CNO Financial Group, Inc.

RESULTS OF OPERATIONS

The following tables and narratives summarize the operating results of our segments (dollars in millions):

(a)Amortization and non-deferred commissions are comprised of: (i) the amortization of deferred acquisition costs, present value of future profits, and sales inducements; 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.

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 insurance liabilities, net of insurance intangibles, 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 (loss) 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 these unlocking exercises have had a significant impact on our earnings.

In the third quarter of 2026, we performed our comprehensive annual actuarial review, resulting in a net favorable impact of $36.0 million to net income, including a net favorable impact of $56.3 million to insurance product margins included in pre-tax operating income. In connection with our comprehensive annual actuarial review, the most significant assumption changes were:

•Fixed indexed annuities - We increased surrender rates and lengthened the time to assumed election of guaranteed living withdrawal benefit ("GLWB") benefits. We increased GLWB excess withdrawal assumption on policies that have elected the benefit.

•Supplemental health - We decreased morbidity assumptions on certain blocks.

•Medicare supplement - We increased morbidity assumptions and updated rate increase assumptions.

•Long-term care - We decreased morbidity assumptions.

•Traditional life - We decreased mortality assumptions.

In addition, the comprehensive annual actuarial review unfavorably impacted pre-tax non-operating income by $11.2 million related to changes in the fair value of embedded derivative liabilities on our fixed indexed annuities.

In the third quarter of 2025, we performed our comprehensive annual actuarial review, resulting in a net favorable impact of $21.0 million to net income, including a net favorable impact of $41.3 million to insurance product margins included in pre-tax operating income. The primary fixed indexed annuities changes related to higher surrender assumptions for GLWBs. The primary supplemental health changes related to lower persistency assumptions. The primary Medicare supplement changes 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 on GLWBs.

The following table summarizes the impact to pre-tax operating earnings from our comprehensive annual actuarial review for the three and nine months ended September 30, 2026 and 2025 (dollars in millions):

Summary of Operating Results: Net operating income was $179.1 million in the third quarter of 2026 compared to $127.2 million in the third quarter of 2025, and was $399.9 million in the first nine months of 2026 compared to $295.8 million in the first nine months of 2025. Net operating income, excluding significant items, was $134.2 million in the third quarter of 2026 compared to $95.0 million in the third quarter of 2025, and was $355.0 million in the first nine months of 2026 compared to $258.3 million in the first nine months of 2025. Significant items include the impacts of our comprehensive annual actuarial reviews and a favorable impact from a model refinement on traditional life reserves of $6.8 million in the first quarter of 2025.

Return on equity ("ROE") is equal to the trailing four quarters of net income divided by average shareholders' equity. As of September 30, 2026, our ROE was 16.4 percent compared to 12.5 percent as of September 30, 2025. 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 income (loss) and net operating loss carryforwards. As of September 30, 2026, our operating ROE, excluding significant items, was 14.1 percent compared to 11.2 percent as of September 30, 2025. 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. In addition, our equity includes the value of significant net operating loss carryforwards (included in income tax assets on our consolidated balance sheet). In accordance with GAAP, these assets are not discounted, and accordingly will not provide a return to shareholders until after they are realized as a reduction to taxes that would otherwise be paid. Management believes that excluding this value from the equity component of this measure enhances the understanding of the effect these non-discounted assets have on operating returns and the comparability of these measures from period to period. However, this non-GAAP measure does not replace the corresponding GAAP measure.

Insurance product margin was $333.0 million in the third quarter of 2026 compared to $300.5 million in the third quarter of 2025, and was $868.9 million in the first nine months of 2026 compared to $801.8 million in the first nine months of 2025. Excluding significant items primarily related to our comprehensive annual actuarial review, the insurance product margin was $276.7 million in the third quarter of 2026, compared to $259.2 million in the third quarter of 2025, and was $812.6 million for the first nine months of 2026, compared to $753.7 million in the first nine months of 2025. Total net investment income (comprised of investment income allocated and not allocated to products) increased 13 percent to $350.7 million in the third quarter of 2026 as compared to $310.4 million in the third quarter of 2025, and 9 percent to $993.4 million in the first nine months of 2026 compared to $911.9 million in the first nine months of 2025 as a result of growth in the business, higher alternative investment income and increased income from FHLB and FABN programs. Fluctuations by product line and investment income not allocated to products are discussed in greater detail in the narratives that follow.

