ratings of our Insurance Subsidiaries
Financial strength ratings provided by Fitch, S&P, Moody's and AM Best are the rating agency's opinions of the ability of our insurance subsidiaries to pay policyholder claims and obligations when due.
On October 21, 2025, Fitch affirmed its "A" financial strength ratings of our primary insurance subsidiaries and the outlook for these ratings remains stable. An insurer rated "A", in Fitch's opinion, indicates a low expectation of ceased or interrupted payments and indicates strong capacity to meet policyholder and contract obligations. This capacity may, nonetheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings. Fitch ratings for the industry range from "AAA Exceptionally Strong" to "D Distressed" and some companies are not rated. Pluses and minuses show the relative standing within a category. Fitch has 24 possible ratings. There are five ratings above the "A" rating of our primary insurance subsidiaries and 18 ratings that are below that rating.
S&P affirmed its "A-" financial strength ratings of our primary insurance subsidiaries on June 24, 2025. The outlook for these ratings is stable. S&P financial strength ratings range from "AAA" to "D" and some companies are not rated. An insurer rated "A", in S&P's opinion, has strong financial security characteristics, but is somewhat more likely to be affected by adverse business conditions than are insurers with higher ratings. Pluses and minuses show the relative standing within a category. S&P has 22 possible ratings. There are six ratings above the "A-" rating of our primary insurance subsidiaries and 15 ratings that are below that rating.
Moody's affirmed its "A3" financial strength ratings of our primary insurance subsidiaries on June 18, 2025. The outlook for these ratings remains stable. Moody's financial strength ratings range from "Aaa" to "C". These ratings may be supplemented with numbers "1", "2", or "3" to show relative standing within a category. In Moody's view, an insurer rated "A" offers good financial security, however, certain elements may be present which suggests a susceptibility to impairment sometime in the future. Moody's has 21 possible ratings. There are six ratings above the "A3" rating of our primary insurance subsidiaries and 14 ratings that are below that rating.
On February 26, 2025, AM Best affirmed its "A" financial strength ratings of our primary insurance subsidiaries and the outlook for these ratings is stable. The "A" rating is assigned to companies that have an excellent ability, in AM Best's
Table of Contents
opinion, to meet their ongoing obligations to policyholders. AM Best ratings for the industry currently range from "A++ (Superior)" to "D (In Liquidation)" and some companies are not rated. AM Best has 13 possible ratings. There are two ratings above the "A" rating of our primary insurance subsidiaries and ten ratings that are below that rating.
Rating agencies have increased the frequency and scope of their credit reviews and requested additional information from the companies that they rate, including us. They may also adjust upward the capital and other requirements employed in their rating models for maintenance of certain ratings levels. We cannot predict what actions rating agencies may take, or what actions we may take in response. Accordingly, downgrades and outlook revisions related to us or the life insurance industry may occur in the future at any time and without notice by any rating agency. These could increase policy surrenders and withdrawals, adversely affect relationships with our distribution channels, reduce new sales, reduce our ability to borrow and increase our future borrowing costs.
Liquidity of the Holding Companies
Availability and Sources and Uses of Holding Company Liquidity; Limitations on Ability of Insurance Subsidiaries to Make Dividend and Surplus Debenture Interest Payments to the Holding Companies; Limitations on Holding Company Activities
CNO and CDOC are holding companies with no business operations of their own; they depend on their operating subsidiaries for cash to make principal and interest payments on debt, and to pay administrative expenses and income taxes. CNO and CDOC receive cash from insurance subsidiaries, consisting of dividends and distributions, interest payments on surplus debentures and tax-sharing payments, as well as cash from non-insurance subsidiaries consisting of dividends, distributions, loans and advances. The principal non-insurance subsidiaries that provide cash to CNO and CDOC are 40|86 Advisors, which receives fees from the insurance subsidiaries for investment services, and CNO Services, LLC ("CNO Services") which receives fees from the insurance subsidiaries for providing administrative services. The agreements between our insurance subsidiaries and CNO Services and 40|86 Advisors, respectively, were previously approved by the domestic insurance regulator for each insurance company, and any payments thereunder do not require further regulatory approval. Refer to "- Liquidity for Insurance Operations" above regarding the CLMA and limitations on CNO Bermuda Re's ability to pay dividends or other capital distributions to CDOC.
At December 31, 2025, CNO, CDOC and our other non-insurance subsidiaries held $351.4 million of unrestricted cash and cash equivalents which was above our minimum target level of $150 million.
