Good morning, and welcome to CNO Financial Group's investor briefing on our worksite division and Medicare business. I'm Adam Auvil, Vice President of Investor Relations & Sustainability. Thank you for joining us today. These briefings are designed to provide a deeper understanding of CNO and the drivers that support our growth. If you have not watched our prior investor briefings on investments and the consumer division, both are available in the investor relations section of our website.
Today's discussion is grounded in our purpose to secure the future of middle-income America. Both our worksite and Medicare businesses bring that purpose to life by helping customers navigate important coverage needs with the support of our trusted in-person agents. Before we begin, I need to cover a few housekeeping items. This morning's presentation is available in the investors section of our website and was filed today in a Form 8-K.
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. Finally, today's presentation contains a number of operating metrics. Certain operating metrics do not have a corresponding GAAP measure but are presented because management believes they provide useful insight into our business and performance. These metrics should not be considered a substitute for results reported in accordance with GAAP. I'd now like to introduce Karen DeToro, President of the Worksite Division. Karen, over to you.
All right. Thank you, Adam. Thank you to all of you for making time today to learn more about our worksite division. I'm Karen DeToro, President of CNO's Worksite Division. I've been with CNO for seven years. I spent four years as CNO's Chief Actuary, and I was named President of the Worksite Division in January 2024. CNO has been selling insurance in the worksite for decades, and I'm here today to shed a little more light on how we go to market and what's been driving our success in this market. Joining me today is Richard Shaffer, Senior Vice President of Worksite Sales. Richard has been with CNO in this role for four years, and he has done a tremendous job of working with our field agents to deliver strong growth every quarter since he joined.
Richard will share some insights about our agents and the investments we're making to support them a little later in the presentation. As you listen today, I'd like you to keep three main points in mind. First, our focus in the worksite division is well-aligned with CNO's mission of securing the future of middle-income America. Our agents focus on helping employers with middle-income employees, such as teachers, first responders, and union members. These individuals need the coverage that we offer, and it's easy for them to buy this coverage at their workplace. Many employees in this demographic don't know where to start when purchasing insurance on their own, and they appreciate the trust and convenience that comes with evaluating coverage offered through their employer.
Second, our products are specifically designed to fill the gaps in employer-paid coverage, gaps that have widened greatly over the last two decades as employers have sought to manage benefit costs through reduced benefit offerings and the increasing use of high-deductible health plans. We offer life and health products that we can manufacture and service with confidence. We specifically don't offer products like major medical, dental, or vision that require provider networks.
This is similar to our strategy in the consumer division on Medicare, where we choose to manufacture Medicare Supplement but not Medicare Advantage. Third, as with CNO's consumer division, we pride ourselves on the strength and quality of our own distribution. Many worksite carriers go to market through employee benefits brokers and consultants, which puts a distance between the carrier and the employers that they're serving. This can also result in broker-initiated churn.
We go to market primarily through our captive agents. As you'll hear from Richard, these agents provide the last mile of delivery. They show up anytime, anywhere employers need them to help employees understand their benefits, purchase coverage, and use that coverage when they need it. They maintain long-term relationships with the employers and employees we serve. We're very proud of the success we've had over the last several years.
2020 was a difficult year for the U.S. voluntary benefits market in general, and we were no exception. But since 2020, we've delivered consistent sales growth with an 18% compound annual growth rate from 2020 to 2025. Over that same period, the U.S. market for the products that we offer had a compound annual growth rate of only 5%. So far in 2026, our year-over-year growth rates were 22% in Q1 and 29% in Q2.
With respect to producing agent count, after a slight dip in 2021, which was driven by the ongoing effects of the pandemic, we've also delivered consistent growth in this metric. I'll note that our sales have grown faster than our producing agent count, meaning that we're growing that both by adding agents and through improved productivity. Driving greater productivity has been a strategic priority since Gary Bhojwani became CEO in 2018, and the benefits are showing up in stronger production, higher agent effectiveness, and sustained sales growth.
We've delivered this growth by focusing on industries that need in-person education and enrollment for their employees. These are industries where people aren't sitting in front of a computer all day, so virtual enrollments are not an effective option. These employees may have limited break periods or shift changes late at night or early in the morning. They may be spread out across multiple geographic locations. These are the conditions for which our agency model is perfectly suited. These industries also tend to be ones that employ middle-income Americans.
Our agents do extremely well in industries like transit and utilities, education, and public sector. We've historically done well with unions, and we're growing our union presence even more with focused attention and investment in that space. These middle-income Americans need the coverage we offer. There's a large addressable market in the industries we serve, which means continued opportunity for growth. Our top four industries represent roughly one-third of the total employment market in the United States. Health services and construction are expected to grow faster than the national average over the next eight years based on projections from the Bureau of Labor Statistics.
Transit is expected to grow at about the same rate as the national average. While education and public sector are expected to stay flat in terms of the total number of jobs, both industries are expected to experience high turnover driven by rising retirements, which will bring more new employees into these industries. Finally, due to the nature of the work in these industries, they are less likely to be disintermediated by AI. Our product portfolio positions us well to capitalize on the evolution that is happening in the U.S. employee benefits space. The supplemental products we offer in the workplace are designed to address the growing gap in employer-paid coverage. Here are some sobering statistics about employee benefits.