The estimated annual effective tax rate for the nine months ended September 30, 2026 was 25.3 percent, reflecting a valuation allowance against deferred taxes as discussed in the non-operating income narratives. The operating income effective tax rate was 20.2 percent.

Total allocated and unallocated expenses are summarized in the table below (dollars in millions):

Total allocated and unallocated expenses in the first three and nine months of 2026 were up 3.8 percent and 1.1 percent, respectively, as compared to the same periods in the prior year and were in line with our expectations. Our expense ratio was 18.6 percent and 19.2 percent for the nine months ended September 30, 2026 and 2025, 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):

Net Consumer Division fee income decreased from income of $2.7 million in the third quarter of 2025 to a loss of $1.1 million in the third quarter of 2026 primarily due to updated Medicare Advantage assumptions. The updated assumptions (previously updated in fourth quarter of 2025) primarily reflect lower persistency and offsetting revenue and expense assumptions resulting in an unfavorable impact to income of $3.0 million ($13.0 million of revenue, offset by $10.0 million of expense). In addition, Medicare Advantage sales have decreased 7.9 percent and 17.6 percent in the third quarter and the first nine months of 2026, respectively, compared to the same periods in 2025, resulting from a continued shift in customer preference towards Medicare supplement products. Broker-dealer revenue has increased $3.6 million and $9.0 million in the third quarter and the first nine months of 2026, respectively, compared to the same periods in 2025 on relatively flat income over the same periods driven by an increase in client assets. 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 have been reflected within non-operating income. The exit of this business was substantially complete as of June 30, 2026.

Margin from Annuity Products (dollars in millions):

Margin from fixed indexed annuities increased $14.9 million in the third quarter of 2026 compared to the third quarter of 2025, and $24.4 million in the first nine months of 2026 compared to the first nine months of 2025. The margin, excluding the net favorable impacts of the annual actuarial reviews previously discussed, increased $7.5 million in the third quarter of 2026 compared to the third quarter of 2025 and $17.0 million in the first nine months of 2026 compared to the first nine months of 2025. The increase in adjusted margin was due to increased spread income and lower insurance policy benefits, partially offset by higher amortization from growth in the block. Spread income has increased due to growth in the block. Average net insurance liabilities (policyholder account balances less: (i) amounts related to reinsured business; (ii) deferred acquisition costs; (iii) present value of future profits; and (iv) the value of unexpired options credited to insurance liabilities) were $11,700.9 million and $10,759.3 million in the third quarters of 2026 and 2025, respectively, and $11,373.8 million and $10,462.8 million in the first nine months of 2026 and 2025, respectively, driven by deposits and reinvested returns in excess of withdrawals. The increase in net insurance liabilities results in higher net investment income allocated. The earned yield was 4.83 percent in the third quarter of 2026, down from 4.85 percent in the third quarter of 2025, and was 4.84 percent in the first nine months of 2026 up from 4.83 percent in the first nine months of 2025.

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 $0.0 million and $(89.4 million) in the third quarters of 2026 and 2025, respectively, and were $88.1 million and $96.3 million in the first nine months of 2026 and 2025, respectively.

