CNO 10-K & 10-Q changes, risk factors and insider trading

General factors such as the availability of credit, consumer spending, business investment, capital market conditions and inflation affect our business. Threats facing the U.S. economy include the imposition of tariffs, the continued disagreement overincreasing the federal debt limit and other federal budget and taxation questions. Failure to resolve these political issues in a timely manner could result in federal government shutdowns, a default on government debt, increased costs, market disruption and volatility and impact government spending and economic activity. In an economic downturn, higher unemployment, lower family income and savings, lower corporate earnings, lower business investment and lower consumer spending may depress the demand for life insurance, annuities and other insurance products. In addition, this type of economic environment may result in higher lapses or surrenders of policies and may negatively impact the value of our assets.

Persistent inflation within the U.S. economy creates a heightened level of risk for us, the insurance industry and the U.S. economy generally. Rising inflation may impact the sales and persistency of our insurance products, the reliability of our loss reserve estimates and our ability to accurately price insurance products, and may create additional volatility in the fair value of our investments. A portion of our insurance policy benefits may be affected by increased medical coverage costs and various operating expenses including payroll have already been affected.expenses. Additionally, regulatory agencies, such as various state departments of insurance, the U.S. government and Federal Reserve may be slow to approve rate changes or adopt measures to attempt to control inflation, which could affect our ability to generate profits and cash flow. There can be no assurance that inflation rates will not escalate in the future or that measures adopted or that may be adopted by the U.S. government or the Federal Reserve to control inflation will be effective or successful. Continuing significant inflation could have a prolonged effect on the insurance industry and U.S. economy and could in turn negatively affect our business, financial condition and results of operations.

Some of our products, principally traditional whole life, universal life, fixed rate and fixed indexed annuity contracts, expose us to the risk that low interest rates will reduce our spread (the difference between the amounts that we are required to pay under the contracts and the investment income we are able to earn on the investments supporting our obligations under the contracts). Our spread, which is a component of product margin, provides a key contribution to our net income. Investment income is also an important component of the profitability of our health products, especially long-term care and supplemental health policies. In addition, interest rates impact the liability for the benefits we provide under our agent deferred compensation plan (as it is our policy to immediately recognize changes in assumptions used to determine this liability).

Interest rates in 2024 and 2023 were higher than the historically low interest rates experienced prior to 2022. If interest rates were to return to low levels for an extended period of time,period, we may haveneed to invest new cash flows or reinvest proceeds from investmentsmaturing, that have matured or have been prepaidprepaid, or sold investments at yieldslower thatyields, havewhich thecould effect of reducingreduce our net investment income asand well asnarrow the spread between interest earned on investments and interest credited to some of ourcertain products below presentcurrent or planned levels. To the extent prepayment rates on fixed maturity investments or mortgage loans in our investment portfolio exceed our assumptions, this could increase the impact of this risk. We can lower crediting rates on certain products to offset the decrease in investment yield. However, our ability to lower these rates may be limited by: (i) contractually guaranteed minimum rates; or (ii) competition. In addition, a decrease in crediting rates may not match the timing or magnitude of changes in investment yields. Currently, approximately 54 percent of our fixed interest annuities and 2928 percent of our universal life products with contractually guaranteed minimum rates have crediting rates set at the minimum rate. As a result, in a low interest rate environment, reinvestment risk can place pressure on insurance product margins resulting in lower earnings.

The performance of our investment portfolio depends in part upon the level of and changes in interest rates, risk spreads, real estate values, equity market values, interest rate and equity market volatility, the performance of the economy in general, the policies adopted by the Federal Reserve, the performance of the specific obligors included in our portfolio and other factors that are beyond our control. Changes in these factors can affect our net investment income in any period, and such changes can be substantial. These factors include, but are not limited to, the following: (i) changes in interest rates and credit spreads, which can reduce the value of our investments; (ii) changes in patterns of relative liquidity in the capital markets for various asset classes; (iii) changes in the perceived or actual ability of issuers to make timely repayments, which can reduce the value of our investments; (iv) changes in the estimated timing of receipt of cash flows; and (v) changes in mortgage delinquency or recovery rates, declining real estate prices, challenges to the validity of foreclosures and the quality of service provided by service providers on securities in our portfolios. These risks are significantly greater with respect to below-investment grade securities and alternative investments, which comprised 4.43.5 percent and 2.63.1 percent of our total investments as of December 31, 2024.2025, respectively. Our structured securities (as defined below), which comprised 31.030.9 percent of our available for sale fixed maturity investments at December 31, 2024,2025, are generally subject to variable prepayment on the assets underlying such securities, such as mortgage loans. When asset-backed securities, agency residential mortgage-backed securities, non-agency residential mortgage-backed securities, CLOs and commercial mortgage-backed securities, (collectively referred to as "structured securities") prepay faster than expected, investment income may be adversely affected due to the acceleration of the amortization of purchase premiums or the inability to reinvest at comparable yields in lower interest rate environments.

On December 13, 2023, the SEC adopted rulesamendments to require covered clearing agencies to adopt policies and procedures reasonably designed to require every direct participant of the agency to submit for clearing eligible secondary market transactions in U.S. Treasury securities,securities. whichThese requirements will effectivelyphase requirein thosesuch participants to clearthat eligible cash market transactions in U.S. Treasury securities must be cleared by December 31, 2025,2026, and eligible repurchase market transactions in U.S. Treasury securities must be cleared by June 30, 2026.2027. As a result, certain in-scope transactions between sucha covered clearing agency's direct participants and us will be required to be cleared. Uncertainty remains regarding potential impact of the rule. However, the rule could increase costs of trading in U.S. Treasuries orand potentially negatively affect market liquidity.

We make and rely on numerous assumptions related to our business which are used to make decisions crucial to our operations. ErrorsInaccurate inmodel the modeling software we usecalculations or differences between actual experience and the assumptions in our models could materially and adversely affect our business, financial condition, results of operations, liquidity and cash flows.

In addition, we have, under an intercompany reinsurance agreementagreements initiated in 2023,2023 and 2025, ceded approximately $7.6$8.8 billion of our fixed indexed annuity statutory reserves from Bankers Life and approximately $1.9 billion of our supplemental health statutory reserves from Washington National, respectively, to CNO Bermuda Re as of December 31, 2024.2025. Future regulatory changes made by the BMA or the NAIC or other events may impact the capital efficiency of the reinsurance structurestructures and could require the holding company to contribute additional capital to CNO Bermuda Re or Bankersthe Lifeceding reinsurers to recapture the ceded business.

