Adam Auvil - IR Ed Bonach - CEO Erik Helding - CFO Gary Bhojwani - President.

Randy Binner - FBR & Company Humphrey Lee - Dowling & Partners Securities Ryan Krueger - KBW Michael Kovac - Goldman Sachs Sean Dargan - Macquarie Research Erik Bass - Citi Tom Gallagher - Evercore ISI Yaron Kinar - Deutsche Bank.

Good morning. My name is Misty, and I will be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter 2016 Earnings Results Conference Call. [Operator Instructions] Thank you. Mr. Adam Auvil, you may begin your conference..

Good morning, and thank you for joining us on CNO Financial Group's third quarter 2016 earnings conference call. Today's presentation will include remarks from Ed Bonach, Chief Executive Officer; Gary Bhojwani, President; and Erik Helding, Chief Financial Officer.

Following the presentation, we will also have several other business leaders available for the question-and-answer period. During this conference call, we will be referring to information contained in yesterday's press release. You can obtain the release by visiting the media section of our website at www.CNOInc.com.

This morning's presentation is also available in the Investors section of our website and was filed in a Form 8-K earlier today. We expect to file our Form 10-Q and post it on our website on November 7.

Let me remind you that any forward-looking statements we make today are subject to a number of factors, which may cause actual results to be materially different than those contemplated by the forward-looking statements.

Today's presentation contains a number of non-GAAP measures, which should not be considered as substitutes for the most directly comparable GAAP measures. You will find a reconciliation of the non-GAAP measures to the corresponding GAAP measures in the appendix.

Throughout this presentation, we will be making performance comparisons, and unless otherwise specified, any comparisons made will be referring to changes between third-quarter 2015 and third-quarter 2016. And with that, I'll turn the call over to Ed..

$52 million from common stock repurchases, and we paid $14 million in dividends. Lastly, as previously announced, we recaptured a closed block of long term care business. Let's turn to slide 6 for a brief update on the status of the recapture. The process is proceeding as expected, and the assets and liabilities have been successfully recaptured.

We have returned policyholder administration back to CNO control. It is important to note that policyholder administration has continued without disruption, and our insurance companies are meeting policyholder obligations.

The independent asset audit is progressing, and we intend to conclude it by the end of the year, with results reported in conjunction with our fourth quarter earnings. Also, we have maintained ongoing communication and continued alignment with regulators. Erik will go into greater details regarding the recapture later in the presentation.

I will now turn the call over to Gary to discuss our segment results.

Gary?.

namely, that Colonial Penn will not be impacted. Washington National will be immaterially impacted due to the low volume of products that are subject to the Rule. This segment has only sold a handful of annuities during 2016. The bulk of the impact will be in Bankers Life.

However, we do not anticipate any material adverse impacts to our business at Bankers Life or our recently launched broker dealer product portfolios. Bankers Life will be utilizing the BIC exemption. Transaction-based compensation will continue to be paid for covered products, and additional compensation impacts are under review.

We anticipate implementation expenses to be in the $8 million to $10 million range. As previously discussed, the diversity of our distribution channels and products and our robust compliance culture have lessened any meaningful disruption to our business model as a result of adopting the Rule.

I will now turn it over to Eric to discuss our financial results..

Thanks, Gary. CNO had a strong quarter on the earnings front. Segment results were in line with expectations. We recorded operating earnings per share of $0.37. Excluding significant items, operating earnings per share was $0.35, up from $0.33 in the prior year. Operating return on equity was 9.2% in the quarter.

We reported net income per share of $0.11, reflecting a $0.28 loss on the recapture of the closed block long-term care business. Despite the recapture, CNO's capital remains is strong. We recorded estimated consolidated risk-based capital of 458%, up 10 points from the second quarter.

Consolidated risk-based capital reflects the $110 million statutory loss on the recapture, but was offset by a $200 million capital contribution. Holding company cash and investments totaled $189 million, down from the second quarter due to the previously mentioned capital contribution to the insurance subsidiaries.

Leverage was approximately 20%, and unchanged from the second quarter. Book value per diluted share, excluding AOCI, increased to $20.80, from $20.67 at June 30. We repurchased $52 million of common stock at an average price of $16.80. For the year, we repurchased $203 million of common stock at an average price of $17.37.

As previously disclosed, we decided to suspend our share repurchase program for the remainder of 2016. We continue to expect capital generation to remain strong, and this should allow us to rebuild our excess capital position quickly and resume deployment in the first half of 2017.

