Good morning, everyone. My name is Jess, and I'll be your conference operator for today. At this time, I would like to welcome everyone to the second quarter 2017 earnings results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question later on, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, simply press the pound key. Thank you. Mr. Adam Auvil, you may begin your conference.
Good morning. Thank you for joining us on CNO Financial Group's second quarter 2017 earnings conference call. Today's presentation will include remarks from Ed Bonach, Chief Executive Officer, Gary Bhojwani, President and CEO successor, and Erik Helding, Chief Financial Officer. Following the presentation, we will also have several other business leaders available for the question and answer period. During this conference call, we will be referring to information contained in yesterday's press release. You can obtain the release by visiting the media section of our website at www.cnoinc.com. This morning's presentation is also available in the investor section of our website and was filed in a Form 8-K earlier today. We expect to file our Form 10-Q and post it on our website on or about August 4th.
Let me remind you that any forward-looking statements we make today are subject to a number of factors which may cause actual results to be materially different than those contemplated by the forward-looking statements. Today's presentation contains a number of non-GAAP measures, which should not be considered as substitutes for the most directly comparable GAAP measures. You'll find a reconciliation of the non-GAAP measures to the corresponding GAAP measures in the appendix. Throughout this presentation, we will be making performance comparisons, and unless otherwise specified, any comparisons made will be referring to changes between second quarter 2016 and second quarter 2017. With that, I'll turn the call over to Ed.
Thanks, Adam. Good morning. CNO posted another quarter of strong results as the diversity of our franchise and sound business management continue to drive consistent profitable growth. Our disciplined approach to pricing, underwriting, business priorities, and investments has produced gains in both revenues and earnings while maintaining a strong balance sheet. Highlights for the quarter include a 7% increase in total collected premiums and a 16% increase in first-year collected premiums. Annuity account values grew 4% as we continue to benefit from the success of our guaranteed lifetime income annuity, coupled with strong persistency. Gary will touch on the primary drivers of our growth in a few minutes. Operating earnings per share increased 29%, driven by favorable underwriting margins, investment income, and capital management. We returned $84 million to shareholders in the quarter and $141 million year to date while maintaining strong capital and liquidity.
With that, I'll now turn the call over to Gary to discuss our segment results. Gary?
Thanks, Ed. Moving to slide six, Bankers Life collected premiums increased 8%, primarily due to annuities being up 28%. Annuity account values increased 5% and are just below $8 billion. Health new annualized premium or NAP decreased 10% compared to the prior year, driven primarily by lower Medicare supplement sales. NAP from life products decreased 17%, continuing the shift in purchases we have recently seen from life policies to annuity contracts with living benefits. Customer asset values and registered advisor accounts continue to grow at our broker-dealer and registered investment advisor. The last 12 months average first and second-year producing agents decreased 10% compared to the prior year, while average producing agents in their third year or later were flat. As mentioned last quarter, we continue piloting various enhancements to our agent recruiting and retention models with the primary goal of increasing veteran agent counts.
Turning to Washington National, total collected premiums were up 1% with a 4% increase in supplemental health, partially offset by the continued runoff of the closed Medicare supplement block. First-year collected premiums were flat, primarily due to timing differences between reported NAP and actual cash receipts. This lag is more pronounced with respect to worksite sales, which posted strong results in the quarter. Total NAP was up 6%, driven by strong worksite NAP, which was up 15%. PMA's worksite sales were up 28% as this channel continues to benefit from initiatives to drive stronger recruiting and improve productivity. Individual NAP was flat as strong hard sales were offset by lower cancer product sales. In an effort to standardize our reporting metrics, PMA producing agent counts have been restated in 2Q17.
The new count, defined as the number of agents that have submitted at least one policy in the month, now aligns with the Bankers Life definition. We will continue to report the 12-month trailing average producing agent count to remove any short-term or seasonal volatility that might be caused by reporting only end of period or quarterly averages. On that basis, PMA average producing agents were flat in the quarter. Moving on to slide eight into Colonial Penn. Total collected premiums were up 4% due to prior year sales growth and stable persistency. First-year collected premiums were down 8% and NAP was down 16% as high demand for television advertising continued in the quarter.