CNO and CDOC, Inc. ("CDOC") are holding companies with no business operations of their own. CNO and CDOC 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 our insurance subsidiaries, consisting of dividends and distributions, principal and interest payments on surplus debentures and tax-sharing payments, as well as cash from their non-insurance subsidiaries consisting of dividends, distributions, loans and advances. Deterioration in the financial condition, earnings or cash flow of these significant subsidiaries for any reason could hinder the ability of such subsidiaries to pay cash dividends or other disbursements to CNO and/or CDOC, which would limit our ability to meet our debt service requirements and satisfy other financial obligations. In addition, CNO may elect to contribute additional capital to certain insurance subsidiaries to strengthen their surplus for covenant compliance or regulatory purposes (including, for example, maintaining adequate RBC or BSCR levels) or to provide the capital necessary for growth, in which case it is less likely that its insurance subsidiaries would pay dividends to the holding company. Accordingly, this could limit CNO's ability to meet debt service requirements and satisfy other holding company financial obligations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Liquidity of the Holding Companies" for more information.

Insurance regulations generally permit our U.S. based insurance subsidiaries to pay dividends from statutory earned surplus without regulatory approval if the amount of the dividend, together with other dividends made within the preceding 12-month period, does not exceed the greater of (or in some states, the lesser of): (i) statutory net gain from operations of such insurer for the prior calendar year; or (ii) 10 percent of such insurer's surplus as regards to policyholders at the end of the preceding calendar year. CNO receives dividends and other payments from CDOC and from certain non-insurance subsidiaries. CDOC receives dividends and surplus debenture interest payments from our insurance subsidiaries and payments from certain of our non-insurance subsidiaries. CNO Bermuda Re may not pay any dividends or make any capital distributions to its parent and/or affiliates within the five years following the initial2023 reinsurance transaction unless approved by the BMA. Payments from our non-insurance subsidiaries to CNO or CDOC, and payments from CDOC to CNO, do not require approval by any regulatory authority or other third party. However, the payment of dividends or surplus debenture interest by our insurance subsidiaries to CDOC is subject to state insurance department regulations and may be prohibited by insurance regulators if they determine that such dividends or other payments could be adverse to our policyholders or contract holders.

CDOC holds surplus debentures from Conseco Life Insurance Company of Texas ("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 330323 percent at December 31, 2024.2025. CDOC also holds a surplus debenture from Colonial Penn Life Insurance Company ("Colonial Penn") with a principal balance of $160.0 million.million on as of December 31, 2025. Interest payments on that surplus debenture require prior approval by the Pennsylvania Insurance Department.

In addition, although we are generally under no obligation to do so, we may elect to contribute additional capital to strengthen the surplus of certain insurance subsidiaries for covenant compliance or regulatory purposes or to provide the capital necessary for growth. Pursuant to the CLMA between CNO Bermuda Re and CDOC,CLMA, 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 ECR 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 Bankersone Lifeor more ceding insurers has provided notice of recapture pursuant to the terms of athe modifiedapplicable coinsurancereinsurance agreement between it and CNO Bermuda Re.Re and such recapture will cause CNO Bermuda Re to meet (i) and (ii) above. Contributions of additional capital to our insurance subsidiaries could affect the ability of our top tier insurance subsidiaries to pay dividends. The ability of our insurance subsidiaries to pay dividends is also impacted by various criteria established by rating agencies to maintain or receive higher financial strength ratings and by the capital levels that we target for our insurance subsidiaries, as well as regulatory and other financial covenant compliance requirements under the Revolving Credit Agreement.

Our senior unsecured debt ratings are currently "BBB+", "BBB-", "Baa3" and "bbb" from Fitch, S&P, Moody's and AM Best, respectively. If we were to require additional capital, either to refinance our existing indebtedness or for any other reason, our current senior unsecured debt ratings, as well as conditions in the credit markets generally, could restrict our access to such capital and adversely affect its cost. Disruptions, volatility and uncertainty in the financial markets, and our credit ratings could limit our ability to access external capital markets at times and on terms which allow us to meet our capital and liquidity needs. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Liquidity of the Holding Companies" for more information.

As of December 31, 2024,2025, we had net deferred tax assets of $791.4$711.7 million. Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities, capital loss carryforwards and NOLs. We evaluate the realizability of our deferred tax assets and assess the need for a valuation allowance on an ongoing basis. In evaluating our deferred tax assets, we consider whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of our deferred tax assets depends upon generating sufficient future taxable income during the periods in which our temporary differences become deductible and before our capital loss carry-forwards and NOLs expire. InWe addition,recognized we expect to recognize approximately $800$797.6 million of non-life NOLs on our tax return as a result of changes related to the tax accounting method for allocating indirect costs (pursuant to the Code) to self-constructed real estate assets upon approval from the IRS.Internal Revenue Service. Such NOLs willare not be subject to expiration. Our assessment of the realizability of our deferred tax assets requires significant judgment. Failure to achieve our projections may 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.

The value of our net deferred tax assets as of December 31, 20242025 reflects the current Federal corporate income tax rate of 21 percent. Changes in tax laws, including changes regarding the utilization of NOLs, could cause a write-down of our net deferred tax assets, which may have an adverse effect on our results of operations and financial condition.

Our Bermuda based insurance subsidiary 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 structurestructures between CNO Bermuda Re and Bankersthe Lifeceding reinsurers and could require the holding company to contribute additional capital to CNO Bermuda Re or Bankers Life to recapture the ceded business.

Insurance companies historically have been subject to substantial litigation. In addition to the traditional policy claims associated with their businesses, insurance companies like ours face class action suits and derivative suits from policyholders and/or shareholders. We also face significant risks related to regulatory investigations and proceedings. The litigation and regulatory matters we are, have been, or may become, subject to include matters related to the classification of our exclusive agents as independent contractors, sales, marketing and underwriting practices, payment of contingent or other sales commissions, claim payments and procedures, product design, product disclosure, administration, additional premium charges for premiums paid on a periodic basis, calculation of cost of insurance charges, changes to certain non-guaranteed policy features, denial or delay of benefits, charging excessive or impermissible fees on products, procedures related to canceling policies, recommending unsuitable products to customers and policies from legacy business that we acquired or no longer write. Certain of our insurance policies allow or require us to make changes based on experience to certain non-guaranteed elements ("NGEs") such as cost of insurance charges, expense loads, credited interest rates and policyholder bonuses. We intend tomay make changes to certain NGEs in the future. In some instances in the past, such action has resulted in litigation and similar litigation may arise in the future. Our exposure (including the potential adverse financial consequences of delays or decisions not to pursue changes to certain NGEs), if any, arising from any such action cannot presently be determined. Our pending legal and regulatory proceedings include matters that are specific to us, as well as matters faced by other insurance companies. State insurance departments have focused and continue to focus on sales, marketing and claims payment practices and product issues in their market conduct examinations. Negotiated settlements of class action and other lawsuits have had a material adverse effect on the business, financial condition and results of operations of CNO and our insurance subsidiaries.