Lastly, I'm pleased to announce that we have reached a settlement with the Internal Revenue Service on certain matters that have been subject to appeal for nearly a decade. The settlement will result in a gain of approximately $120 million in the fourth quarter of 2016.

Of the $120 million gain, approximately $70 million represents additional life NOLs that will be used to offset taxable income in the third and fourth quarter of 2016, as well as the tax liability associated with the recapture of the closed block LTC business.

The remaining $50 million represents increases to our non-life NOLs that we expect to utilize over the next several years. Turning to Slide 11, and a more in-depth discussion on the recapture of the closed block LTC business. We recorded an after-tax GAAP loss of $53 million, in line with the estimate provided on September 29th.

The statutory loss, coupled with the recapture of the liabilities and assets, which had a heavy concentration of NAIC-5s and equities, required a significant cash infusion in order to maintain consolidated RBC in the 450% range. In the fourth quarter, we will begin reporting the closed block LTC business as a fifth operating segment.

We expect operating earnings to be approximately break-even to a slight loss on a quarterly basis going forward. In terms of the Level 3 assets, let me make a couple of comments.

On September 29th, we disclosed our estimated values for the Level 3 investments, summarized by investments that were part of the initial audit; investments that were part of the expanded audit; and investments that we do not plan to include as part of the audit.

With respect to the assets that were included in the initial scope of the audit, our estimated values recognize the inherent volatility in default probability, given the nature of the investments and specific ownership-related issues.

The audit related to this group was substantially completed in the third quarter, and based on information available to us at this time, we feel comfortable that our estimated values are reasonable.

In mid September we chose to expand the scope of the audit, primarily to independently confirm our internal assessment that these securities do not have the same ownership structure concerns and have lower propensity to default than those included in the initial audit.

While we continue to work through this phase of the audit, to date we have not uncovered anything that would lead us to believe that our initial assessment was incorrect. With respect to the assets that we do not intend to include as part of the audit, we have greater confidence in the reasonableness of our valuation inputs.

While these investments may be subject to normal market value fluctuations, concerns related to ownership structure and the probability of default are much lower than the other Level 3 investments. As we work through the process of unwinding these securities, it's important to note the following.

First, due to the relative lower quality of some of the assets, cash proceeds that are reinvested in higher-rated securities will result in a release of capital. While it's difficult to estimate how much capital and over what period of time this will happen, it's not unreasonable to assume that this will begin to occur the next several quarters.

Second, because of the amount of capital necessary to back these lower rated securities, any additional valuation adjustments would have minimal impact to consolidated RBC.

In fact, if we were to fully write down the remaining value of the assets that were included in the initial scope of the audit, our consolidated RBC ratio would be negatively impacted by less than 10 points. In terms of the liabilities, it's worth noting the following.

On a GAAP basis, there are $552 million of reserves, $145 million of which are claim reserves. This higher proportion of claim reserves to total reserves is not unusual, given the higher average attained age of 83.

While $552 million is not an insignificant level of reserves, it is important to note that this represents approximately 2% of CNO's overall reserves. In addition, there are just over 10,000 policies in force. We expect this number to shrink relatively quickly, due to an annualized termination rate of approximately 10%.

There are no intangibles or testing margin on this block, so changes in assumptions are immediately reflected in our financial statements. In conjunction with our normal fourth quarter review, we will update all key assumptions on this block as well.

As we have provided interest rate-related sensitivities in the past, we thought it appropriate to provide a similar sensitivity on this block. For our 50 basis-point reduction in the ultimate new money rate assumption, we would expect a $15 million pre-tax charge to income.

We view this to be very manageable in the context of our overall capital structure and financial position. Turning to slide 13 in our segment earnings, Bankers Life earnings in the quarter reflect higher LTC margins, which were partially offset by lower Medicare supplement margins.

Washington National's earnings reflect lower supplemental health margins. Colonial Penn's results were in line with seasonal expectations. For the full year, we expect to report approximately break-even earnings for Colonial Penn. Lastly, corporate segment results were flat year-over-year.

Turning to slide 14 and our key health benefit ratios, Bankers Life Medicare supplement benefit ratio was 72.5% in the quarter, in line with expectations and recent trends. For the fourth quarter of 2016, we expect the Medicare supplement benefit ratio to be in the 70% to 73% range.