This resulted in continued limited inventory of cost-effective TV spots, leading to reduced marketing spend and ultimately lower sales. We remain both disciplined and opportunistic with our marketing expenses and will invest as attractive advertising opportunities become available. Partially offsetting the decline in TV lead volume is our continued progress in diversifying lead generation activity towards web, digital, and direct mail marketing activities. Given the reduced television marketing spend year-to-date, along with favorable mortality experience in the first half of 2017, we are increasing the full-year EBIT guidance range to $15 million-$20 million from $5 million-$15 million for Colonial Penn. I will now turn the call over to Erik to discuss our financial results. Erik?
Thanks, Gary. CNO posted another strong quarter on the earnings and capital fronts. We reported net income of $0.48 per share, up 45% from the prior year. Operating earnings per share were $0.45, up 29% from the prior year. Second quarter 2017 results were impacted by favorable underwriting margins and investment results, partially offset by higher corporate segment expenses. Excluding significant items, net operating earnings per share were $0.42, up 24% from the prior year. Lastly, operating return on equity was 9.1%. Turning to slide 10 and our segment results. CNO posted combined EBIT excluding significant items of $123 million, up 16% from the prior year. Results in the quarter reflect favorable annuity and long-term care margins and higher call prepayment income at Bankers Life, higher supplemental health margins and higher call prepayment income at Washington National, favorable mortality and lower direct marketing spend at Colonial Penn.
Our closed block LTC business reported positive earnings, slightly better than expectations due to favorable incurred claims. Lastly, corporate segment results were impacted by higher expenses, partially offset by higher investment income. Turning to slide 11 and our key health benefit ratios. Bankers Life Medicare supplement benefit ratio was 70.4% in the quarter, slightly better than expectations due to favorable incurred claims. As a result of the favorability we have seen in the first half of the year, we are lowering our benefit ratio guidance from the 71%-74% range to the 70%-73% range for the remainder of 2017. Bankers Life long-term care interest adjusted benefit ratio, excluding the impact of rate increases and one-time items, was 74.4%, better than expectations due to lower persistency and favorable incurred claims.
As a reminder, the 2017 interest-adjusted benefit ratio reflects no additional future loss reserve accrual as a result of year-end 2016 loss recognition testing results. Due to the favorability we have seen in the first half of the year, we are lowering our guidance on the LTC interest-adjusted benefit ratio from the 77%-82% range to the 75%-80% range for the remainder of 2017. Washington National supplemental health interest-adjusted benefit ratio was 60.4%, consistent with first quarter of 2017 results and in line with our expectations. We continue to expect this ratio to be in the 58%-61% range for the remainder of 2017. Turning to slide 12 and our investment results for the quarter. We put money to work at 4.64%, somewhat lower than in recent periods and primarily due to lower overall rates in the quarter.
Call prepayment activity was heavy in the quarter due to an increase in refinancing activity after a quiet first quarter. We continue to experience solid alternative investment results as we are benefiting from higher overall equity markets. Realized gains, losses, and impairments continue to be moderate, and we continue to make progress in repositioning the recaptured assets. As of June 30th, we had approximately $75 million of assets remaining, down from $88 million at the end of the first quarter. Turning to slide 13 and our capital position. Estimated consolidated risk-based capital was 458%, up 12 points from the first quarter of 2017. Results reflect approximately $95 million of statutory income and dividends to the holding company of $49 million. Leverage was steady at 19%. Book value per diluted share was $22.74, up 10% over the prior year.
Holding company cash and investments was $278 million, down from $314 million at the end of the first quarter, due primarily to the lower level of statutory dividends paid in the quarter. We repurchased $69 million of common stock in the quarter at an average price of $20.61. Through the second quarter, we have repurchased $112 million of common stock. For 2017, we continue to expect to repurchase $200 million-$275 million of common stock, absent compelling alternatives. With that, I'll turn the call back over to Ed.
Thanks, Erik. Our previously announced CEO succession is proceeding on track for the end-of-year changeover. This transition is a natural evolution of the company, and I would like to reiterate that CNO's strategic priorities remain unchanged. We are committed to serving the middle-income market, to continuing franchise growth and diversification, maintaining business discipline, and reducing our relative LTC exposure. As discussed in detail at our recent Investor Day, our focus on serving middle-income America, diversity of distribution, and breadth of product offerings, including both health and wealth and insurance and security solutions
Is unique to the industry and the foundation of our sustainable competitive advantage. This differentiated business model, combined with management's track record of solid execution, should continue to produce strong cash flows and deliver long-term shareholder value. With that, we'll now open it up for questions. Operator?