The Dodd-Frank Act of 2010 made extensive changes to the laws regulating financial services firms and required various federal agencies to adopt a broad range of implementing rules and regulations, including those pertaining to the use of derivatives. Certain of these regulations have imposed additional requirements that may affect both the Company and its derivatives counterparties, including in the areas of reporting, recordkeeping, the mandatory exchange execution and clearing of certain derivatives, position limits with respect to certain derivatives, regulatory initial margin and variation margin requirements, and limitations on the ability to close out certain derivatives transactions with certain counterparties upon the bankruptcy of such counterparties. These and other regulations under the Dodd-Frank Act could pose limitations and burdens on the Company and its derivatives counterparties, which could result in increased costs to the Company in connection with its derivatives transactions. Uncertainty remains regarding potential amendments to the Dodd-Frank Act and whether any such changes to the Dodd-Frank Act would result inhave a material adverse effect on our businessbusiness, operations.results of operations, cash flows or financial condition.

We cannot predict thewhether requirementsother offederal theinitiatives regulationswill ultimatelybe adopted or what impact, if any, such initiatives, if adopted, the effect such regulations willmay have on financial markets generally, or on our businesses specifically, the additional costs associated with compliance with such initiatives and related regulations, or any changes to our operations that may be necessary to comply with any new regulations, any of which could have a material adverse effect on our business, results of operations, cash flows or financial condition.

Our investment portfolio may be adversely affected as a result of any delays or failures of borrowers to make payments of principal and interest when due or delays or moratoriums on foreclosures, enforcement actions with respect to delinquent or defaulted mortgages imposed by governmental authorities or the failure of tenants to pay rent or tenants' demands for lease modifications.due. Further, severe market volatility may leave us unable to react to market events in a prudent manner consistent with our historical investment practices. Market dislocations, decreases in observable market activity or unavailability of information, in each case, arising from major public health issues may impact the key inputs used to derive certain estimates and assumptions made in connection with financial reporting or otherwise.

We depend heavily on our telecommunication, information technology and other operational systems and on the integrity and timeliness of data we use to run our businesses and service our customers. These systems may fail to operate properly or become disabled as a result of events or circumstances which may be wholly or partly beyond our control including cyber-attack, denial of service, viruses or other malicious activities, power outages, failure of critical infrastructure, hardware or software malfunction, defects or degradation, lack of proper maintenance, human error or misuse, and similar events. Further, we face the risk of operational and technology failures by others, including financial intermediaries, vendors and parties that provide services to us. If these parties do not perform as anticipated, we may experience operational difficulties, increased costs and other adverse effects on our business. We have implemented, and we require our vendors to implement, a variety of security measures to protect the confidentiality, availability, and integrity of our information systems and data. However, failure to maintain a reasonable and effective data protection and cybersecurity program, or any compromise of the security, confidentiality, integrity, or availability of our information systems and the sensitive, proprietary, and confidential data, including personal information, on such systems could lead to additional costs and liabilities, as well as damage our reputation or deter people from purchasing our products. We are periodically targeted by cybersecurity threat actors. In the past, we have experienced cybersecurity events resulting in the compromise of personal and confidential information of our customers. While no such cybersecurity event has been material, there can be no assurance that a future breach will not occur or, if any does occur, that it can be promptly detected and sufficiently remediated without materially impacting our businessbusiness, operations, or our operations.reputation.

Moreover, we invest significant time and resources towards ensuring that the capacity and reliability of our information technology systems, and those of third parties on which our operations rely, are sufficient and appropriate to support our business. Costs associated with maintaining, upgrading, or replacing such information technology, including legacy systems, could exceed our expectations or we may be required to dedicate additional resources. Maintaining legacy systems, including ensuring such systems meet our evolving technical and regulatory requirements, may become impracticable or cost prohibitive. Planned system upgrades (including our previously announced TechMod initiative) may not be successful or operate as intended, may take longer than anticipated, may exceed their budget, or create or exacerbate previously unknown security vulnerabilities. Any of these outcomes could have a materially adverse impact on our business, operations, and financial condition.

Interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality, integrity or availability of sensitive, confidential or proprietary data residing on such systems, whether due to actions by us, our vendors, or others, could delay or disrupt our ability to do business and service our customers, harm our reputation, subject us to litigation, regulatory sanctions and other claims, require us to incur significant technical, legal and other expenses, lead to a loss of customers, revenues and opportunities, or otherwise adversely affect our business. Depending on the nature of the information compromised, in the event of a data breach or other unauthorized access to or acquisition of our customer data, we may also have obligations to notify customers, other stakeholders, and federal and state government regulators about the incident and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident. All fifty states, as well as a growing number of regulatory bodies have adopted consumer notification requirements in the event of the actual or reasonably suspected unauthorized access to, or acquisition of, certain types of personal information. Such breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another. Complying with these obligations could cause us to incur substantial costs (including fines) and could increase negative publicity surrounding any incident that compromises customer data. While we maintain insurance coverage that, subject to policy terms and conditions and a self-insured retention, is designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the continually evolving area of cyber risk.risk, or may be no longer available on commercially reasonable terms.

AI technologies offer numerous potential benefits, such as creating or increasing operational efficiencies, and we expect the use of AI and generative AI by us, third parties on our behalf, and other market actors, including our competitors, to increase. However, the deployment of such technologies also poses certain risks, including that they may be misused, or the models or datasets on which the models are trained may be flawed or otherwise may function in an unexpected manner. The relative newness of the technology, the speed at which it is being adopted, and the relative lack of laws, regulations or standards expressly and specifically governing its useuse, combined with the growing interest by various legislators and regulators to address the development and deployment of AI technologies in a manner which may not be consistent across jurisdictions, increases these risks. Any such misuse could expose us to legal or regulatory risk, damage customer relationships or cause reputational harm. Our competitors may also adopt AI or generative AI more quickly or more effectively than we do, which could cause competitive harm.