In just the last four years, the percentage of employers offering major medical coverage to their employees has dropped from 78% to 61%, and this drop is occurring primarily among employers with fewer than 100 employees. Less than half of employers provide dental or vision coverage to their employees. In 2025, 88% of employees with major medical were enrolled in a plan with a deductible, and that average annual deductible was over $1,800.
Consider this against the backdrop of recent surveys that indicate that almost half of Americans do not have the liquidity to cover a $1,000 emergency expense. We all know that the premiums for major medical insurance for both the employer and the employee continue to rise each year. To sum up, employers are providing less coverage and shifting more of the financial burden to employees, with middle-income workers often feeling the strain the most.
Our supplemental health products, critical illness, accident insurance, and hospital indemnity, help protect employees and their families from unexpected out-of-pocket healthcare-related costs that may not be covered by their major medical, dental, or vision coverage. These are primarily indemnity products, which means policyholders can use their benefits as they see fit, whether to cover a medical bill or to pay for other non-medical expenses that can arise from an adverse health event.
We also offer life insurance in the workplace. The workplace is where many Americans first obtain life insurance coverage. Group coverage is the typical starting point, but the amount of coverage offered on these group products is typically limited and often insufficient to meet people's coverage needs. Our supplemental life products offer both term and permanent coverage in amounts up to $250,000 to help employees address this gap and obtain coverage in a convenient way.
We are particularly proud of the return of premium feature offered on our supplemental health and life products, subject to state regulations. When this rider is added to the product, it pays the policyholder the cumulative premiums paid into the policy, less any benefits received, generally after 20 to 25 years. Through this product design, we have paid out almost $5 billion to policyholders since inception. Our products are typically written as individual, not group coverage. Even though the policies are individual, we can still take payment through payroll deduction or through direct bill, whatever the employer prefers. The individual chassis means that coverage is portable and employees can keep their coverage even if they leave the employer. This feature, combined with the return of premium feature, tends to make our policies stickier than some other workplace coverage.
As I noted, we are less exposed to broker-driven churn because of the fact that our long-tenured captive agents maintain stable relationships with the employers that they work with for years or even decades. We feel we have a strong story to tell about our go-to-market approach and our product portfolio, but I think the most distinctive quality of our Worksite Division is the strong synergy between our captive distribution, the Optavise Career Agency, and our manufacturing arm, Washington National Insurance Company. I am going to turn it over to Richard now to talk about how this relationship, and in particular, our Optavise agency force, is a source of competitive advantage for us. Richard.
Thank you, Karen. Good morning, everyone. My name is Richard Shaffer, Head of Sales in CNO's Worksite Division. I have worked in the employee benefits industry for 28 years. One thing that makes our business different is that we own both manufacturing of insurance through Washington National and distribution of our products through our wholly owned career agency, Optavise. That is increasingly rare. Most supplemental benefits carriers rely heavily on brokers and external enrollment firms.
We do not. We have a dedicated career sales force working for Optavise selling Washington National Insurance. That gives us direct relationships with employers and employees before, during, and after enrollment. Our distribution force is comprised of independent contractors. Agents are paid through product commissions, allowing for a variable cost structure. As sales grow, the economics scale. An independent contractor workforce creates tremendous energy and alignment.
Their entrepreneurial mindset, the mind of an owner growing a business and a team inside of our business, is a powerful engine when paired with Optavise recruiting, sales enablement, and field development support. Ownership of distribution also gives us greater visibility into how our products are presented and sold, allowing us to establish consistent training, supervision, and compliance standards across the agency.
Our Optavise Career Agency has become a long-term career destination that scales with opportunity and attracts self-motivated producers with a sky's-the-limit mentality. They provide benefits advice and education in live, tailored one-on-one sessions anytime, anywhere workers need us. I would like you to hear directly from two Optavise top performers working inside of our model every day. Here is an excerpt from a conversation I recorded with them recently in Florida. One of the things we pride ourselves on is being with workers, policyholders, wherever they are, whenever they are.
Leona, Todd, thank you for spending a few minutes with me today. I know you all are very busy helping to lead Optavise Career Agency. Thank you for what you do every day. Something people may not realize is we are in a B2B2C business, right? We are a business. We are calling on business owners, Presidents of Unions, Vice Presidents of Benefits at large employers. What is the value for them in what we do at Optavise, if you are an employer and owner of-
I think that it's different depending upon the employer group that you're referring to.
Yeah.
We have employer groups as small as three lives, and in some cases, hundreds of thousands of lives.
Wow. Right.
When I'm talking to a smaller employer group, the value add is very simple for this individual, which is, in most cases, their benefit programs are pretty minimal.
Can't afford it, right?
They can't afford it.
Yeah.
How can we help allow them to have a more robust benefit offering to their employees?
Right
Right, that ultimately can help them attract and retain employees to stay inside of their organization?
Right.
That's what I'll speak to. When you move to something like a more of a union driven or member benefits driven, there's huge opportunity to get their messaging out, right? To actually have a true partner, to be able to have the opportunity to visit with their members and educate their members on whatever it is that they need to be educated on, not just on our programs.