The following table sets forth the aggregate amount of dividends (net of paid or accrued capital contributions) and other distributions that our insurance subsidiaries paid to our non-insurance subsidiaries in each of the last three fiscal years (dollars in millions):
Years ended December 31,
Dividends (net of contributions) from insurance subsidiaries
Surplus debenture interest
Fees for services provided pursuant to service agreements
Total dividends and other distributions paid by insurance subsidiaries
The ability of our U.S. based insurance subsidiaries to pay dividends is subject to state insurance department regulations and is based on the financial statements of our insurance subsidiaries prepared in accordance with statutory accounting practices prescribed or permitted by regulatory authorities, which differ from GAAP. These regulations generally permit dividends to be paid from statutory earned surplus of the insurance company without regulatory approval for any 12-month period in amounts equal to the greater of (or in some states, the lesser of): (i) statutory net gain from operations or net income for the prior year; or (ii) 10 percent of statutory capital and surplus as of the end of the preceding year. However, as Washington National and CLTX, the immediate U.S. based insurance subsidiaries of CDOC, have significant negative earned surplus, any dividend payments from the insurance subsidiaries require the prior approval of the director or commissioner of the applicable state insurance department. Washington National and CLTX receive funds to pay dividends primarily from: (i) the earnings of their direct businesses; (ii) tax sharing payments received from subsidiaries (if applicable); and (iii) with respect to CLTX, dividends received from subsidiaries. Bankers Conseco Life Insurance Company, Bankers Life and Colonial Penn are wholly-owned subsidiaries of CLTX. Colonial Penn has
Table of Contents
significant negative earned surplus, and would therefore require prior approval to pay a dividend. Colonial Penn has not paid dividends in recent years. Bankers Life has negative earned surplus in 2025 and would require prior approval to pay a dividend. Bankers Conseco Life Insurance Company has minimal earned surplus, but consistently have positive earnings. As a result, a limited amount of dividends can be paid without prior approval. CNO Bermuda Re may not pay any dividends or make any capital distributions to its parent within the five years following the 2023 reinsurance transaction unless approved by the BMA. In 2025, our U.S. based insurance subsidiaries paid dividends to CDOC totaling $458.4 million. We expect to receive regulatory approval for future dividends from our subsidiaries, but there can be no assurance that such payments will be approved or that the financial condition of our insurance subsidiaries will not change, making future approvals less likely. During 2025, CDOC made capital contributions of $140.0 million to its insurance subsidiaries and $68.0 million to CNO Bermuda Re.
CDOC holds surplus debentures from CLTX with an aggregate principal amount of $749.6 million. Interest payments on those surplus debentures do not require additional approval provided the RBC ratio of CLTX exceeds 100 percent (but do require prior written notice to the Texas Department of Insurance). The estimated RBC ratio of CLTX was 323 percent at December 31, 2025. CDOC also holds a surplus debenture from Colonial Penn with a principal balance of $160.0 million. Interest payments on that surplus debenture require prior approval by the Pennsylvania Insurance Department. Dividends and other payments from our non-insurance subsidiaries, including 40|86 Advisors and CNO Services, to CNO or CDOC do not require approval by any regulatory authority or other third party. However, insurance regulators may prohibit payments by our insurance subsidiaries to parent companies if they determine that such payments could be adverse to our policyholders or contract holders.
A significant deterioration in the financial condition, earnings or cash flow of the material subsidiaries of CNO or CDOC for any reason could hinder such subsidiaries' ability to pay cash dividends or other disbursements to CNO and/or CDOC, which, in turn, could limit CNO's ability to meet debt service requirements and satisfy other financial obligations. In addition, we may choose to retain capital in our insurance subsidiaries or to contribute additional capital to our insurance subsidiaries to maintain or strengthen their surplus or fund reinsurance transactions, and these decisions could limit the amount available at our top tier insurance subsidiaries to pay dividends to the holding companies.
At December 31, 2025, there were no amounts outstanding under our $250 million Revolving Credit Agreement and there are no scheduled repayments of our direct corporate obligations until May 2029.
The scheduled principal and interest payments on our direct corporate obligations are as follows (dollars in millions):
Principal
Interest (a)
2031 and thereafter
(a) Based on interest rates as of December 31, 2025.
(b) Such amount includes $500 million of 5.250% Notes due 2029.
(c) The maturity date of the Revolving Credit Agreement is May 8, 2030.
(d) Such amount includes $700 million of 6.450% Notes due 2034 and $150 million of Subordinated Debentures.