Most of our major competitors have higher financial strength ratings than we do. Many of our competitors are larger companies that have greater capital,capital and technological and marketing resources and have access to capital at a lower cost.resources. Recent industry consolidation, including business combinations among insurance and other financial services companies, has resulted in larger competitors with even greater financial resources. In some of our product lines, such as life insurance and fixed annuities, we have a relatively small market share. Even in some of the lines in which we are one of the top writers, our market share is relatively small.

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 managementthe 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; and(ii) interest credited to policyholders; and (iiiii) 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 the averagenet insurance liabilities, net of insurance intangibles,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 help provideprovides an additional understanding of the business and a more meaningful analysis of the results of our insurance product lines.

The Worksite Division focuses on the sale of voluntary benefitinsurance lifebenefits, including supplemental health and healthlife insurance products in the workplace for businesses, associations, and other membership groups, interacting with customers at their place of employment and virtually. The Worksite Division also offers employer benefits services that seek to increase benefits engagement and reduce costs for employers and their employees. These services include: benefit administration technology, year-round advocacy, enrollment, benefits compliance and communications services.

__________ (a) Management believes that an analysis of net income applicable to common stock before: (i) net realized investment gains or losses from sales,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 losses related to divested business, net of taxes; and (viiixi) 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 benefit allocated to the items included in net non-operating income (loss) represents the current and deferred income tax expense or benefit allocated to the items included in non-operating earnings. Management believes this information helps provideprovides a better understanding of the 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.

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.

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, our experience with operating loss and tax credit carryforwards expiring unused, 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, 2024,2025, 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 all our net deferred tax assets of $791.4$711.7 million will be realized through future taxable earnings.

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. InOur addition,life weNOLs expectwith no expiration date of $127.5 million can be used to recognizeoffset approximately $800 million80% of non-lifelife NOLscompany ontaxable ourincome, 2024subject taxto returncertain aslimitations in the Code. In March 2025, the Company executed a resultconsent ofagreement changeswith relatedthe toIRS that provided formal approval for the tax accountingmethod methodchange for allocating indirect costs (pursuant to the Code) to self-constructed real estate assetsassets. uponAs approvala fromresult, the IRS.Company Suchrecharacterized NOLsthe willremaining not$797.6 bemillion subjectof capitalized indirect costs under the prior accounting method to expiration.a NOL with no expiration date.

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.

At December 31, 2024 the value of goodwill and other intangible assets was $69.5 million and $28.1 million, respectively. 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 Accounting Standards CodificationASC 350, Intangibles - Goodwill and Other (“ASC 350”).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 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 multiplerevenue-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.

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 thisinsurance informationproduct helpsmargin provideand 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 (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. Previously, the review was completed in the fourth quarter of each year, however, we began performing this review in the third quarter starting with 2024 to better align with our annual planning process, and third quarter is also more consistent with industry practice. 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 20242025 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 of $27.3 million. The impact to insurance product margins by product are summarized in the table below.income. The most significant insurance product margin impacts related to fixed indexed annuitiesannuities, supplemental health and Medicare supplement productsproducts, which were favorably (unfavorably) impacted by $36.2$13.8 millionmillion, $24.8 million, and $(9.49.2) million, respectively. The primary fixed indexed annuities changes primarily related to higher mortalitysurrender assumptions on the MRB liability. The supplemental health changes primarily related to lower persistency assumptions. The primary Medicare supplement changes primarily related to higher morbidity and higher persistency assumptions.morbidity. In addition, the comprehensive annual actuarial review unfavorably impacted pre-tax non-operating income by $42.8$14.3 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 higherincreases earnedin the surrender rate assumptions.

We performed our 20232024 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 $33.9$27.3 million. The impact to insurance product margins by product are summarized in the table below. The most significant impacts related to supplementalfixed healthindexed annuities and Medicare supplement products which were favorably (unfavorably) impacted by $41.9$36.2 million and $(10.69.4) million, respectively. The primary supplementalfixed healthindexed annuities changes related to lower morbidity and higher surrendermortality 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$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 20222023 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 $0.7$33.9 million and is summarized by product in the table below.million. The most significant impacts related to long-termsupplemental carehealth and traditionalMedicare lifesupplement products which were favorably (unfavorably) impacted by $16.4$41.9 million and $(13.010.6) million, respectively. The primary long-termsupplemental care assumptionhealth changes related to lower near-termmorbidity morbidity.and higher surrender assumptions. The primary traditionalMedicare lifesupplement assumptionchanges changerelated wasto anhigher increasenear-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 expectedthe mortality.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 ourpre-tax operating income for the years ended December 31, 2024,2025, 20232024 and 20222023 (dollars in millions):

Insurance product margin was $1,067.6 million, $1,040.0 million,million and $959.0 million in 2025, 2024 and $936.52023, 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 2024,2025, 20232024 and 2022, respectively. Insurance product margin, excluding the impacts summarized in the table above, were $1,012.7 million, $925.1 million and $935.8 million in 2024, 2023 and 2022,2023, respectively. Fluctuations by product line are discussed in greater detail in the narratives that follow.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):follow.

The favorable (unfavorable) impacts of our comprehensive annual actuarial review (reflected in insurance policy benefits) on annuity product margins are summarized below (dollars in millions):

Margin from fixed indexed annuities was $196.0 million in 2025 compared to $215.8 million in 2024 compared toand $192.2 million in 2023 and $183.4 million in 2022.2023. The margin adjusted to exclude the favorable (unfavorable) impacts of the comprehensive annual actuarial review previously discussed was $182.2 million, $179.6 million,million and $182.8 million and $186.6 million in 2024,2025, 20232024 and 2022,2023, respectively. The decreasing adjusted marginsmargin areincreased in the current period primarily due to additionalgrowth amortizationin resultingthe from higher surrenders and assumption changesblock, partially offset by increasedhigher surrender charge income.amortization. Growth in the block is primarilybeing beingpartially 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,million and $9,337.3 million in 2025, 2024 and $8,788.62023, millionrespectively. The growth in 2024,net 2023insurance andliabilities 2022, respectively,was driven by deposits and reinvested returns in excess of withdrawals.withdrawals, The increase in net insurance liabilitieswhich results in higher net investment income allocated. The earned yield was 4.84 percent in 2025, up from 4.66 percent in 2024,2024 up fromand 4.39 percent in 2023 and 4.25 percent in 2022,2023, 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,million and $118.3 million and $(181.3) million in 2024,2025, 20232024 and 2022,2023, respectively.