At this time, I would like to remind everyone, in order to ask a question, simply press star then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Erik Bass. Your line is open. Please ask your question.
In Bankers long term care, can you just comment a little bit more on what's driven the favorable variance in the margin year-to-date, and what gives you the confidence to project some of that continuing?
Hey, Erik, this is Erik. Operator, we heard a little bit of background noise there, so if you can make sure all the other lines are muted, we'd all appreciate that. There's nothing really specific to point to in terms of the LTC experience in the first half of the year. Again, excluding some of the one-time items that we detailed. Really, we're just seeing slightly favorable incurred claims, and slightly a lower persistency, which I believe, as you know, when you have lower persistency, you tend to have more reserve releases, which favorably impacts the benefit ratio. Going forward, it's just really a continuation of the experience that we have seen.
Got it. I realize we're only halfway through the year, but does this suggest, also that your reserves are trending favorably versus what's assumed in your margin?
Well, yeah. Again, it's only halfway through the year and still six months to go. A lot can happen in those six months, it's a little too early to make the call on where we expect year-end testing results to come in. Certainly, to the extent that we've seen favorability here in the first half of the year, that certainly gives me comfort that we're moving in the right direction.
Thanks. If I could ask one on Colonial Penn. Just could you provide any more details on the sales contribution from non-TV lead generation? I guess if the TV ad pricing environment doesn't improve, do you expect to be able to continue growing the in-force EBIT?
The lead sources are roughly one-third non-television, two-thirds television. We'd like to continue to grow that. In terms of the actual television advertising, we will continue to look at that every quarter, frankly, every month. When and where it makes sense, we will resume a heavier advertising pace.
Yeah. Erik, this is Ed. Let me add to that, to your comment on profitability. You're seeing it in the first half of the year when we spend marginally less on advertising, our earnings grow. We think the collected premiums in total, as that grows, that should lead to EBIT growth of the in-force. Yeah. Erik, this is Erik. I think, more to the heart of your second question is, can you continue to grow in-force EBIT with lower levels of sales? The answer is yes, albeit at a slower pace.
You can take a look at what happened here in the first two quarters of the year where sales were down. Sales as defined as NAP, look at collected premiums in total and see that those actually went up about $3 million in the quarter. The answer is yes, albeit at a slower rate.
Got it. Thank you.
Your next question comes from the line of Mr. Randy Binner. Your line is open. Please ask your question.
Right. Thanks a lot. I'm actually going to ask just a couple on RBC and liquidity. Erik, in your comments, did you say that the dividend upstream in the quarter was lower? The answer to the upstream from the insurance companies to the holdco. That actually looked in line, but the management fees looked a little bit higher than we've seen them in the second quarter. Is there any timing issues? Did I hear you right on characterizing that as a lower dividend upstream to the holdco?
Hey, Randy. Yes, this is Erik. With respect to the management fees, yes, there is always an element of timing there, between when the expenses are incurred and then actually billed and then reimbursed. Yes, absolutely an element of timing there. Dividends were a little bit lower than we would've normally expected, largely due because at the end of the first quarter, we were at 446% consolidated RBC, and we wanted to nudge that back up above 450%. Our dividend plan was tied to getting RBC back up to 450%. Now, we ended at 458%, largely because of the outperformance in income. The required capital actually cooperated a little bit as well. That contributes to sort of outperformance on RBC.
All right. Yeah. The timing issue on management fees, did some things that usually would be in the first quarter end up in the second quarter? Or were they things that would usually be in the third quarter that ended up in the second quarter?
It's more the first quarter/second quarter dynamic.
Okay. What cooperated on the denominator there for RBC?
It was largely on the investment side, I believe, where just net-net, we just had lower sort of C1 related to upgrades and downgrades. It was just a couple of million dollars, but when you're targeting 450% RBC, that moves the needle pretty well.
You're above $450, and cash looks pretty good up at the holdco. Obviously buybacks are a potential use of the cash. Any update on what compelling alternatives might look like these days?
Yeah, Randy, Ed. One of the main compelling alternatives is to reduce risk and exposure on LTC, where I think we've said in several different ways, if we're going to reduce the risk, it's going to involve parts of the business that have future losses, and that would most likely require a charge and a cash outlay.
Is that the most probable thing you're planning for with that extra cash? Does that mean you're working towards something?
As we've commented on before, we're actively engaged with different counterparties, reinsurers to reduce our LTC risk, that doesn't mean it's our sole focus. We continue to look at investing back in the business, whether that be organically or non-organically as well.