Right. Right.
Ultimately, more times than not, the thought process of a decision maker when I'm in front of them is exponentially different from the moment I walk in after the moment I walk out.
To the end of the meeting.
Because all they're thinking about is how much this is going to cost.
Right.
How much extra labor is this going to be on this department or on that department, and ultimately, they realize very quickly that it's a very light lift for them
Yeah
With a huge reward on the backside of that. When you're able to look someone in the eye and they can feel whether you're being honest with them, you're guiding them down the right path, that you're able to answer their questions directly, I don't think that'll ever be replaced.
You know, Todd, we tend to work with underserved workers, right? Police, firefighters, first responders, teachers, unionized workers. What is it about the way Optavise works that resonates with those kind of workers in America?
For me, I think it is all about understanding and putting ourself on the other side of the table. When we are sitting with a firefighter, a police officer, an educator, we have an understanding of what their world actually is like. It is truly educating them on what is available to them to be able to protect themselves and their families. One of the things that in my organization specifically, but OCA all the way around, we believe in white glove service.
Right.
For us, that is what has really been able to separate us from the pack
Right
And really resonate deeply with those folks.
One of the things we pride ourselves on is being with workers, policyholders, wherever they are, whenever they are. You really exemplify that. What's your schedule like? How do you sit with people and
The scheduling usually happens quite a few weeks in advance.
Okay.
We want to make sure nothing comes up on the calendar, SWAT training or a different type of training that
Right
they already have planned. It's all shift work, so we want to make sure we catch somebody a few different times. So finding, "Hey, let's find a meeting place here, and we'll do a little lunch and get everybody together.
Right.
So as much as so many police departments and sheriff's offices are the same
Right
they're all so very different.
Oh, I'm sure. Yeah.
So it's definitely not a plug and play.
Right
simple type of process.
Can you think of a story where it really landed for you, the value of what we're providing? You get to know these people year after year.
Yes
I'm sure you get close to some of our policyholders. Can you think of a specific time that?
I'm going through a situation with a dear friend of ours that's a policyholder.
out in Las Vegas, and he's Stage 4 cancer right now.
Goodness.
What we've been able to do for his family from a policy that he bought from me many years ago.
Wow. Gosh, Todd. Okay.
Actually had called me a few years prior to his diagnosis and said, "Hey, Todd, do I actually need to keep this?
Oh, my goodness.
I said, "You bet your you know what that you need to keep this.
Yeah. Yeah.
Absolutely. Because he kept it, he was able to go and get some additional treatments, some things that were outside of the box.
That he couldn't have afforded to do.
Pay his mortgage, etc .
Yeah. Yeah. Wow. I love those stories. Yeah.
It doesn't even have to be the serious.
Right. Sure.
I mean, somebody actually at his department as well, her little son slipped at the
Right
Waterpark earlier summer started, and a few stitches, a few ER visits, and she got the exact same service. No matter what we
Yeah
The severity
We all see this.
We just want to be able to be there.
They say insurance is a kind of promise, but it's intangible until.
Until it's happened.
God forbid, somebody dies, somebody gets hurt.
Yeah
Or it is time to return a premium check to them.
One of the things that I love about our organization is that when this type of tragedy occurs, we jump to it, and we understand that this is what they actually paid for.
Right. Thank you both for an outstanding conversation today. We have two of the very best of Optavise Career Agency. Thank you, guys. Thanks for being here.
Thank you.
Thank you.
Appreciate you both. What you just heard from Todd and Leona is a snapshot of the work hundreds of Optavise agents and leaders are doing all across the United States. What you see here is our current agent footprint. We have deep agency infrastructure in many established markets, but the bigger takeaway is the amount of white space that remains, especially across the middle and northern parts of the country. For us, this is not simply about planting more flags on a map. Our agents are the engine of our business. Where we develop productive agents and capable field leaders, we create the capacity to serve more employers and unions, enroll more of their workers, and build durable relationships in those markets.
As we expand our footprint, we take a disciplined and strategic approach, carefully matching the pace of expansion to our ability to recruit, develop, and support agents successfully. We know the characteristics of the employers and communities where our model works. We identify attractive markets, establish and seed new leadership there, recruit to real sales opportunities, find new clients in the vicinity around existing clients, and build infrastructure over time, then repeat.
When I look at this map, I see lots of room to grow. The growth opportunity comes from taking a proven model, already delivering an 18% compound annual growth rate over the last five years, and extending it into markets where we are underrepresented. This slide shows how growth activities reinforce one another and create a compounding effect. Our existing clients give us established enrollment locations.
Those locations create opportunities for new agents to learn, produce, and build repeatable business. Over time, as we earn the right to do more through consistently showing up and doing a good job, we deepen penetration within those clients. New client prospecting does several things for us. First, it typically generates higher sales in the first year of the relationship than re-enrollments in existing clients.
Second, it provides opportunities for re-enrollments in future years. Finally, it gives us additional places to recruit, train, and develop new agents. In targeted geographies, we move proven leaders and agents with entrepreneurial spirit into attractive white space and wrap financial and other support around them. We launch with experienced leadership and a clear path to early productivity. This is our geographic expansion strategy. These three pieces provide a self-reinforcing effect.