Margin from fixed interest annuities was $32.8 million in 2025 compared to $31.6 million in 2024 compared toand $33.9 million in 2023 and $32.4 million in 2022.2023. 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 isin 2024 was largely offset by increased yields. Average net insurance liabilities were $1,591.4 million, $1,578.3 million,million and $1,612.0 million and $1,700.5 million in 2024,2025, 20232024 and 2022,2023, respectively, driven by withdrawals in excess of deposits and reinvested returns. The earned yield increased to 5.335.46% percent in 2024,2025, reflecting higher portfolio yields compared to 5.33 percent in 2024 and 5.19 percent in 2023 and 4.88 percent in 2022.2023.

Margin from other annuities was $9.8 million in 2025 compared to $26.8 million in 2024 compared toand $8.9 million in 2023 and $11.1 million in 2022.2023. 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. WeThe experiencedadjusted elevatedmargin annuitantdecreased in the current period due to higher mortality on a small number of closed block payout annuity policies in 2024. Mortality was lower in 2023 compared to 2022.

Margin from supplemental health business was $305.4 million in 2025 compared to $269.8 million in 2024 compared toand $294.4 million in 2023 and $230.9 million in 2022.2023. The margin adjusted to exclude the favorable impacts of the comprehensive annual actuarial review previously discussed was $280.6 million, $269.5 million,million and $252.5 million and $229.0 million in 2024,2025, 20232024 and 2022,2023, respectively. The adjusted margin as a percentage of insurance policy income was 38 percent in 2025 compared to 37 percent in 2024 compared toand 36 percent in 2023 and 33 percent in 2022.2023. The increase in the supplemental health adjusted margin in 2024,2025, compared to 20232024 and 2022,2023, reflects growth in the block and favorablelower morbidity.

Margin from Medicare supplement business was $106.1 million in 2025 compared to $113.9 million in 2024 compared toand $116.9 million in 2023 and $151.0 million in 2022.2023. The Medicare supplement margin adjusted to exclude the impacts of the comprehensive annual actuarial review previously discussed was $115.3 million, $123.3 million,million and $127.5 million and $151.0 million in 2024,2025, 20232024 and 2022,2023, respectively. The adjusted margin as a percentage of insurance policy income was 18 percent, 20 percent,percent and 21 percent in 2025, 2024 and 232023, percentrespectively. Insurance policy income was $627.0 million in 2024, 2023 and 2022, respectively. The slight decrease in the adjusted margin in 2024, as2025 compared to 2023,$620.5 ismillion primarilyin due2024 toand higher$619.9 morbidity.million in 2023. The decrease in the adjusted margin in 20232025, as compared to 2022,2024, 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 ahigher reductionclaims in the2024 sizecompared ofto the block and higher morbidity.2023. Claim experience will fluctuate from period to period. InsuranceWe policyare income was $620.5 million in 2024 comparedable to $619.9 million in 2023 and $657.8 million in 2022. Over the last several years, we have experienced a shift in the sale of Medicare supplement policies to the sale of Medicare Advantage policies. 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 bothre-rate our Medicare supplementSupplement productsbusiness annually. Each year we review experience and Medicareregulatory Advantage distributionrequirements to meetarrive at appropriate rate actions. We file rate increase requests with individual states and historically have received approvals generally aligned with our customers' needs and preferences. We launched a new competitive Medicare supplement product in 2022 resulting in sales growth over the past two years.requests.

Margin from Long-term care products was $145.1 million in 2025 compared to $133.1 million in 2024 compared toand $83.0 million in 2023 and $122.5 million in 2022.2023. The margin adjusted to exclude the impacts of the comprehensive annual actuarial review previously discussed was $139.6 million, $132.2 million,million and $92.0 million and $106.1 million in 2024,2025, 20232024 and 2022,2023, respectively. The adjusted margin as a percentage of insurance policy income and excluding the impacts of the annual actuarial review was 48 percent, 3548 percent and 4035 percent in 2024,2025, 20232024 and 2022,2023, respectively. The fluctuationsincrease resultedin 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 which was favorable in 2024 as compared to 2023 and unfavorable in 2023 as compared to 2022.2023. Claim experience will fluctuate from period to period. EffectiveThe 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.agreement We(this now retain 100 percent of our long-term care new business. This doesdid not impact the inforce business that we previously ceded.ceded). As a result, we expect margins to increaseincreased modestly in 2025 and we expect to grow more in future years as earnings emerge from the sales.

The favorable (unfavorable) impacts of our comprehensive annual actuarial review (reflected in insurance policy benefits) onas 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.

Margin from interest-sensitive life business was $94.3 million in 2025 compared to $97.9 million in 2024 compared toand $98.7 million in 2023 and $79.5 million in 2022.2023. 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,million and $94.8 million and $80.9 million in 2024,2025, 20232024 and 2022,2023, respectively. The increasedecrease in the adjusted margin in 20242025 and 20232024 compared to 20222023 reflects morehigher favorableinsurance mortalitypolicy and growth in the block due to sales in recent periods.benefits.

The interest margin was $2.7 million in 2025 compared to $2.3 million in 2024 compared toand $2.8 million in 20232023. Allocated net investment income reflects earned yields of 5.02 percent, 4.99 percent and $3.34.96 millionpercent in 2022.2025, 2024 and 2023, respectively. The decline in thefluctuating interest margin over the three year period is due to spread compression, partially offset byreflects growth in the block.block and compressed spreads in 2024, which lessened 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,million and $13.2 million and $(24.0) million in 2024,2025, 20232024 and 2022,2023, respectively.

Margin from traditional life business was $178.1 million in 2025 compared to $151.1 million in 2024 compared toand $131.0 million in 2023 and $125.7 million in 2022.2023. 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,million and $136.2 million and $138.7 million in 2024,2025, 20232024 and 2022,2023, respectively. The increase in the adjusted margin in 20242025 compared to 20232024 and 20222023 primarily reflects lower advertising expense and growth in the block.business.

Advertising expense was $67.7 million in 2025 compared to $77.3 million in 2024 compared toand $92.5 million in 2023 and $94.3 million in 2022. The demand and cost of television advertising can fluctuate from period to period and tends to spike during presidential election cycles.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.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.

The following summarizes our net non-operating income (loss) for each of the three years ended December 31, 20242025 (dollars in millions):

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. Net realized investment losses were $62.2 million in 2022, including the unfavorable change in the allowance for credit losses of $52.6 million which were recorded in earnings.