Margin from fixed interest annuitieswas flat in the third quarter of 2026 compared to the third quarter of 2025, and decreased $1.0 million in the first nine months of 2026 compared to the first nine months of 2025. The margin, excluding the net unfavorable impacts of the annual actuarial reviews previously discussed, increased $0.7 million in the third quarter of 2026 compared to the third quarter of 2025 and decreased $0.3 million in the first nine months of 2026 compared to the first nine months of 2025. Average net insurance liabilities were $1,561.5 million in the third quarter of 2026 compared to $1,587.4 million in the third quarter of 2025, and were $1,570.1 million in the first nine months of 2026 compared to $1,592.9 million in the first nine months of 2025, driven by withdrawals in excess of deposits and reinvested returns. The decrease in investment income results from the decrease in the average net insurance liabilities and the slight decrease in the earned yield. The earned yield was 5.48 percent and 5.49 percent in the third quarter of 2026 and 2025, respectively, and was 5.44 percent in the first nine months of 2026, down from 5.46 percent in the first nine months of 2025.

Margin from other annuities increased $0.1 million in the third quarter of 2026 compared to the third quarter of 2025, and increased $1.4 million in the first nine months of 2026 compared to the first nine months of 2025. The margin, excluding the net favorable impacts of the annual actuarial reviews previously discussed, increased $2.9 million in the third quarter of 2026 compared to the third quarter of 2025 and increased $4.2 million in the first nine months of 2026 compared to the first nine months of 2025. The adjusted 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. In the second and third quarters of 2026, we experienced higher annuitant mortality on a few larger policies in a closed block of payout annuities, which reduced insurance policy benefits.

Margin from Health Products (dollars in millions):

Margin from supplemental health business decreased $8.1 million in the third quarter of 2026 compared to the third quarter of 2025, and $1.0 million in the first nine months of 2026 compared to the first nine months of 2025. The margin, excluding the net favorable impacts of the annual actuarial reviews previously discussed, increased $0.5 million in the third quarter of 2026 compared to the third quarter of 2025 and $7.6 million in the first nine months of 2026 compared to the first nine months of 2025. The adjusted margins reflect growth in the business offset by less favorable morbidity in the third quarter of 2026. Morbidity remained flat for the first nine months of 2026 compared to the first nine months of 2025. The adjusted margin as a percentage of insurance policy income was 38 percent in the third quarter of 2026 compared to 39 percent in the prior year period, and was 37 percent in the first nine months of 2026 and 2025.

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 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 decreased $18.0 million in the third quarter of 2026 compared to the third quarter of 2025, and $14.7 million in the first nine months of 2026 compared to the first nine months of 2025. The margin, excluding the net unfavorable impacts of the annual actuarial reviews previously discussed, decreased $0.5 million in the third quarter of 2026 compared to the third quarter of 2025 and increased $2.8 million in the first nine months of 2026 compared to the first nine months of 2025. The adjusted margin as a percentage of insurance policy income was 17 percent in the third quarter of 2026 compared to 19 percent in the prior year period, and was 18 percent in the first nine months of 2026 compared to 19 percent in the first nine months of 2025. The adjusted margins reflect growth in the block and the implementation of larger rate increases in 2026. In addition, morbidity was higher in the third quarter of 2026 offset by lower morbidity in the first six months of 2026 as compared to the same periods in 2025. 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 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 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 increased $18.2 million in the third quarter of 2026 compared to the third quarter of 2025, and $27.4 million in the first nine months of 2026 when compared to the first nine months of 2025. The margin, excluding the net favorable impacts of the annual actuarial reviews previously discussed, increased $5.4 million in the third quarter of 2026 compared to the third quarter of 2025 and $14.6 million in the first nine months of 2026 compared to the first nine months of 2025. The adjusted margin as a percentage of insurance policy income was 50 percent in the third quarter of 2026 compared to 45 percent in the third quarter of 2025, and was 51 percent in the first nine months of 2026 compared to 48 percent in the first nine months of 2025. The increase in adjusted margin in the third quarter and the first nine months of 2026 is primarily due to lower morbidity and growth in the business from sales of our short duration Long-Term Care Fundamental product. The average benefit period for policies sold in the third quarter of 2026 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 have increased since October 2024 and we expect them to continue to grow in future years as earnings emerge from the sales.