Existing clients give us a base to recruit and develop new agents, experienced agents open new clients to grow opportunities for enrollment, and proven agents move into geographic white space to expand our footprint. All of these give us the ability to keep growing our owned distribution. Our job now is to make the system more efficient to scale. Scaling owned distribution requires two things: more strong leaders and better tools, and that is what we are all about now. While our career agents at Optavise are independent contractors, we like to say that with the support and tools we wrap around them, they are independent but never alone as they build a career and a team inside of our business. First, leadership development. In an agency model, the local leader matters enormously.
That person recruits, sets expectations, develops agents, builds the culture of that market, and provides agency inspection and oversight, similar to how a franchise system maintains quality and consistency across locations as it grows. We have created clear career paths, practical development at every level. We have embedded field coaching from industry leaders, transparent performance and promotion standards, and simpler incentives tied to the behaviors that we know drive the business. The goal is straightforward: develop more capable leaders more quickly.
Give them a repeatable way to build productive teams. The second area is tools. We continually seek ways to improve the systems our agents and leaders use to develop themselves, manage client relationships, plan enrollments, and sell at the worksite. We are making investments to reduce friction at the point of sale with our enrollment platform. Think of the enrollment platform like the cash register in our business.
A streamlined purchasing experience reduces enrollment time, increasing agent capacity, and allowing them to reach more customers. We have also standardized our enrollment planning, the pairing of agents with opportunities and work locations across a shared technology platform. Finally, we have introduced modern, lightweight CRM and learning platforms and put better data and insights into the hands of the field, empowering our leaders to track performance and respond to areas that need attention more quickly.
Every improvement should help us do one of three things: get an agent productive faster, help leaders manage a larger, healthier organization, or improve enrollment attendance, penetration, and customer experience. When we do that well, we improve productivity while also increasing the capacity of our distribution system. Our growth plan is very practical. We have significant geographic white space. We know how to deploy new leaders and teams.
Today, in fact, 24% of our annual sales and climbing come from geographic expansion locations. We have a model where finding new clients, recruiting, and re-enrollment reinforce one another, and we are investing in the career pathing, talent management, and sales tools required to scale with consistency. We have significant opportunity with the model we have today. We have an owned distribution force, direct relationships with employers and employees, a focus on serving underserved sectors of the American workforce, and a field force highly capable of running the logistics to deliver benefits education and enrollment where and when America's workers actually work. Back to you, Karen.
All right. Thank you, Richard. We feel our Worksite division is well-positioned with the right go-to-market approach, products, and distribution to capitalize on trends in the U.S. employee benefits market. The industries that we serve are aligned with CNO's middle-income focus. These employers and their employees continue to need the products and personalized high-touch service that our agents provide. Our products address a growing gap in employer-provided coverage, enabling employees to protect themselves and their families from unexpected out-of-pocket costs. Our own distribution is a critical differentiated asset for us, one that is performing well today and has opportunities for growth. We're excited about the future of this business, and I appreciate you taking the time today to hear our story. With that, I'll turn it back to Adam.
Thanks, Karen. We'll now move to the Q&A with the Worksite team. If you're interested in asking a question, please type it in the dialog box on your screen. Thanks to you both for being here. Let's begin with our first question. Worksite has grown at an 18% CAGR since 2020. How sustainable is that growth?
We're not going to provide a long-term growth target for Worksite today. As our CEO likes to say, growth doesn't always go in a straight line, but we do feel like there's significant opportunities for growth. I think you heard Richard Shaffer talk about our excitement around geographic expansion and new group development, but I think as I think about that, what gives me the most confidence looking ahead is what we've done over the last several years, and the fact that the consistent growth we've put up every quarter has been driven by a number of different factors.
We're not reliant on one sole driver of growth, but we've got diversity of growth levers that have all been contributing to our success. I'm most excited because I feel like that's a sustainable way to continue to grow in the future.
Excellent. Thank you very much for that one. Let's go to the second question. Some group benefit companies have argued dental is a must-have product. Hold on. The question just moved. Does not having dental offering limit your ability to grow? Do you have any plans to add dental?
I think that's a very interesting question. One of the things about having our owned distribution is the relationship that we have with the field, and we hear directly from our field agents and leaders about what they want, the kinds of products they want us to introduce. I have not heard from our field that they're looking for dental or that they feel like that's an essential component in the product portfolio. If we did, there's multiple ways that we can think about providing our agents with more products.
One is to manufacture them ourselves. That's the core of our portfolio today. If we determine that there's another product in the future that our agent force wants to sell, and it's something that we don't think we've got the capabilities to manufacture, we can always move forward with a partnership. There's other options available to us. But I would just say I haven't heard from the field that they're looking for dental. I don't know. Have you have?
The only thing I would add, Karen, is that in the last few years, we've refreshed all of our products. All of our products have been refreshed the last few years, and as we think about product design, we're really thinking about how do we tailor the products we have to those target audiences we talked about. For instance, later this year, we'll be introducing into the market a life insurance product tailored for police and firefighters. I think as we think about product design, we're really focused on those audiences, listening to them, and getting them what they need.