Free cash flow is a measure of holding company liquidity and is calculated as: (i) dividends, management fees and surplus debenture interest payments received from our subsidiaries; plus (ii) earnings on corporate investments; less (iii) interest expense, corporate expenses and net tax payments. In 2025, we generated $365.5 million of such free cash flow. The Company expects to deploy its free cash flow into investments to accelerate profitable growth, common stock dividends and share repurchases. The amount and timing of future share repurchases (if any) will be based on business and market conditions and other factors including, but not limited to, available free cash flow, the current price of our common stock and investment opportunities. In 2025, we repurchased 8.1 million shares of common stock for $319.9 million under our securities repurchase program. The Company had remaining repurchase authority of $420.4 million as of
Table of Contents
December 31, 2025. The Company's Board of Directors authorized the repurchase of an additional $500.0 million of the Company's outstanding shares of common stock in February 2025.
In 2025, 2024 and 2023, dividends declared on common stock totaled $66.4 million ($0.67 per common share), $67.5 million ($0.63 per common share) and $67.9 million ($0.59 per common share), respectively. In May 2025, the Company increased its quarterly common stock dividend to $0.17 per share from $0.16 per share.
On October 21, 2025, Fitch affirmed its "BBB+" and "BBB" ratings on our issuer credit and senior unsecured debt ratings, respectively. The outlook for these rating is stable. In Fitch's view, an obligation rated "BBB" indicates that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity. Pluses and minuses show the relative standing within a category. Fitch has a total of 24 possible ratings ranging from "AAA" to "D". There are seven ratings above CNO's BBB+ rating and 16 ratings that are below its rating. There are eight ratings above CNO's "BBB" rating and 15 ratings that are below its rating.
S&P affirmed its "BBB-" rating on our issuer credit and senior unsecured debt on June 24, 2025. The outlook for these ratings is stable. In S&P's view, an obligation rated "BBB" exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. Pluses and minuses show the relative standing within a category. S&P has a total of 22 possible ratings ranging from "AAA (Extremely Strong)" to "D (Payment Default)". There are nine ratings above CNO's "BBB-" rating and 12 ratings that are below its rating.
Moody's affirmed its "Baa3" rating on our senior unsecured debt on June 18, 2025. The outlook for these ratings remains stable. In Moody's view, obligations rated "Baa" are subject to moderate credit risk and may possess certain speculative characteristics. A rating is supplemented with numerical modifiers "1", "2" or "3" to show the relative standing within a category. Moody's has a total of 21 possible ratings ranging from "Aaa" to "C". There are nine ratings above CNO's "Baa3" rating and 11 ratings that are below its rating.
On February 26, 2025, AM Best affirmed its "bbb" rating on our issuer credit and senior unsecured debt and the outlook for these ratings is stable. In AM Best's view, a company rated "bbb" has an adequate ability to meet the terms of its obligations; however, the issuer is more susceptible to changes in economic or other conditions. Pluses and minuses show the relative standing within a category. AM Best has a total of 21 possible ratings ranging from "aaa (Exceptional)" to "c (In default)". There are eight ratings above CNO's "bbb" rating and 12 ratings that are below its rating.
Outlook
We believe that the existing cash available to the holding company, the cash flows to be generated from operations and other transactions will be sufficient to allow us to meet our debt service obligations, pay corporate expenses and satisfy other financial obligations. However, our cash flow is affected by a variety of factors, many of which are outside of our control, including insurance regulatory issues, competition, financial markets and other general business conditions. We cannot provide assurance that we will possess sufficient income and liquidity to meet all of our debt service requirements and other holding company obligations. For additional discussion regarding the liquidity and other risks that we face, see "Part 1 - Item 1A. Risk Factors".
MARKET-SENSITIVE INSTRUMENTS AND RISK MANAGEMENT
Our spread-based insurance business is subject to several inherent risks arising from movements in interest rates, especially if we fail to anticipate or respond to such movements. First, interest rate changes can cause compression of our net spread between interest earned on investments and interest credited on customer deposits, thereby adversely affecting our results. Second, if interest rate changes produce an unanticipated increase in surrenders of our spread-based products, we may be forced to sell invested assets at a loss in order to fund such surrenders. Many of our products include surrender charges, market interest rate adjustments or other features to encourage persistency; however, at December 31, 2025, approximately $3.9 billion of our total insurance liabilities could be surrendered by the policyholder without penalty. Finally, changes in interest rates can have significant effects on our investment portfolio. We use asset/liability management strategies that are designed to mitigate the effect of interest rate changes on our profitability. However, there can be no assurance that management will be successful in implementing such strategies and sustaining adequate investment spreads.