All right. I'll leave it there. Thanks a lot.
Your next question comes from the line of Sean Dargan. Your line is open. Please ask your question.
Thank you and good morning. If I could maybe carry Randy's line of questioning a bit further. If we look at the holding company liquidity, and then I look back at the slide in your investor day in which you call out what the margin sensitivity, if one assumes more adverse morbidity and a lower interest rate level. If a counterparty wanted, maybe assume those things, and wanted more capital, that's more cash than you have currently. What kind of debt to total capital level would you feel comfortable going to if you were to raise debt to fund such a capital contribution?
Yeah, Sean, thanks for the question. I think generally what we have been talking about is we run right now at about 19%. In terms of leverage, we've been targeting about 20%, so we're running a little bit below that.
Yeah.
I'd say optimally, for an investment-grade company at the end of the day that has reduced LTC exposure, optimally, I think it's somewhere between 22.5% and 25%. Exactly where in that range depends on a lot of factors, but it's probably in that range.
Okay, thanks. It looks like the first quarter sales results were restated. I'm just wondering what drove the update.
I'm sorry, can you repeat the question?
Yeah. There was a footnote in the supplement. It looked like first quarter sales results were restated. I'm just wondering if there's something that we should know about that.
Oh, not really, Sean. This is Erik. As data was being passed from our administrative systems to that commission system, there was just a glitch in the calculation of the new annualized premiums. We actually found that out here in the second quarter, remediated that, and updated what we reported in the first quarter. It was really nothing more than that. It didn't impact anything, as far as we know anyway, with respect to earnings or capital or any other sort of financial metrics.
Okay, great. Thank you.
Your next question comes from the line of Humphrey Lee. Your line is open. Please ask your question.
Good morning, thank you for taking my questions. Looking at the LTC reserve releases, there's a component of the shock lapses, the other one is the in-force management. My understanding is you have a better kind of, the way you look at the DMF and have a better success rate in terms of coming through the policies. What are you doing differently than what you did in the past, and how much did that kind of in-force management help you in the current quarter?
Humphrey, this is Erik. Thanks for the question. There were really three components of the $9.4 million that we called out. About $1.1 million of that was the shock lapse impact related to the rate increases that you noted. About $1.7 million was related to really just a reserve release related to correction of an administrative error that we had uncovered in the quarter. The balance, which was about $6.5 million, was tied to what you noted, which is just what I call in-force cleanup. What we do is every year we go through a process to identify terminations related to death, and as you know, sometimes those are not recorded. We started that process in the first quarter, looking at our life and annuity policies, and then made our way into the second quarter with health policies.
What you see there is largely related to terminations related to the long-term care policies, and it was a little bit bigger in the second quarter because we had a little bit of a buildup in inventory in the first quarter because of the work we were doing on life and annuity. It's a little bit outsized this quarter. To answer your question a little bit more specifically in terms of what we're doing, we started this process a couple of years ago, and this process has evolved. We've done more things, and the rest of the industry is actually doing a lot more to get at this. We're using more data that's out there, and we're also using more tools and frankly, doing some manual work on our own to do some more intense matching. That's basically it.
Okay. Going forward, even though with the refined process that you have, probably the benefits in future years is not going to be as big as this year.
Well, it's difficult to say. I think one thing that we're looking at is the frequency of when we do these reviews. Right now it's annual. It's a heavy lift for the organization. We're looking to see if we can do this a little bit more frequently, but not ready to make the call on that quite yet.
Okay. Then maybe a question for Gary. In the press release, you mentioned that you've made some progress on several of the key initiatives. Can you maybe elaborate on that in terms of what you started in terms of the pilot program, or when do we expect to see some tangible results?
Hi, Humphrey. This is Gary. Thanks for the question. The bulk of where we put our efforts in terms of pilots and initiatives and so on has to do with Bankers Life. We see some very early results, and I want to emphasize they're very early. They pertain primarily to the tools we're using to recruit and retain agents. As we've stated a number of times, what we really want to do is drive that retention of the more productive, longer-tenured agents. You can see that this quarter, that number held flat. I wouldn't exactly call that an achievement. I would tell you that that represents progress and we're continuing to run those pilots. I would say we still need at least three to four more quarters before we'll see meaningful results that I'd be comfortable calling a trend.