Margin from Life Products (dollars in millions):

Margin from interest-sensitive life business increased $1.9 million in the third quarter of 2026 compared to the third quarter of 2025, and $5.1 million in the first nine months of 2026 compared to the first nine months of 2025. The margin, excluding the net favorable impacts of the annual actuarial reviews previously discussed, increased $2.3 million in the third quarter of 2026 compared to the third quarter of 2025, and $5.5 million in the first nine months of 2026 compared to the first nine months of 2025. The increases in adjusted margins in 2026, as compared to the same periods in 2025 reflect lower insurance policy benefits and higher insurance policy income from modest growth in the block.

The interest margin was $0.6 million in the third quarter of 2026, compared to $0.9 million in the third quarter of 2025, and was $1.5 million in the first nine months of 2026, compared to $2.1 million in the first nine months of 2025. The earned yield was 5.01 percent and 4.97 percent in the third quarter of 2026 and 2025, respectively, and 5.01 percent and 5.02 percent in the first nine months of 2026 and 2025, respectively. 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 exclude 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 $1.1 million and $8.8 million in the third quarter of 2026 and 2025, respectively, and were $10.3 million and $11.2 million in the first nine months of 2026 and 2025, respectively.

Margin from traditional life business increased $23.5 million in the third quarter of 2026 compared to the third quarter of 2025, and $25.5 million in the first nine months of 2026 compared to the first nine months of 2025. The margin, excluding the net favorable impacts of the annual actuarial reviews previously discussed and a model refinement related to traditional life reserves, which increased margins $6.8 million in the first quarter of 2025, decreased $1.3 million in the third quarter of 2026 compared to the third quarter of 2025 and increased $7.5 million in the first nine months of 2026 compared to the first nine months of 2025. The adjusted margins reflect modest growth in the block. In addition, the decrease in the adjusted margin in the third quarter of 2026 is primarily due to higher advertising expense. The increase in the adjusted margin in the first nine months of 2026 is primarily due to lower advertising expense and lower mortality.

Advertising expense increased $0.8 million in the third quarter of 2026 compared to the comparable period in 2025, and decreased $3.3 million in the first nine months of 2026 compared to the comparable period in 2025. 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. In addition, we consider effective advertising alternatives, including web, digital, and commission based third-party distribution channels.

Collected Premiums From Annuity and Interest-Sensitive Life Products (dollars in millions):

Collected premiums from annuity and interest-sensitive products increased 8.0 percent in the third quarter of 2026 compared to the third quarter of 2025 primarily due to higher premium collections from fixed indexed annuities and increased 3.5 percent in the first nine months of 2026 compared to first nine months of 2025 due to higher premium collections from both fixed indexed annuity and interest-sensitive life products partially offset by lower premium collections from fixed interest annuities.

Investment Income Not Allocated to Product Lines (dollars in millions):

(a)Amounts reported as benefits and expenses.

(b)Comprised of interest credited and amortization of deferred acquisition costs.

The above table reconciles investment income not allocated to product lines to net investment income. Net investment income is made up of net investment income from general account assets and policyholder and other special-purpose portfolios. Investment income not allocated to product lines 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. The increases in the 2026 periods compared to the same periods in 2025 are primarily due to an increase in alternative investment results and increased spread income on the FHLB and FABN programs.

Net Non-Operating Income (Loss):

The following summarizes our net non-operating income (loss) for the three and nine months ended September 30, 2026 and 2025 (dollars in millions):

Net realized investment losses for the three and nine months ended September 30, 2026 were $48.3 million and $77.1 million, including a net increase in the allowance for credit losses of $5.4 million and $18.2 million, respectively. Net realized investment losses in the three and nine months ended September 30, 2025, were $8.8 million and $43.8 million, respectively, including a net reduction in the allowance for credit losses of $8.0 million and an increase of $2.5 million, respectively.

The change in market value of investments recognized in earnings was $(16.4) million and $5.8 million during the three months ended September 30, 2026 and September 30, 2025, respectively, and was $(25.0) million and $15.6 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. The change in value will fluctuate from period to period based on market conditions.