Bankers Life long-term care interest adjusted benefit ratio was 77.7% on a reported basis and reflects a $6 million impact from policyholder actions following the implementation of rate increases. Excluding these impacts, the interest-adjusted benefit ratio was 82.6%, in line with expectations.

We continue to expect the long-term care interest adjusted benefit ratio, excluding the impact of rate increases, to be in the 81% to 86% range in the fourth quarter. Washington National's supplemental health interest-adjusted benefit ratio was 59.8%, slightly above the high end of our expectations but down from the second quarter.

We expect the interest-adjusted benefit ratio to be in the 59% range in the fourth quarter, reflecting the higher levels we have experienced over the past couple of quarters. Turning to Slide 15 and our investment results.

A third-quarter new money rate of 5.29% was strong and driven by tactical investments in esoteric ABS, TCP direct loans, and special situation funds. After a difficult first quarter of the year, we made some adjustments to our alternative allocations and those actions are showing positive results.

Asset turnover remains low as we seek to defend portfolio yields in this persistent low interest rate environment. Gross realized gains and losses continue to be moderate, and impairments were minimal and limited to two securities. With that, I will now turn it back over to Ed..

Thanks, Erik. CNO remains a compelling investment with a growing, diversified business. We remain focused on profitable growth through meeting the needs of the under-served middle income market in the U.S. CNO's strong free cash flow generation provides the ability to quickly replenish our excess capital position.

Although we have no stated target of excess capital, recent events have underscored the value of holding readily deployable capital for use as needs or opportunities arise. With the recapture of the closed block LTC business, it's important to note that we do not expect any material impact to ongoing operations, future cash flows, or earnings.

Lastly, we remain focused on the goal to reduce our relative long-term care exposure by 50% over the next three to six years. A portion of that reduction will come from normal run-on and run-off dynamics of the business. However, reinsurance is a necessary piece to accomplish this objective.

Our Bankers Life long-term care block is quite different than most LTC blocks in the industry. Those differences are why we believe that a reinsurance deal is achievable. Slide 19 of the appendix provides the key points of differentiation.

It's also important to remember that it has always been our plan to enter a reinsurance agreement on Bankers LTC, with a traditional reinsurance partner. With that, we will open it up for questions.

Operator?.

[Operator Instructions] Your first question is from Randy Binner..

I will pick up right where Ed left off. It seemed like somewhat decent prospects for some risk transfer on long-term care with a traditional reinsurance partner. I guess my thought on this whole BIRI situation is that, that might have some kind of chilling effect on risk transfer in the LTC area.

Is that something that's an active dialogue you are having with the reinsurance community?.

Randy, thanks for your question. This is Ed. We are regularly interacting with reinsurers on a variety of things. We have LTC as one of the topics when we talk to them, yes..

On the commentary around the buyback, does cash need to build to a certain level? You mentioned sometime in the first half of '17, you have a little bit of a tailwind, maybe 15 million to 20 million a quarter more than we would have thought because of this IRS settlement. And then there is earnings, as they develop.

So, is there a level of cash buffer you would want to get to before you would recommit to the share repurchase program?.

Hey, Randy, thanks for the question. This is Erik. I would say, in general, no. But in terms of thinking about excess capital deployment, I do like to have a level of excess capital above and beyond what I plan to spend.

So, to the extent we entertain the notion of reentering the markets or think about deploying our excess capital in other ways, I always like to have a little extra dry powder on hand. You know, our stated minimum is $150 million, it's unlikely that we would manage to $150 million every quarter while we are deploying excess capital.

I likely would manage to something between $200 million to $250 million..

200 million to 250 million total, not buffer?.

That's correct, yes..

Then what would be the buffer in there that you always want to keep it to, 150 million? I think that has been the number historically, right?.

150 million is the stated objective minimum at all times. The buffer above that would then be $50 million to $100 million. And think of that as being available for opportunistic deployment..

Your next question is from Humphrey Lee..

Good morning, and thank you for taking my question. A question is related to Washington National's underwriting experience as being weak since second quarter.

I am just wondering what are some of the dynamics that you are seeing in the supplemental health block? And then also how you are trying to address the underwriting pressure?.

Hey, Humphrey, thanks for the question. This is Erik again. The interest-adjusted benefit ratio has been a little bit elevated the last couple of quarters. If you recall, in the second quarter we had really a conflux of three things happening.

We had slightly higher claims, and then slightly lower persistency in newer policies, and slightly higher persistency in older policies. I would say those trends largely did recur here in the third quarter, although I think the claim portion was a little bit less pronounced than it was in the second quarter.