Table of Contents
We seek to invest our assets allocated to our insurance products in a manner that will fund future obligations to policyholders and meet profitability objectives, subject to appropriate risk considerations. We seek to meet this objective through investments that: (i) have similar cash flow characteristics with the liabilities they support; (ii) are diversified (including by types of obligors); and (iii) are predominantly investment-grade in quality.
Our investment strategy is to manage, over a sustained period and within acceptable parameters of quality and risk, capital efficiency through active strategic asset allocation and investment management. Accordingly, we may sell securities at a gain or a loss to enhance the projected total return of the portfolio as market opportunities change, to reflect changing perceptions of risk, or to better match certain characteristics of our investment portfolio with the corresponding characteristics of our insurance liabilities.
The profitability of many of our products depends on the spread between the interest earned on investments and the rates credited on our insurance liabilities. In addition, changes in competition and other factors, including the level of surrenders and withdrawals, may limit our ability to adjust or to maintain crediting rates at levels necessary to avoid narrowing of spreads under certain market conditions. As of December 31, 2025, approximately 13 percent of our insurance liabilities had interest rates that may be reset annually, 43 percent had a fixed explicit interest rate for the duration of the contract, 40 percent are fixed indexed products where the income earned is subject to a participation rate that typically may be changed annually, and the remainder had no explicit interest rates.
At December 31, 2025, $1,289.0 million and $414.5 million of our annuity and universal life account values, respectively, net of amounts ceded, were at minimum guaranteed crediting rates. The weighted average crediting rates at December 31, 2025, related to such annuity and universal life account values, that were at the minimum guaranteed crediting rate were 2.61 percent and 4.09 percent, respectively.
At December 31, 2025, the weighted average yield, computed on the cost basis of investments allocated to our product lines, was approximately 4.9 percent, and the average interest rate credited or accruing to our total insurance liabilities (excluding interest rate bonuses for the first policy year only and excluding the effect of credited rates attributable to variable or fixed indexed products) was 4.3 percent. Such 4.3 percent rate includes interest credited to annuity and universal life products as well as the rates assumed in our calculations of reserves for health and traditional life products which are set based on investment yields at policy issuance and are locked-in in accordance with current accounting requirements. Refer to "Part 1 - Item 1A. Risk Factors - A return to a prolonged low interest rate environment may negatively impact our results of operations, financial position and cash flows" for additional information on interest rate risks.
We simulate the cash flows expected from our existing insurance business under various interest rate scenarios. These simulations help us to measure the potential gain or loss in fair value of our interest rate-sensitive investments and to manage the relationship between the interest sensitivity of our assets and liabilities. When the estimated durations of assets and liabilities are similar, absent other factors, a change in the value of assets related to changes in interest rates should be largely offset by a change in the value of liabilities. At December 31, 2025, the estimated duration of our fixed income securities (as modified to reflect estimated prepayments and call premiums) and the estimated duration of our insurance liabilities were approximately 7.5 years and 8.1 years, respectively. We estimate that our fixed maturity securities and short-term investments would decline in fair value by $691.7 million if interest rates were to increase by 10 percent from their levels at December 31, 2025. Our simulations incorporate numerous assumptions, require significant estimates and assume an immediate change in interest rates without any management of the investment portfolio in reaction to such change. Consequently, potential changes in value of our financial instruments indicated by the simulations will likely be different from the actual changes experienced under given interest rate scenarios, and the differences may be material. Because we actively manage our investments and liabilities, our net exposure to interest rates can vary over time.
We are subject to the risk that our investments will decline in value if interest rates rise.
The Company is subject to risk resulting from fluctuations in market prices of our equity securities. In general, these investments have more year-to-year price variability than our fixed maturity investments. However, returns over longer time frames have been consistently higher. We manage this risk by limiting our equity securities to a relatively small portion of our total investments.
Table of Contents
Our investment in options backing our equity-linked products is closely matched with our obligation to fixed indexed annuity holders. Fair value changes associated with that investment are substantially offset by an increase or decrease in the amounts added to policyholder account liabilities for fixed indexed products.
Inflation
Inflation rates may impact the financial statements and operating results in several areas. Inflation influences interest rates, which in turn impact the fair value of the investment portfolio and yields on new investments. Inflation also impacts a portion of our insurance policy benefits affected by increased medical coverage costs. Operating expenses, including payrolls, are impacted to a certain degree by the inflation rate. Refer to "Part I - Item 1A. Risk Factors - Inflation levels could have adverse consequences for us, the insurance industry and the U.S. economy generally" for additional information on inflation.