During 2024,2025, 20232024 and 2022,2023, we recognized an increase (decrease) in earnings of $22.8$14.3 million, $(6.3)$22.8 million and $(73.26.3) 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 2024,2025, 20232024 and 2022,2023, we recognized an increase (decrease) in earnings of $(1.7) million, $6.6 million,million and $(3.5) million and $48.9 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 2024,2025, 20232024 and 2022,2023, we recognized an increase (decrease) in earnings of $24.7$(64.0) million, $46.3 million and $(29.9) million and $440.2 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 $67.5$(49.7) million, $89.1 million and $(17.5) million and $440.2 million in 2024,2025, 2023,2024 and 2022,2023, 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.

In this section, we review the consolidated financial condition of CNO as of MarchJune 31,30, 2026, and its consolidated results of operations for the threesix months ended MarchJune 31,30, 2026 and 2025, and, where appropriate, factors that may affect future financial performance. Please read this discussion in conjunction with the accompanying consolidated financial statements and notes. Results for interim periods are not necessarily indicative of the results that may be expected for a full year.

A wide variety of factors continue to impact financial and economic conditions. Consumer and economic uncertainty due to rapid changes in global trade policies, including the imposition of tariffs and potential changes to existing tariffs, and geopolitical actions are also causing market volatility and heightening concernsinflationary regarding inflation.concerns. Reactions to these factors and fluctuations in the value of the U.S. dollar compared to foreign currencies may result in reduced economic growth in the United States, the targeted nations and globally, increase inflation, disrupt global supply chains and increase volatility in financial markets, including currency and interest rate markets.

•general economic, market and political conditions and uncertainties, including the performance and fluctuations of the financial markets (including the impact of inflation, market volatility, the impact of a U.S. federal government shutdown, tariffs, changes in tax laws, changes in commodity prices andprices, fluctuations in foreign currency exchange rates and the impact of a U.S. federal government shutdown), which may affect the value of our investments as well as our ability to raise capital or refinance existing indebtedness and the cost of doing so;

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 the average net 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.

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. Through our Optavise brand, we guide employers and their employees through their healthcare choices with a suite of voluntary insurance products as well as fee services, including benefits administration technology, education, and advocacy, and communications services to reduce costs and increase benefits engagement.products. In November 2025, we announced our intention to exit the fee services business (which included benefits administration technology, education, and advocacy, and communications services) within our Worksite Division to sharpen our focus on the core insurance business. In 2026, we have begun theThe exit of the fee services business and expect the exit to bewas substantially completedcomplete byas of June 30, 2026.

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. As a result of exiting the fee services business within our Worksite Division, beginning in the 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 exit of the fee services business was substantially complete as of June 30, 2026.

The following summarizes our earnings for the three and six months ended MarchJune 31,30, 2026 and 2025 (dollars in millions, except per share data):

____________ (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 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 our normal spend and will not recur following implementation, net of taxes; (ix) goodwill and other asset impairment expenses, net of taxes; (x) gains or losses related to divested 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 benefit allocated to the items included in net non-operating income (loss) represents the current and deferred income tax expense or benefit allocated to the items included in non-operating earnings. Management believes this information provides a better understanding of the 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.

Refer to "Governmental Regulation" in our 2025 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 for information on our insurance and other governmental regulatory matters, other than those amended or supplemented here.

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 liabilitiesliabilities, 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.

Summary of Operating Results: Net operating income was $101.3$119.5 million in the second quarter of 2026 compared to $87.5 million in the second quarter of 2025, and was $220.8 million in the first quartersix months of 2026,2026 compared to $81.1$168.6 million in the first quartersix months of 2025.

Operating returnReturn on equity ("operating ROE") is equal to the trailing four quarters of net income divided by average shareholders' equity. As of June 30, 2026, our ROE was 10.9 percent compared to 11.9 percent as of June 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 MarchJune 31,30, 2026, our operating ROE, excluding significant items, was 12.213.1 percent,percent compared to 11.911.2 percent as of MarchJune 31,30, 2025. WeOur continue to target an improvement in run-rate2026 operating ROE ofis 200expected basisto pointsexceed throughthe 2027,three-year off a 2024 run-ratetarget of approximately12 10percent percent.we had previously established for year-end 2027.

Insurance product margin was $256.9$279.0 million in the second quarter of 2026 compared to $252.4 million in the second quarter of 2025, and was $535.9 million in the first quartersix months of 2026,2026 compared to $248.9$501.3 million in the first quartersix months of 2025. Total net investment income (comprised of investment income allocated and not allocated to products) increased 68 percent to $315.2$327.5 million in the second quarter of 2026 as compared to $302.7 million in the second quarter of 2025, and 7 percent to $642.7 million in the first quartersix months of 2026, as2026 compared to $298.7$601.4 million in the first quartersix months of 2025 as a result of growth in the business and higher yields.alternative Theinvestment higher yields reflect continued new money rates in excess of 6 percent over the past 13 quarters.income. Fluctuations by product line and investment income not allocated to products are discussed in greater detail in the narratives that follow.

The effective tax rate for the threesix months ended MarchJune 31,30, 2026 was 22.021.4 percent.

Total allocated and unallocated expenses in the first threesix months of 2026 were down slightly as compared to the same period in the prior year. Our expense ratio was 18.918.7 percent and 19.919.4 percent for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. We generally experience seasonally higher expenses during the first quarter; however, timing of certain expenses incurred during the threesix months ended MarchJune 31,30, 2026 offset the seasonal increases historically experienced in the first quarter.half of the year. 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.

Net Consumer Division fee income wasdecreased $10.6from income of $7.4 million in the firstsecond quarter of 2025 to a loss of $1.2 million in the second quarter of 2026 compared to $4.3 million in the first quarter of 2025 primarily due to unfavorablea experiencedecrease adjustments recognized onin Medicare Advantage third-party productssales resulting from a continued shift in customer preference towards Medicare supplement products. In addition, fee income decreased $3.0 million for an experience adjustment in the firstsecond quarter of 2025.2026. Net Consumer Division fee income decreased $2.3 million for the six months ended June 30, 2026 compared to the same period in 2025 due to decreased Medicare Advantage third-party sales, partially offset by lower experience adjustments. 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.