I think the persistency really was the issue in the third quarter. And that is not necessarily a bad economic outcome for the business..

Okay.

So, but going forward, because of these dynamics, we should expect the interest-adjusted benefit ratio to be elevated at least in the -- could potentially be beyond Q4?.

Right now, our expectation is that the interest-adjusted benefit ratio will be in the 59% range in the fourth quarter. We obviously haven't given guidance beyond that at this time..

Okay. Then shifting gears to Bankers, the recruiting effort seems to be pretty strong in the quarter.

What is driving the increase in agent recruiting?.

Humphrey, is this is Gary. Thanks for the question. We have taken a number of steps over the last year to implement certain technology and other initiatives and have made the recruiting a focus. We were pleased with the 15% increase, and continue to work towards building that recruitment..

And then maybe just remind us, what is the ramp-up time from recruit to being a productive agent?.

the ramp-up time?.

Yes..

Typically about six months to reach that, what we refer to a successful new agent status..

And your next question is from Ryan Krueger..

your target is 150 million at the holding company, and you are at 189 right now. So you are 19 million above the target. You would like to be 50 million to 100 million above that target before deploying or going back into the market for buyback.

Is that the right understanding?.

Hey, Ryan, it's Erik. Yes, so its $189 million at the end of the third quarter, that is $39 million above our stated corporate minimum objective. And yes, to the extent that we entertain excess capital deployment, we are going to want to be in that $200 million to $250 million range..

Got it and then --..

We are not quite there yet, but we are getting pretty close..

And you typically generate 75 million of excess capital per quarter? Would that be boosted by 15 million to 20 million in the fourth quarter because of the tax settlement?.

That's correct..

Okay.

Then, separately, do you have any preliminary commentary on the fourth-quarter long-term care review as it pertains to claim trends you have seen this year relative to your assumptions as well as interest rate levels?.

Sure. I think a couple of comments on that. You know, in terms of experience, whether it's claims or persistency, remember that we conducted some pretty comprehensive studies on both of those in the last couple of years. Our experience in those areas has largely been in line with those studies, if not slightly better.

So, as we move into the fourth quarter here, and start thinking about year-end testing, where I sit today, not envisioning any type of material movement in our margin, with respect to claims or persistency, So is that is good news.

I think the risk remains related to interest rates, and if you recall, we had a rising rate assumption in our 2015 year-end testing. Rates continue to be low. The yield curve is probably a little bit flatter. We have to take a pretty hard look at that.

So what does that mean? The best I can do at this particular point in time is point you back to what we have done in the past. In instances, in 2013 and 2014, where we've lowered the ultimate new money rate assumption by 50 basis points, that's typically caused a decline in margin of about $50 million or $60 million.

To the extent we do something like that again, here at year-end 2016, I would expect to see the margin impact to be roughly the same. Now, take that in the context of $180 million of margin in total for long-term care as of year-end 2015.

So we have degradation in our margin it may be offset by slightly better performance in claims and persistency, net, net, though, we don't have a charge in the fourth quarter. That is what I see evolving here..

Your next question is from Michael Kovac..

I just wanted to follow up on the long-term care recapture. I think you mentioned in the comments that there was some liability review that you are planning on conducting in the fourth quarter and gave us some numbers on interest rates.

Can you remind us what liability adjustments you made when you recaptured it at the end of September, versus what you are looking at in the fourth quarter?.

Sure, Mike, this is Erik again. So, when we recaptured the business, and updated basically the assumptions to reflect CNO's current assumptions, on the liability side we took a mark of about $60 million. About $50 million or $52 million of that was related to bringing the interest rate assumption down to our current assumptions.

That was the vast majority of it. Moving into the fourth quarter, we will retest all of the assumptions and update all of the assumptions. So to the extent CNO's current assumptions need to change, the assumption related to the closed block long term care business will also have to change..

Okay. That is helpful.

So, it was the other liability assumptions, not just interest rates, that you adjusted in the third quarter?.

Yes. The other piece was largely related to a rate increase assumption that was embedded in the reserves. As you know, it's not our practice to incorporate future realms of rate increases in our margins or reserves. So we took that out as well..

Great. That's helpful. And then, shifting gears here, as you think about the Department of Labor and the updates coming in April 2017, and your compliance with that, can you give us a sense of what the expense is you expect to be ongoing, versus one-time in nature? You called out $8 million to $10 million.