Excellent. Thank you for that. Next question. Can you provide more detail on what is supporting better Worksite agent productivity, use of tech, training practices, etc ?
All of the above. Do you want to take that one?
I'll just start. A couple of things. One of the things we did a few years ago, historically, the agency was reliant upon a handful of senior leaders to open up new clients, and we knew that to scale in the way we wanted to, we needed to really have a culture of new group opening. We introduced a brand-new curriculum teaching agents how to open up new groups, how to get through gatekeepers, and manage objections and things like that, all the things that got to get set up to make a new group happen. In that period of time, we shifted from about 10% of our new premium being from new clients to several times that.
That culture of new group opening, and as I said earlier, new clients tend to generate more premium at the Worksite in their initial enrollment. The other thing that we've done is we've introduced a CRM platform that's allowing agents and their managers to have a lot more visibility into the clients we do have, the penetration rates we do have, so we can unlock all of those assets. Those are two things that come to mind, Karen, that have improved agent productivity significantly.
Yeah.
Excellent. Thank you for that. Geographic expansion has come up a couple of times. I'll pick one of them. Could you talk about the geographical expansion that has taken place in your Worksite business over the past few years, and what are expectations moving forward? Are there reasons why you don't have a presence in a large part of central U.S.? Do you view M&A as a possibility to fill some of the gaps you currently have?
That was a lot of questions.
A lot of questions.
We'll try to tackle all of them. You'll let us know if we missed any. We've done a lot around geographic expansion. I'll turn it over to you, Richard, in a minute to talk about some specific
Sure
Examples. Obviously, as you look at the map, it probably becomes apparent that we've sort of moved into adjacent states. It's easier to take somebody from Florida and ask them to move to Georgia than to ask them to maybe fly halfway across the country and relocate there. The white space tells us that we absolutely do still have opportunity to continue to do that, and as I think Richard indicated, we just keep getting better at it the more times that we've done this, and we've been doing this over the past few years.
Each time, it becomes that much easier to repeat it. But we're committed to continuing to make investments in this space just because we have seen it work so well. I think that's something that we'll continue to do. I can't give you specific states. We haven't figured out exactly where we want to expand over the next few years yet. But we're definitely going to keep running this play because it's been very successful for us. Do you want to give an example
Yeah
Richard?
I'll give an example, and like you said, we're intentionally choosy around where we expand, and matching the pace of that growth to our ability to execute on it. Georgia's a great example. Florida's sort of our founding state, and we had four or five years ago very little sales activity in the state of Georgia. We helped a team, a leader and his team, physically move into the state of Georgia, and now we've gone from almost nothing in that state to $4 million or $5 million. That's a great example of how you get very choosy at the right time, the right leader, wrap a lot of support around them. We're deciding now what our 2027 expansion states will be, and we'll have more to report as we make those decisions.
Excellent. Thank you. First part of this question has come in a couple of times. The second part, not so much. Can you provide more color on average client size of your Worksite clients? How much of the business is employer paid versus employee paid? On the employee paid side, what is the penetration rate?
I don't have a specific statistic on the average client size, but I would also say that it's not that meaningful. It's really because of what you heard Todd say in the video.
Right.
We have clients as little as three employees all the way up to unions that have thousands of members, tens of thousands of members. The average client size is not as meaningful, I think, as the identity and the markets of the clients that we serve, the industries that I talked about. Sorry, what was the other question? It was about employer paid.
Employee paid versus employer paid. Correct.
Yeah. None of our business effectively is paid by the employer. These are all employee funded, which again, helps a lot with persistency because obviously if the employee is accustomed to paying that, then when they leave their employer, there's no change in that. The third question was on persistency, or sorry, penetration.
Yep.
Yeah, I don't have a specific statistic on that.
I think we'll get it. We'll get it, Adam.
Yeah.
Okay.
Yeah. We can follow up with that one.
All right. Let's go to the next one. Could digital enrollment or AI disintermediate your in-person model?
I would say we haven't seen it yet. I think that, as you saw in my comments, Richard's comments in the video, that in-person, very personalized touch that our agents bring is really the key to our identity. It's really, I think, the greatest asset that we have. I think because of that, because we're targeting these industries, as I said, they're not in front of their computer all day. They're on the move.
They're doing shift changes. I think that they will continue to need that in-person touch that we bring. They're also the industries that themselves are always working in person, police, fire, teachers. They're living in environments that bring them in contact with people all day, every day. I think they appreciate that in-person touch that we bring. Richard, what are your thoughts?
One thing I would add is, I've been in the industry for 28 years, and I've been hearing about the demise of live benefit assistance and advice for 28 years. There'll be parts of our business where we'll experiment with AI, with partners perhaps, but we'll let other people replace their people with chatbots and robots. We're leading a 700-person business, insurance entrepreneurs, and they're serving underserved workers who are not at their computers, right? They're, as you said, they're police and firefighters and teachers and unionized workers, and they, by the way, value live assistance. I think people underestimate how much people want to talk to a person and get social confirmation around the benefits decisions they're making.
Excellent. Well, thank you very much. I think in the interest of time, we are going to have to cut it up there. That includes the worksite Q&A. If we did not get to your question, please contact the investor relations team following the event. Thank you, Karen and Richard for a great presentation and Q&A session. I'd now like to introduce a familiar face to the stage, Scott Goldberg, President of the Consumer Division, to speak about our Medicare business. Scott, over to you.