Margin from fixed indexed annuities wasincreased $50.2$3.8 million in the firstsecond quarter of 2026 compared to $44.5the second quarter of 2025, and $9.5 million in the first quartersix of 2025. The margin increased in the first quartermonths of 2026 as compared to the first quartersix months of 2025 primarily due to increased spread incomeincome, partially offset by higher amortization both due tofrom growth in the block. Spread income has increased due to growth in the block and increased spread rates. 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 $11,104.1$11,316.3 million and $10,085.7$10,543.4 million in the second quarters of 2026 and 2025, respectively, and $11,210.2 million and $10,314.6 million in the first quarterssix 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 4.844.85 percent in the second quarter of 2026 which was flat to second quarter of 2025, and was 4.85 percent in the first quartersix months of 2026 up from 4.794.82 percent in the first quartersix months of 2025, 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 $(58.7)$146.8 million and $(63.5)$70.4 million in the firstsecond quarters of 2026 and 2025, respectively, and were $88.1 million and $6.9 million in the first six months of 2026 and 2025, respectively.

Margin from fixed interest annuities wasdecreased $7.3$0.2 million in the firstsecond quarter of 2026 compared to $8.1the second quarter of 2025, and $1.0 million in the first quartersix months of 2026 compared to the first six months of 2025. Average net insurance liabilities were $1,580.4$1,568.4 million in the firstsecond quarter of 2026 compared to $1,599.5$1,591.7 million in the second quarter of 2025, and were $1,574.4 million in the first quartersix months of 2025.2026 Thecompared marginto decreased$1,595.6 slightlymillion in the first quartersix months of 2026,2025, asdriven comparedby to the same periodwithdrawals in 2025,excess primarilyof duedeposits toand higherreinvested policy benefits partially offset by lower interest credited.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 5.395.46 percent and 5.405.48 percent in the firstsecond quarter of 2026 and 2025, respectively.respectively, and was 5.43 percent in the first six months of 2026, down from 5.44 percent in the first six months of 2025.

Margin from other annuities wasincreased $1.0$2.2 million in the firstsecond quarter of 2026 compared to $1.9the second quarter of 2025, and increased $1.3 million in the first quartersix months of 2025.2026 Thecompared decrease in margin is driven by higher mortality duringto the first quartersix months of 2025. 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. In the second quarter 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 supplemental health business wasincreased $71.2$1.5 million in the firstsecond quarter of 2026 compared to $65.6the second quarter of 2025, and $7.1 million in the first quartersix months of 20252026 compared to the first six months of 2025, reflecting the growth in the blockblock. andAs a result of a handful of large claims on older policies in the second quarter of 2026, morbidity was slightly higher than the prior year period. For the first six months of 2026, morbidity was lower morbidity.than the prior year period. The margin as a percentage of insurance policy income was 37 percent in the firstsecond quarter of 2026 compared to 35 percentand in the prior year period.period, and was 37 percent in the first six months of 2026 and 36 percent in the first six months of 2025.

Margin from Medicare supplement business wasincreased $23.1$8.3 million in the second quarter of 2026 compared to the second quarter of 2025, and $28.1$3.3 million in the first quartersix months of 2026 andcompared 2025,to respectively.the first six months of 2025. The margin as a percentage of insurance policy income was 1422 percent in the firstsecond quarter of 2026 compared to 18 percent in the prior year period.period, and was 18 percent in the first six months of 2026 and 2025. The decreaseincrease in the Medicare supplement margin is primarily due to higher benefit ratios partially offset by growth in the block.block, favorable morbidity and the implementation of rate increases during the first half of the year. In addition, the second quarter of 2026 margin included favorable morbidity from better than expected first quarter claims development. 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 have filed rate increase requests with individual states and expect those to impact subsequent quarters of 2026.

Medicare supplement sales were 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 in January 2026 and therefore, are reflected in our first quarter 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.

Margin from Long-term care products wasincreased $38.3$3.4 million in the second quarter of 2026 compared to the second quarter of 2025, and $32.5$9.2 million in the first quartersix months of 2026 andwhen 2025,compared respectively.to the first six months of 2025. The margin as a percentage of insurance policy income was 5153 percent in the firstsecond quarter of 2026 compared to 4652 percent in the second quarter of 2025, and was 52 percent in the first quartersix months of 2026 and 49 percent in the first six months of 2025. The increase in margin in the second quarter and the first quartersix months of 2026 is primarily due to growth in the business from sales of our short duration Long-Term Care Fundamental product, as well as lower morbidity and favorable persistency.morbidity. The average benefit period for policies sold in the firstsecond 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 modestly since October 2024 and we expect them to continue to grow more in future years as earnings emerge from the sales.

Margin from interest-sensitive life business wasincreased $22.8$4.5 million in the second quarter of 2026 compared to the second quarter of 2025, and $3.2 million in the first quartersix months of 2026,2026 downcompared from $24.1 million into the first quartersix months of 2025. The decreaseincreases in marginmargins in 2026, as compared to the same periodperiods in 2025,2025 reflectsreflect higherlower insurance policy benefits and lowerhigher interestinsurance marginpolicy onincome afrom modestlymodest growinggrowth in the block.

The interest margin was $0.6$0.3 million in the firstsecond quarter of 2026, compared to $1.0$0.2 million in the second quarter of 2025, and was $0.9 million in the first quartersix months of 2026, compared to $1.2 million in the first six months of 2025. The earned yield was 5.014.99 percent and 5.075.02 percent in the second quarter of 2026 and 2025, respectively, and 5.00 percent and 5.05 percent in the first quartersix 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 $(5.8)$15.0 million and $(6.7)$9.1 million in the firstsecond quarter of 2026 and 2025, respectively, and were $9.2 million and $2.4 million in the first six months of 2026 and 2025, respectively.

Margin from traditional life business wasincreased $43.0$3.1 million in the second quarter of 2026 compared to the second quarter of 2025, and $44.1increased $2.0 million in the first quartersix months of 2026 andcompared 2025,to respectively.the first six months of 2025. Excluding the impacts of a model refinement,refinement during the first quarter of 2025, the adjusted margin for the six months ended June 30, 2025 was $79.0 million. The increases in the margins in 2026 compared to the margin in the second quarter of 2025 and the adjusted margin in the first quartersix months of 2025 was $37.3 million. The increase in the margin in the first quarter of 2026, as compared to the adjusted margin in the first quarter of 2025, primarily reflectsreflect lower advertising expense, growth in the business and improvedlower mortality.

Advertising expense was $18.3$17.5 million in the second quarter of 2026, down from $18.7 million in the comparable period in 2025, and was $35.8 million in the first threesix months of 2026, down from $21.2$39.9 million in 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. Lower advertising expenses reflect a shift to lower cost and more effective advertising alternatives, which include web, digital, and commission based third-party distribution channels.