Do you expect that to continue into 2018 and beyond? Or are those just costs to become compliant?.

Yes, Mike, Erik again. Thanks again for the question. Expecting 2017 implementation costs to be in the $8 million to $10 million range, as Gary noted. On an ongoing basis, beyond that, we have the normal run rate is really around $2 million to $3 million..

Your next question is from Sean Dargan..

Thanks, and good morning. Erik, a lot of investors seem to have read the civil complaint that Bankers and Washington National filed against the principals of Beechwood. What some investors are having a hard time getting their heads around, is that you are alleging widespread fraud on behalf of Beechwood and the principals in Platinum.

Trying to reconcile that around the limited Level 3 assets that you are auditing.

I guess the question is why aren't you auditing all the assets associated with Beechwood?.

Well, Sean, just to answer pieces and parts of your question, with respect to anything litigation related, our proceedings that are ongoing, we aren't going obviously comment on that, given where we stand. Hopefully, you understand that.

With respect to the second part of the question, why aren't we auditing all of the assets, recall the breakdown of the assets that we disclosed previously. A portion that was cash, which doesn't need to be audited. A portion of the assets which are Level 1 and Level 2 securities, which, we feel very comfortable with.

Then you have the remainder, which is Level 3, which the vast majority of the Level 3 securities are undergoing some form of audit. The portion that is not undergoing audit is being subjected to scrutiny and review. We feel like we have this covered off pretty well..

Okay. That's great. One thing that caught my attention in that civil complaint was that you said there were other reinsurers who were interested in the closed block long term care.

Ed discussed the potential outcomes for the Bankers LTC; but I'm wondering if you think there is any market for reinsurance for the closed block LTC that you are bringing back?.

Sean, this is Ed. I believe there is. The extent to which we would entertain reinsuring any portion of this closed block would have to be evaluated in the grand scheme of LTC reinsurance. Our priority is to look for reinsurance of Bankers LTC.

As Erik mentioned in his comments, the closed block LTC continues to run off, at least from a policy count standpoint, of about 10% a year, largely due to mortality. The cash flows, the claim patterns, are quite steady and not as volatile.

So, from the standpoint of where do we want to and need to reduce LTC risk, those factors will be taken into account..

Your next question is from Erik Bass..

Thank you. This is for Gary.

As we look forward, what needs to happen to get back to positive NAP growth? Is it more related to increasing the producer count? Or do you need to see more marketplace demand for life, Med Supp, annuities, and other NAP products? How tied are those two things? And is it the market environment that is making it harder to retain agents?.

I wouldn't want us to focus on NAP as a measure of sales efficacy. I would really ask you to look at a basket of things, such as first year premiums, such as total collected premiums, such as policy in force, all of which showed growth in the past quarter..

Perfect, thanks. One thing to clarify, Erik, I think you had mentioned or confirmed free cash flow expectations are typically around $75 million a quarter, $300 million for the year.

As we think for next year, on top of that, am I reading it right that you could have potentially some benefit from release of capital from the recaptured LTC block?.

Erik. Yes, that is correct. It's difficult to estimate, as I mentioned in the prepared remarks, but that would be the expectation, that as we trade out of these lower-rated securities there would be some release of capital.

We did just back-of-the-envelope, if you think about the amount of assets that are lower-rated, and these would be like NAIC 6s and equities, that is probably about 30%, 35% of the $500 million or so that was recaptured.

If you trade out those securities over time, not that you wouldn't have some lower-rated securities which we actually like, you are probably looking at something like $50 million to $75 million of capital that would be released, again, over a period of time. Difficult to say how long, but some period of time..

Our next question is from Tom Gallagher..

Good morning. First question is just on the tax benefit. I want to make sure that I understand that correctly.

Of the $120 million, the $70 million that you are going to recognize both this quarter and next quarter, how much was in this quarter and how much is coming in Q4?.

Hey, Tom, it's Erik. Thanks for the question. There is about $70 million we are realizing on the life side. You can think about $30 million of that being allocated towards offsetting the tax liability on the recapture. The other $40 million is going to offset life income in the third and fourth quarter, so roughly $20 million a quarter..

$20 million a quarter.

And then, Erik, the other $50 million is likely to be utilized over, did Gary say a five-year period?.