Just on that note. It's definitely a positive sign to see some stabilization on the experienced agent count. The new agents, or at least the more junior agents, kind of the one to two years, still decline notably. At some point, that's going to be a negative to the buildup of your experienced agent count. Again, I guess the pilots that you're working on will help kind of soften the attrition there? Is there anything else that you're planning to do to accelerate the efforts or the efficiency of your recruiting?
Yeah, I think the easiest way to explain it, in terms of what is the most likely strategy that's going to work for us, is to change the yield. In other words, I don't think that we're realistically going to see a material increase in the pipeline of new candidates that want to become agents. I don't expect to see a gigantic spike in that number. Rather, what we need to continue to experiment with and find better ways to do is bring in agents that are more likely to make it past first that 90-day mark, then that 180-day mark and so on. Rather than bringing in 7,000 agents a year, perhaps we'll only bring in 4,000 agents a year or 3,000 agents a year and have the yield go up on that.
That's what we need to be able to achieve, by definition, that's going to take time to bear itself out. Just to circle back, to give you a simple answer, I don't expect to see an increase in the number, the raw number that we're bringing in as new potential agents. I do expect to see an increase in the yield. In other words, how many of those stick around.
Got it. Thank you.
Your next question comes from the line of Daniel Bergman. Your line is open. Please ask your question.
Thanks. Good morning. Annuity growth is strong again in the quarter. I just want to see if you could talk about how much of this is coming from your newer lifetime income product. Then I guess as we got further out from that product launch and as the DOL rule is now partially into effect, I just wanted to see if you had any thoughts around how we should expect annuity sales to trend going forward. I guess how much runway is left for additional incremental growth from current levels?
Okay. First of all, thank you for the question. This is Gary. Couple of general comments and then I'll try and speak more specifically. First of all, I'd remind everybody that we don't want to be a specific product-focused company. What we really want to do is build products, whatever they are, whether they're annuities or life products or what have you. Whatever products our middle market needs, that's what we want to build and offer. We've tapped into something here with annuities, and I'll talk about that in a moment. The second thing I want to just make sure I remind everybody, when we look at CNO holistically, please remember that the DOL rule really isn't that much of a factor for us. We had to spend money and do certain things, particularly as it respects our broker-dealer that we recently established.
If we look at the aggregate business of CNO, the DOL rule doesn't have an impact. Now, speaking specifically to annuities, I think we've tapped into something here if we look at what this middle market consumer needs. We've obviously posted very strong sales growth. We've been very pleased with it. We're still only about three quarters in. I'd like to have another three or four quarters under our belt to really call it a trend. We feel very good about what we've seen. I think the reality of what we've seen is a middle market consumer that historically hasn't been called on to provide products or to receive products that can provide a Guaranteed Lifetime Income. We're benefiting from that right now.
The vast majority of the growth has come from the new product, the Fixed Indexed Annuity that we launched in Q3 of last year, was our first product with lifetime income benefits, and that's where the growth has come from. We expect to continue to see that, and we expect to continue to see that growth. I don't know if it'll be of this magnitude. Growing at this rate every quarter becomes a pretty tall feat, particularly when the comparables catch up with us. I do expect to see continued strong demand because that's what this consumer base needs. They need products that protect for income accumulation and longevity. We have plans to continue to develop products that go after that particular need. I would expect to see continued growth there. I'm not in a position to give you a specific forecast
Did we answer your question, Dan?
Yeah, you did. That was very helpful. Thanks. Maybe if I could, just switching gears really quick to Bankers Medicare supplement. I just want to see if you can provide a little more color on what's caused the recent favorability there, and really what's changed or different from your thinking going into the year that's given you the confidence that the current trends are going to persist and caused you to lower the second half benefit ratio guidance.
Yeah, Daniel, this is Erik. Thanks for the question. Really nothing specific to point to in terms of first half favorability. We just have seen lower incurred claims. I think what's changed is, over the past couple of years, so thinking back to kind of 2015 and 2016, we did see an uptick in incurred claims. It wasn't necessarily unexpected. If you go back even before that, we were experiencing sort of outsized favorability in our margins there. We were taking less by way of premium rate increases in 2015, 2016. Naturally, the benefit ratio was moving up a little bit more towards where we priced the product. As we went into 2017, we started to take a little bit more by way of premium rate increases. That has helped to stabilize the benefit ratio.
Now, beyond that, we have seen a little bit of favorability in incurred claims. We're doing a little bit better than expected, but that's really it.