Collected premiums from annuity and interest-sensitive products decreasedincreased 1.13.3 percent in the firstsecond quarter of 2026 compared to the second quarter of 2025 and increased 1.3 percent in the first quartersix months of 2026 compared to first six months of 2025 due to lower premium collections from fixed interest annuity products partially offset by higher premium collections from both fixed indexed annuity and interest-sensitive life products.

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 increaseincreases in the first2026 quarter of 2026,periods compared to the same periodperiods in 2025, isare primarily due to an increase in alternative investment results.results, increased spread income on the FHLB and FABN programs, and higher gains on option forfeitures from annuity surrenders, partially offset by unfavorable changes in other components of investment income not allocated to product lines.

The following summarizes our net non-operating income (loss) for the three and six months ended MarchJune 31,30, 2026 and 2025 (dollars in millions):

Net realized investment losses infor the three and six months ended MarchJune 31,30, 2026 were $15.2$13.6 million and $28.8 million, including a net increase in the allowance for credit losses of $9.4$3.4 million.million and $12.8 million, respectively. Net realized investment losses in the three and six months ended MarchJune 31,30, 2025, were $13.2$21.8 million and $35.0 million, respectively, including increases in the allowance for credit losses of $9.6$1.0 million.million and $10.5 million, respectively.

The change in market value of investments recognized in earnings was a decrease of $7.5$(1.1) million and an increase of $6.4$3.4 million induring the firstthree quartersmonths ofended June 30, 2026 and June 30, 2025, respectively, and was $(8.6) million and $9.8 million for the six months ended June 30, 2026 and June 30, 2025, respectively. The change in value will fluctuate from period to period based on market conditions.

WeDuring the second quarter of 2026, we recognized aan decreaseincrease in pre-tax earnings of $42.4$34.6 million and $69.6 million in the first quarter of 2026 and 2025, respectively,million, resulting from changes in the fair value of embedded derivative liabilities and MRBs related to our fixed indexed annuities.annuities, compared to $25.2 million in the second quarter of 2025. We recognized a decrease in pre-tax earnings of $7.8 million and $44.4 million in the first six 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.

During the firstsecond quarter of 2026, we incurred $13.7$9.7 million of expenseexpenses related to TechMod, compared to $3.2 million in the second quarter of 2025. For the six months ended June 30, 2026, we incurred $23.4 million of TechMod-related expenses, compared to $3.2 million in the prior year period. TechMod is a three-year projectinitiative beginningthat began in 2025 to modernize certain elements of our technology, which was initially disclosed in February 2025.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 historical information technologynormal spend and arewill expectednot torecur befollowing limited to the duration of TechMod.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 firstsix quartermonths ofended June 30, 2026, we incurred a $1.9$3.0 million loss related to our exit from the fee services side of the Worksite Division business.business, of which $1.1 million was incurred during the second quarter. 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. WeThe expectexit of the exitfee toservices bebusiness was substantially complete in the first halfas of June 30, 2026.

We are raising full-year operating earnings per share guidance and either improving or reaffirming our previously disclosed 2026 guidance, as discussed below.

WeGiven expectour strong first-half results and confidence in the underlying performance of the business, we are increasing our operating earnings per diluted share guidance to be in the range of $4.25$4.60 to $4.45,$4.80, excluding any significant items in the year.year (as compared to our previous guidance of $4.25 to $4.45). We expectare narrowing our expense ratio to be in the range of 18.8 percent to 19.219.0 percent,percent however,(as we do not expect the same historical expense ratio pattern throughout the year duecompared to theour significantprevious savingsguidance of 18.8 percent to 19.2 percent), reflecting improved operating leverage from timingcontinued duringstrong thesales three months ended March 31, 2026. We expect improved results in net investment income not allocated to product lines, which assumes higher returns on our alternative investments.results. We expect fee income of approximately $30 million for the year with roughly a third in the first quarter,half of the year, minimal contribution in the second and third quarters,quarter, and the balance in the fourth quarter. Fee income will benefit from the exit of the Worksite Division fee services business as explained below. We expectare lowering the effective tax rate assumption to be approximately 21.5 percent (as compared to our previous guidance of 22.5 percent.percent), primarily driven by favorable non-recurring tax deductions and the continued benefit of tax planning initiatives executed during the first half of the year.

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 Division fee services business includes benefits administration technology, education, advocacy, and communications services. The exit is expected to bewas substantially complete in the first halfas of June 30, 2026. Once complete, theThe 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 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.

Our capital structure as of MarchJune 31,30, 2026 and December 31, 2025 was as follows (dollars in millions):

The following table summarizes certain financial ratios as of and for the threesix months ended MarchJune 31,30, 2026 and as of and for the year ended December 31, 2025:

_____________________ (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.

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 from the FHLB on a collateralized basis. As of MarchJune 31,30, 2026, collateralized borrowings from the FHLB totaled $2.7$2.9 billion and are classified as investment borrowings in the accompanying consolidated balance sheet. The borrowings are collateralized by investments with an estimated fair value of $3.4$3.6 billion at MarchJune 31,30, 2026, which are maintained in custodial accounts for the benefit of the FHLB. The proceeds from these borrowings were used to purchase variable rate fixed maturity securities with similar durations to generate spread-based earnings.

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. As of MarchJune 31,30, 2026, the carrying value of the FHLB common stock was $117.2$128.5 million.

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. Under current authorizations, 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 $300 million in June 2026 and $350 million and $400 million in September and December 2025, respectively. During January 2025, a $400 million funding agreement was repaid at maturity. There were no funding agreements issued or repaid during the three months ended March 31, 2026. The aggregate principal amount of funding agreements outstanding at MarchJune 31,30, 2026 was $3.4$3.7 billion. The activity related to the funding agreements is reported in investment income not allocated to product lines.

Our estimated consolidated statutory RBC ratio of our U.S. based insurance subsidiaries was 375377 percent at MarchJune 31,30, 2026, compared to 380 percent at December 31, 2025. In the first threesix months of 2026, the RBC ratio reflected our estimated consolidated statutory operating income of $23.0$58.4 million. Our RBC ratio at MarchJune 31,30, 2026 was within our targeted RBC ratio range of 360 percent to 390 percent that is reflected in our risk appetite statement that we share and discuss with rating agencies and insurance regulators. We believe that the target RBC ratio range continues to adequately support our financial strength and credit ratings.