It's an extended period of time. If you look at the slide that we have in the appendix that outlines our NOL, I think the key there is to look at the economic value of the NOL, which increased by about $70 million with the tax settlement. In essence, the economic value of the additional $50 million is pretty low, because it extends so far out..

so, now that you have gotten the assets back, what percent of the $550 million or so of assets would you expect to look to reposition? That would be my first question.

Second question is, what is the yield on that portfolio? When you recaptured it, where do you think that is going to go to after the repositioning would be done?.

Yes, Tom, this is Erik again. We have started to reposition a portion of the portfolio. Obviously, this would be any cash that we received as well as any Level 1, Level 2 highly liquid securities. We haven't disclosed how much of that, but that process has begun.

The remaining repositioning is going to take several quarters, if not a couple of years, because just by their nature, some of the assets are pretty liquid. This is a process that is already started, but is going to take a period of time. We have not disclosed what the existing yield was, or what it is going to be.

So, I can't really comment on that any further..

I guess my, sorry go ahead, Ed?.

Sorry. I just wanted to add, to the extent that we did revalue the liabilities to our current interest rate assumptions, we had reason to believe that we could achieve the current interest rate assumptions with the assets repositioned..

Yes, that was -- Ed, that was where I was going with that.

So, you have already contemplated strengthening reserves based on where you would expect that portfolio to settle out from a yield standpoint? Is that a fair way to characterize it?.

Yes. With the caveat that we haven't worked our way through the whole portfolio yet, but that was our reasonable best estimate at the time we recaptured..

And, Gary, just finally, so the point you were making on the worst case RBC impact being 10 points was more the way you were thinking about writing down the remaining portfolio to zero? That would be, the Level 3 that is under due diligence affiliated with Beechwood and Platinum.

You are writing that down to zero? And it would only be a 10 point impact? Is that the right way to think about it?.

Hey, Tom, this is Erik, actually. So let me just clarify the comments that I made. So, first and foremost, recognize that, that was just a scenario. We are not anticipating that we need to write down any of the assets any further.

Second, specifically what I said was that, if we were to write down the remaining $60 million or so of the assets that were the initial scope of the audit, then that would result in less than a 10 point decline in consolidated RBC. I want to clarify, the $60 million versus the entire portfolio..

I think there was an additional over $100 million when you broaden the scope. You weren't assuming writing that down to zero in the scenario..

No, so, yes, this is just so, if you recall, the portion of the assets that were the initial scope of the audit, we impaired those by $50 million. And that resulted in a remaining value of about $60 million. My scenario was just to say, if we wrote that $60 million all the way down to zero, it would have less than a 10 point impact on our RBC..

Your next question is from Yaron Kinar..

I had a couple of questions.

First, just wanted to confirm that, post the recapture, you are in full possession and control of the assets that were part of the Beechwood re-transaction?.

Yes, Yaron, that is correct..

And, maybe to follow-up on Tom's question about yields, while you haven't disclosed those, is there any reason to assume that is the yield after you reposition the portfolio wouldn't be roughly in line with the other long-term care assets that you hold?.

That is generally right. Probably a little lower, given that it's a little bit of an older block..

Then you talked about the RBC impact from, should the remaining assets of that were under the initial scope of the audit be written down completely.

What would happen, or what would the RBC impact be, if all assets that are currently under the audit review be written down? Just to get some sensitivity, not that I necessarily expect that to happen?.

We didn't run those numbers, Yaron. All we provided is the sensitivity that I obviously discussed in my prepared remarks..

Fair enough. And maybe one question away from the long-term care block. In terms of Bankers Life recruits, you say recruiting activity is up 15% year over year. And yet, if I look at first year recruits, they are still down quite significantly, both year over year and sequentially.

When does that turn, or when do we see the inflection point on that front?.

Yaron, this is Gary. We were pleased with the increase in the Bankers Life recruits. We were also pleased with the movement we saw in the first year collected premium. What we did not anticipate, and we were not pleased with, was the retention of the first year agents.

Now, what causes an agent to leave within that first year, by definition, is going to vary for each agent. But if there is one thread that is generally most common, it's the amount of income they are able to produce in that first year.

That is usually direct correlated to the quantity and quality of leads that they are able to have for those first year sales. So, that is what we are focused on getting right here for the next couple of quarters.

I would not want to give you a time certain in terms of when we will get that rectified by, but I would be very comfortable in saying we are focused on it, and we will get it sorted out..

I will turn the call back over to the host for closing remarks..

Thank you, Operator. Thank you, everyone for your interest in CNO. That concludes the call..

This concludes today's conference call. You may now disconnect..