CNO Financial Group, Inc. reported a 47% jump in net operating income in the third quarter of 2026, a figure that includes a $44.9 million benefit from the company’s annual actuarial review. Excluding that item, underlying net operating income rose 41% to $134.2 million.
But the more consequential disclosure came on October 1, when the company closed its third consecutive reinsurance transaction with CNO Bermuda Re, its wholly owned captive, moving approximately $270 million of inforce graded benefit life statutory reserves from Colonial Penn. Three deals in three years, each covering a different product line and subsidiary.
The three transactions together trace a deliberate capital-release strategy. The first, effective October 1, 2023, ceded approximately $6.2 billion of fixed indexed annuity reserves from Bankers Life, alongside new FIA business going forward. The second, effective October 1, 2025, shifted $1.8 billion of supplemental health reserves from Washington National, with 50% of new supplemental health business also ceded under the agreement. The October 2026 deal covers a smaller reserve block from Colonial Penn, CNO’s direct-to-consumer brand.
Each transaction transfers statutory reserves to the Bermuda entity. These are the capital insurers must hold against future policyholder obligations under state law, and CNO Bermuda Re, operating under the Bermuda Monetary Authority’s regulatory framework, generally requires less capital against the same liabilities. The freed-up capital flows back to the holding company, where CNO has deployed it on share buybacks, dividends, and TechMod, a three-year technology modernization initiative that has now cost $33.5 million through the first nine months of 2026, against a full-year budget of approximately $76 million.
CNO repurchased $60 million of its own stock in Q3 2026 alone, at an average of $54.52 per share, and has authority to buy back a further $240.4 million. Dividends paid during the quarter were $16.5 million. That capital had to come from somewhere, and the Bermuda transactions have been a consistent source.
When CNO executed the second deal in Q3 2025, it raised its excess holding company cash flow guidance sharply, from $200 million to $250 million to $365 million to $385 million for the year, attributing the revision directly to the Bermuda transaction. The effect of each deal on capital distributions has been material and immediate.
US life insurance annuity reserves ceded offshore have surged to $1 trillion since 2017, with Bermuda the primary destination, according to Moody’s Ratings data. AM Best has noted Bermuda accounted for over 40% of total ceded reserves for US life-annuity writers by 2024.
What distinguishes CNO’s version of this playbook is its use of a wholly owned captive rather than a third-party reinsurer. That arrangement keeps the economic benefits of the reserve block inside the group while still capturing the statutory capital relief.
The trade-off, disclosed in CNO’s filings, is that CNO Bermuda Re cannot pay dividends or make capital distributions to its parent for five years following the initial transaction unless the Bermuda Monetary Authority (BMA) approves it. The holding company is also required to contribute additional capital to the captive if its solvency buffer falls below 150% of the entity’s enhanced capital requirement.
Separate from the Bermuda mechanics, total new annualized premiums rose for the 17th consecutive quarter. CNO’s consumer division, which includes Bankers Life and its captive agent force serving middle-income households, posted its 15th consecutive quarter of producing agent count growth. Worksite its 17th.
The agent count gains come alongside a shift in how CNO describes its priorities. In its 2025 annual letter to shareholders, CEO Gary Bhojwani said the consumer division’s “nationwide agent force operates at a scale that would be nearly impossible to build anew today,” positioning distribution scale itself as the moat.
Growing agent count in the middle-income life and health segment runs against the broader industry trend of shrinking captive forces. The 2024 Insurance Barometer Study by LIMRA and Life Happens found that four in 10 middle-income adults acknowledge a life insurance shortfall, identifying it as the largest coverage gap in the US. Agent count growth is accelerating in specific states but contracting in others, making a carrier that is expanding its force across multiple consecutive quarters a notable outlier.
The $44.9 million net favorable impact from CNO’s comprehensive annual actuarial review, a comprehensive annual actuarial review that occurs each third quarter, is baked into both net income and net operating income for the period. Stripping that out, underlying net operating income was approximately $134.2 million, against $95 million on the same basis a year ago, still a 41% increase.
The review can cut either way. In Q3 2024, the annual actuarial review produced a $3.9 million unfavorable impact. The Q3 2026 figure is large enough relative to the total that it warrants flagging when assessing the quarter’s headline growth rate.
CNO raised its full-year 2026 operating EPS guidance again, with the midpoint now 9% above its prior outlook. The statutory risk-based capital ratio stood at an estimated 374% at September 30, within the company’s 360% to 390% target range. Financial strength ratings from Fitch, S&P, and AM Best remain at “A” or equivalent, with stable outlooks.