Thank you, Adam, and thank you all for joining. Thank you to Karen and Richard for a terrific presentation. It's great to see the success that we're having with our worksite sales. I'm Scott Goldberg. I lead our consumer division. We typically engage individuals as they're transitioning away from workplace benefits, seeking individual retirement advice and guidance with navigating Medicare.
As of today, we're just 45 days away from the beginning of the Medicare annual election period. So it's an opportune time for us to talk about the Medicare market, the role we play in it, and the value it creates for CNO Financial Group. As background, I've been with CNO Financial Group for the last 22 years. I've had the pleasure of serving as the President of Bankers Life for the past 13 years and Head of our Consumer Division since we formed it in 2020.
I'll be joined today by our Chief Actuary, Jeremy Williams. Jeremy is also a longtime CNO Financial Group veteran. He joined the enterprise about 11 months before I did, so we've both had the privilege of being part of this journey for more than two decades, and it's been rewarding to share so much of that time together. Our presentation today is not intended to be a deep dive into the nuances of Medicare.
Rather, the goal is simply to convey three simple messages. First, the Medicare market is massive and growing. It's tied to the age demographics of the U.S., so the market is destined to expand. There's built-in demand. Second, CNO Financial Group is well-positioned to gain share because our model aligns with what consumers want, local experts and a choice of plans. And third, just look at our results. Higher sales, higher enrollment, and growing premium.
Not to mention that the value we generate by participating in the market goes beyond Medicare. We open up new households, we uncover unmet needs, and we create opportunities across our products and services. Medicare is a growing market. Let's start with a few basics. What is it? Well, it's a federal insurance program primarily for Americans aged 65 and older. It serves roughly 70 people, and with the aging of the baby boom generation and increases in longevity, it's projected to continue to grow for decades.
Medicare-related expenditures now exceed $1 trillion annually, which is an extraordinary figure, and it underscores the need for private insurance solutions, particularly as individuals are asked to assume a greater responsibility for their healthcare costs. And it's a dynamic program. Consumers need to revisit their coverage at least annually to make sure it continues to meet their needs.
So you might ask, if Medicare is a federal program, where do private insurers fit in? Private insurers provide plans that augment Original Medicare, such as Medicare Supplement and prescription drug plans, or serve as an alternative to it, such as Medicare Advantage plans. Each year, consumers are empowered to make choices around how they want to receive their benefits for the coming year. The top two boxes show the number of enrollees who choose to receive their benefits through Original Medicare. Roughly speaking, about 29 million enrollees elect to receive their benefits through Part A and Part B. And about half of those enrollees, roughly 14 million, purchase a supplement policy from a private insurer, such as CNO Financial Group, to cover gaps in coverage.
Moving down the page, slightly more people, about 31 million, receive their benefits through a Medicare Advantage plan, which replaces original Medicare and generally cannot be paired with a Medicare Supplement policy. Regardless of how consumers receive their medical benefits, most Medicare beneficiaries also have some type of prescription drug coverage. If you are new to this, I know it sounds like a lot, but the reality is, by its nature, health insurance can be complicated.
So far, we have only reviewed the types of coverages that exist. For consumers to enroll in original Medicare, there is a number of different Medicare Supplement plans from which to choose, and for consumers who wish to explore Medicare Advantage options, on average, there is over 40 different plan options from which to choose, depending on the area in which they live. Not surprisingly, it is easy for consumers to become overwhelmed.
I said health insurance can be complicated. Well, it can also be scary. By the time people reach age 65, they understand how expensive healthcare can be and how important it is to choose coverage that fits their needs. For nearly three-quarters of consumers, that means consulting with an expert, an agent or a broker who can develop a personal relationship with them, understand their needs, and bring confidence to their decision process.
This brings us to one of CNO's key advantages and a real differentiator in the Medicare market. We have more than 5,000 licensed health insurance professionals who exclusively distribute our products and approved partner plans. Our Bankers Life agents are highly trained across Medicare Supplement, Medicare Advantage, and prescription drug plans. They also bring something that is difficult to replicate, deep local knowledge of providers and a genuine passion for serving this market.
You will see that passion later in a short video. By comparison, a traditional financial advisor is unlikely to have the time, the expertise, or the incentive to engage in Medicare with the same level of focus and commitment that you will find with our professionals. Even if they did, few can match the breadth of solutions that we are able to offer. Our strategy is to offer consumers a broad selection of plans and to remain agnostic as to which type of coverage they choose.
We provide our own Medicare Supplement plans, which we underwrite and retain the insurance risk on. By regulation, these plans are standardized. We offer all the relevant options. We have been manufacturing these plans for more than half a century. We know our customers, we understand the risks, and our team has a strong track record of pricing and managing the block.
We also distribute other carriers' plans, Medicare Advantage and prescription drug plans. In these instances, we do not take any insurance risk. We act as an agency and earn commissions. We earn an enrollment fee when a policy is placed and an ongoing renewal fee as long as the member remains enrolled. Currently, we have distribution arrangements with more than two dozen carriers that collectively represent more than 90% of all U.S. enrollments.