Got it. Thank you.
Next question comes from the line of Mr. Ryan Krueger. Your line is open. Please ask your question.
Hey, thanks. Good morning. I had a quick follow-up to Sean's question, I guess, for Erik on in a similar scenario where you were able to achieve your risk reduction target for long-term care, I guess can you talk about where you would see, I guess, your kind of pro forma targets for holding company liquidity and the RBC ratio, I guess, relative to kind of the 450 you've been targeting and I guess kind of that $250 million-$300 million Holdco liquidity target that you're on now?
Sure, Ryan, could talk a little bit about that. We've had an objective at the holding company to maintain at least $150 million at all times. We've talked in past quarters about more practically that we're going to run north of that, just because we like to have dry powder on hand. I don't know that I necessarily see that $150 million target changing in sort of a post-LTC risk reduction scenario. Likewise, with consolidated RBC, our target currently is 450%. Arguably, you could probably run slightly lower than that. I think to the extent we can run lower will depend on how much of the LTC risk reduction has been achieved. Certainly, if we're only reducing it by a quarter or a third, then we're probably going to run closer to that 450.
If we're reducing it by, in a very extreme scenario, 100%, maybe we could get comfortable running something closer to 425%. That's kind of generally how I think about it.
Thanks. That's helpful. Just a quick follow-up. On the target Holdco liquidity, would you no longer feel the need, though, to kind of run with a buffer above the 150 in that scenario?
Again, I think the key is we like to have dry powder on hand at all times. Dry powder that's available for sort of opportunistic deployment. I think maybe a different way to answer it is I would feel a lot more comfortable running down to 150 in a post-LTC risk reduction scenario.
Got it. Okay. Thanks a lot.
Next question comes from the line of Thomas Gallagher. Your line is open. You may ask your question.
Hi. Just another follow-up on the long-term care risk transfer side. Ed, if the compelling alternative to buyback is long-term care risk transfer, and something that could be meaningful this year, would it make more sense for you guys to not buy back stock to build capital? Just curious how to think about that in the context of you continuing to buy back stock here with the possibility of near-term risk transfer. How are you balancing that?
Yeah, Tom. Good question. I think 2 things. One, refer back to Erik's comments on we've already got buffers to our targets in both RBC and liquidity, there is some of that already. The other thing is that we do generate roughly $25 million a month of excess cash capital with our ongoing operations. When and if we have a transaction to reduce LTC risk, we see the timing between having a deal in principle and closing that deal offering us some months in between to then add to our buffer in liquidity and/or capital.
Got you. I guess there's an NAIC initiative going on for potential long-term care risk transfer solutions. Just curious what you think of that. Is that something that you think could be the catalyst for you from a risk transfer standpoint, or is that something that's still not in its infancy in terms of you being able to have that be the vehicle for you?
Yeah, I think, Tom, it's, in our view, definitely the latter. This is very early stages of discussion. We welcome that and think it's good in general for the marketplace if there are other potential alternatives to managing LTC business. At the same time, because of the infancy and the opportunities we believe are still there for us to work with the private markets, we're not slowing down anything because of that.
Got it. I just want to make sure I follow where the annual cash flow is going here and as that translates into your returning capital. Ed, you had mentioned that $25 million a month is how much you generate in terms of excess cash which gets you to a little under, I guess, $300 million a year. Is that a pretty good run rate going forward? Or what percent of that still benefits from NOL, which may get used up? How do I think about that as a run rate for cash generation here, if I think out over the next one, two, three years? Is that going to meaningfully change, or is that a pretty good run rate?
Yeah, Tom, this is Erik. I'll field that one. I think the $25 million a month or $75 million per quarter, $300 million annually, is a pretty good run rate here for the next couple of years.
Erik, even considering the usage of NOL and that expiring, you'd still have that level of visibility on cash flow.
Yeah, that's correct, Tom. Just remember that we utilize our life NOLs at the end of 2016 and really re-guided to the $300 million in a post-life NOL world. We still do have meaningful non-life NOLs. The majority of them don't expire till 2023, so we've got a good five and a half, six years worth of tax shelter.
Got you. That's all folks. Thanks.
That ends the Q&A session. I'll now hand it back over to the presenters for the closing comments.
Yeah. Thank you, operator. Thank you all on the call, and appreciate your support and interest in CNO Financial Group. This ends the call.
This ends today's conference call. You may now all disconnect.