CNO Financial Group, Inc.

CNO's wholly-owned Bermuda reinsurance company executed its second transaction, reinsuring $1.8 billion of inforce supplemental health statutory reserves from Washington National Insurance Company ("Washington National"), a CNO subsidiary, effective October 1, 2025. Additionally, 50 percent of new supplemental health business written by Washington National will be ceded to the Bermuda company as part of the agreement.

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 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 million (less than 1 percent of total revenue) and increase annual pre-tax income by roughly $20 million. In the fourth quarter of 2025, we expect to incur non-operating expenses between $15 million and $20 million pre-tax related to exit and disposal costs. In addition, non-operating results will include losses on fee income services as business operations wind down.

We are narrowing the range of our expected operating earnings per diluted share to between $3.75 and $3.85, excluding any significant items in the year (from the previous range between $3.70 and $3.90). We expect a decrease in fee income of approximately $2 million as compared to the fourth quarter of 2024, reflecting lower fee income from our distribution of Medicare Advantage products due to the shift towards Medicare supplement products and away from Medicare Advantage products, partially offset by the favorable impact of including losses from the Worksite fee services business in non-operating income beginning in the fourth quarter. We expect the effective tax rate on operating earnings to be between 22.0 and 22.5 percent (lowered from our previous guidance of approximately 23 percent).

We are increasing our run rate operating ROE target to 200 basis points total improvement through 2027 from a run rate operating ROE of 10 percent in 2024 (as compared to our previous guidance of 150 basis points improvement). We continue to expect an approximately 50 basis point improvement in 2025. The increase in total improvement incorporates the favorable impacts of our intention to exit the fee service business of our Worksite Division as well as the second Bermuda transaction.

We expect our expense ratio to be approximately 19.0 percent, the low end of our original guidance of 19.0 percent to 19.4 percent.

We are increasing our expected excess cash flow to the holding company to a range of $365 million to $385 million (from our previous guidance of $200 million to $250 million) reflecting the impact of the second Bermuda transaction.

We expect to continue to manage to: (i) a consolidated RBC ratio of 375 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 $25 million in 2025 (reduced from $45 million due to the expected timing of the total spend). 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.