We offer quite a selection of plan options, and we operate our own health insurance marketplace called myHealthPolicy.com that allows agents and consumers to compare and enroll in plans online. To take a closer look at our performance as it relates to our Medicare Supplement business, I am now going to turn this over to Jeremy Williams, our Chief Actuary. Jeremy?
Thank you, Scott. Normally they do not let the actuaries out of the back room, so it is great being here with you today. I am going to take a few minutes to discuss Medicare Supplement performance. Med Sup is an important growth opportunity for CNO from both a top and bottom-line perspective. Scott talked a lot about the sales opportunity, and we have seen very strong sales growth the last few years. You see that here with new policies sold increasing more than 18% a year since 2023. That strong sales growth is starting to equate into in-force and earned premium growth. In-force had hovered around 200,000 policies for several years but has recently grown to 212,000 in 2026, and earned premiums have shown a similar pattern with more recent growth as well.
While higher recent claim trends across the industry have pushed down margin, we see those ratios returning back toward more historical levels of 18% in 2026 as recent rate increase actions have taken hold. So overall, we are achieving higher sales that is driving growth in the block at solid margin levels. If we move to the next slide, let us briefly hit on industry pricing dynamics, as this is a critical part of how Med Sup is managed.
Across the industry, higher healthcare utilization and medical cost trends have driven up claims experience over the last several years. While it has created pressure on loss ratios and earnings, Med Sup has a well-established annual rate increase mechanism that allows the industry to reprice quickly in response to the emerging claims experience. You can see that here in action.
Industry rates have increased by roughly 35% since 2020 through annual rate actions in response to those higher claim trends. So while there is exposure to healthcare cost volatility in the short term, we can react quickly and seek rate increases when experience supports it to meet longer-term pricing actions. We have a strong track record of doing just that, as the next slide demonstrates. Here you see our average historical rate increase approval percentages on the left.
With the higher recent claim trends, our experience supported the need for higher rate increases, and we were able to file with the states and receive approval for 11.3% increase on average in 2026. That is similar to what we saw in the last slide from the industry. It is about 95% of what we requested, demonstrating the effectiveness of our rate action process.
While those higher claim trends have pushed up our benefit ratios recently, we have seen the impacts of the rate increases start to pull down the ratios in 2026. Note that we also still have a material portion of our 2026 rate increase that will be effective in the third quarter, which also provides a tailwind for benefit ratios going forward. Maybe the most important part on here is those higher rate increases have not materially impacted persistency. We have seen very stable rates through time. We have actually seen higher persistency this year compared to 2025, despite those higher rate increases. The simple reason for the solid persistency is that Med Sup is a product that customers need and want, so they tend to hold on to their coverage.
On top of that, our career agents build strong long-term relationships with our customers, and that leads to higher sticky persistency, further demonstrating the strength of our sales model. To bring it all together, disciplined rate actions are improving our benefit ratios while persistency remains strong. We are able to effectively manage the results through annual rate actions when justified and grow the block via strong sales and high persistency, leading to good returns for the company. With that, I will turn it back to Scott.
Yeah. Thank you, Jeremy. As Jeremy indicated, our Med Supp sales have been strong over the last few years, and our overall enrollment is trending up. This is partly due to good execution on our part, but we are also benefiting from a resurgence of demand for this particular type of coverage. Taken together, our overall outlook is quite bullish. Our exclusive distribution gives us an advantage in a relatively fragmented market.
As you see in the middle of the chart, we represent less than 2% of total industry premium, which reinforces our belief that we have meaningful room to grow share, particularly as we continue to grow our field force. It is also worth noting that even if we were to simply maintain our current share, there is still substantial upside. Total industry earned premium is expected to become 50% larger over the next 8-10 years.
Now let me take you through some key metrics related to our Medicare Advantage business. Last year's annual election period was more disruptive than usual as several carriers retooled their plans or pulled out of areas completely. Our sales of Medicare Advantage plans, while relatively in line with recent years, were slightly down from the previous period. But if you look at our total enrollment numbers, they are still trending upwards, which speaks to the stickiness of our client relationships.
Fee revenue is down slightly due to lower sales, as well as adjustments we made to more conservatively reflect lifetime values. But again, our overall commission receivable, which estimates our expectation of future renewals, continues to grow. When we look at our Medicare business in total, combining Medicare Supplement and Medicare Advantage, the trend is clear.
Total policies sold are growing at a compound annual growth rate of more than 9%, and we are really proud of that. At the same time, total Medicare enrollment continues to grow, which means new sales are more than offsetting attrition, and we are developing a stable, growing block of business. I said Medicare helps us acquire new households, and it does. For our professionals, it is a door opener that leads to broader conversations about retirement and the opportunity to understand consumers in a way that creates value. More than one-third of the time, we sell a second product into the household. As trust builds and the relationship deepens, we can introduce additional offerings, including retirement planning, annuities with guaranteed income, and investment management services.
When you look at the new life and health premium across CNO, you can see solid growth that we've achieved over the last several years. More than most traditional life insurers, we lean towards health products. That not only makes us unique, but it gives us the opportunity to talk differently with consumers. We help individuals protect themselves while they're living, and health insurance gives us a reason to check in with our clients at least once a year as plans change and needs evolve.