During the third quarter of 2026, we recognized an increase in earnings of $10.0 million 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 the third quarter of 2026, we recognized an increase in pre-tax earnings of $69.7 million, resulting from changes in the fair value of embedded derivative liabilities and MRBs related to our fixed indexed annuities, compared to a decrease of $18.1 million in the third quarter of 2025. We recognized an increase (decrease) in pre-tax earnings of $61.9 million and $(62.5) million in the first nine months of 2026 and 2025, respectively. Such amounts include the impacts of changes in market interest rates, equity impacts and equity volatility used to determine the estimated fair values of the embedded derivatives and MRBs and the unfavorable impact resulting from our comprehensive annual actuarial review of $11.2 million and $14.3 million during the three months ended September 30, 2026 and 2025, respectively.

During the third quarter of 2026, we incurred $10.1 million of expenses related to TechMod, compared to $7.2 million in the third quarter of 2025. For the nine months ended September 30, 2026, we incurred $33.5 million of TechMod-related expenses, compared to $10.4 million in the prior year period. TechMod is an initiative that began in 2025 to modernize certain elements of our technology. These expenses relate primarily to data conversion and migration activities associated with the implementation of our modernized insurance administrative platforms. The costs also include discrete external consulting fees for project management support specialized implementation capabilities that we do not maintain internally, as well as certain temporary duplicate vendor costs incurred while legacy and modernized systems operate in parallel. These costs were incremental to our normal spend and will not recur following implementation. We exclude these costs from operating income because they are directly attributable to a defined, finite modernization initiative and are not expected to continue once the project is completed. Management believes this presentation provides meaningful information to investors by improving period-over-period comparability and by facilitating an assessment of our ongoing operating performance absent the temporary impact of these project-specific costs.

During the three months ended September 30, 2025, the Company performed a quantitative impairment assessment of the Optavise reporting unit, driven by macroeconomic conditions, a decline in comparable public company valuations, and lower than anticipated revenue. As a result, the Company determined that goodwill of $69.5 million and other assets, primarily intangible assets, of $27.2 million were fully impaired as of September 30, 2025.

During the nine months ended September 30, 2026, we incurred a $3.0 million loss related to our exit from the fee services side of the Worksite Division business, all of which was incurred during the first half of 2026. In addition to exit costs, this loss includes operating losses for the period. Operating losses prior to the fourth quarter of 2025 were reported in operating income as a component of fee income. The exit of the fee services business was substantially complete as of June 30, 2026.

During the nine months ended September 30, 2026, we generated capital losses primarily from asset sales in anticipation of executing the internal reinsurance transaction on October 1, 2026, portfolio optimization activities and from capital loss allocations from partnership investments. During the third quarter, higher interest rates reduced the level of unrealized capital gains in the insurance companies' available-for-sale fixed maturity securities portfolio that could serve as a source of taxable income to support realization of the resulting capital loss carryforwards. Based on our evaluation of all available positive and negative evidence as of September 30, 2026, management concluded that it is more likely than not that all of the deferred tax assets associated with these capital loss carryforwards will not be realized before expiration. Accordingly, we recorded a valuation allowance of $22.1 million against these deferred tax assets during the period.

We have not recorded a valuation allowance against deferred tax assets associated with unrealized losses on our available-for-sale fixed maturity securities. In evaluating the realizability of these deferred tax assets, we considered our intent and ability to hold the underlying securities until recovery or maturity, available and feasible tax planning strategies that could be implemented, if necessary, to support realization of our deferred tax asset, as well as the expected reversal of the related temporary differences and other available sources of taxable income. Our operating cash flows, capital resources and available sources of liquidity further support our ability to hold securities in an unrealized loss position until recovery or maturity without the need to sell such securities to meet near-term liquidity requirements. Based on our evaluation of all available positive and negative evidence, we concluded that it is more likely than not that these deferred tax assets will be realized.