As you can see, Medicare Supplement has been a growing part of our overall production mix, rising from 9% of our total new premium from just a few years ago to now 15% of our total sales. Earlier I said that you would hear from our agents and managers who work directly with clients to help them make good decisions about their Medicare coverage. So before I wrap up, let's take a look.
[Presentation]
My thanks to everyone who participated in that presentation. I think the dedication and pride that our professionals take in helping our clients navigate these important decisions came through loud and clear. I'll conclude with this. The Medicare market is substantial, and it's going to continue to grow. CNO has the right model to succeed in serving this market, as demonstrated by our results. As we look ahead, there's multiple ways to create additional value, whether that's through growing our field force, increasing our cross-sales, taking appropriate rate actions, or as we've seen more recently, benefiting from lower claims as health outcomes improve. Now I'm going to turn it back to Adam, and he'll lead us through Q&A.
Thanks, Scott. We will now move to the Medicare Q&A portion of today's event with Scott and Jeremy. As a reminder, to ask a question, please enter it on the dialog box on your screen. Welcome to the both of you. Let us begin with our first question. What are you seeing from a competitive standpoint in the Medicare market, and why do you believe CNO's growth will continue?
Yeah, it is a good question. Look, it is a competitive product. They are standardized plans. A lot of the success that we have in this market is because we show up and we sit down with an individual over the kitchen table, and we take the time to explain how the programs work, how our products works, and so forth. We have seen over this past year, a number of carriers, and including ourselves, have significant rate increases, as last year there was a swelling of claims.
But we saw that across the board, so our relative competitive position has not changed. In fact, as our rate increases came to fruition throughout the year, we did not see any change in our sales activity because the whole market has had to increase rates to cover higher claims costs. We think our competitive position is quite good. We think it is going to remain that way, at least for the next foreseeable business cycle, and we think that our distribution model is really what makes all the difference.
All right. Thank you for that one. All right. Next question. You highlighted that Medicare is an entry point to build deeper relationships. Could you talk about the overlap in policyholders who buy a Medicare product from you that also utilize CNO for other insurance or retirement products? How has that trended over time, and does cross-sell differ between Med Sup buyers and Med Advantage buyers?
Yeah. I'll take the last part first. We do see Medicare Supplement buyers tend to be a little bit more well-heeled. They tend to have more risks to cover, and they tend to more often buy a second plan as compared to Medicare Advantage. In rough terms, one out of three of our Medicare Supplement Policyholders will buy a second plan, and we'll see a little less than half of that come from the Medicare Advantage population.
Excellent. This is another question on trends within the space. Do you expect the trend toward Medicare Advantage will reverse in favor of Medicare Supplement regaining share, or is this a temporary blip with the challenges on MA? Could you walk us through CNO's economics between Med Sup and Med Advantage?
Yeah, I'll take the first part. I'll refer to Jeremy for some of this as well, to chime in. Look, we went through a decade or more where Medicare Advantage took a lot of share away from Medicare Supplement, and some of this was from the way the government had set reimbursement rates and had supported the program with the idea of creating a larger private market for Medicare. More recently, we've seen some of the reverse happen.
As costs have become a little bit out of line for some of the planned sponsors of Medicare Advantage, some abuses have been reported in the press, and carriers have largely done what happens in any mature business cycle. First, you're working towards growth, and then there becomes a point where you're working towards profitability. We're seeing the latter part begin to happen, and that means narrower networks.
That means pulling plans out of areas that aren't profitable. That means a greater degree of prior authorizations required, and a variety of things that have made Medicare Advantage plans less attractive than they had been. Some of the ancillary benefits that were often found in Medicare Advantage plans have gone away or become less attractive, and all of that is feeding some of the demand into Medicare Supplement. In terms of our economics, we've been relatively agnostic, but I'll turn it to Jeremy to expound further.
Yeah, you're exactly right, Scott. We price the two products to be the same as far as our long-term pricing goes and meeting our ROE targets, so we're totally agnostic to that at this point. Whatever is best for the customer, in this case, the agent working with the customer to decide what is best for them, is also best for us.
Great. Thank you very much. The next two questions are a little bit around market share. This one references slide 22, which shows the bars of the various groups and the number of enrollees, and this talks about approximately 25% of total enrollees have no Medicare Sup or MA. Do you think that boomers coming into Medicare right now might be more likely to use Med Sup or MA in future years?
I know when you first look at that, and I had made a statement that said, look, about half of those enrolled in original Medicare buy a Medicare Supplement, you begin to wonder, what do the other half do? But in many cases, they have some type of alternative that is giving them the benefits of a Medicare Supplement plan. That may be that they are getting benefits from their employer. It may be that they're participating in another type of government plan. Maybe it's a veteran plan, a TRICARE plan, or so forth, where Medicare Supplement is not as necessary.
Then, of course, there's a portion of the population that simply cannot afford to buy a supplement plan to go along with original Medicare. What do I think is going to happen over time? I think that over time, the government can only be so much of the solution. I do think that we will see more people who are original Medicare only, be compelled to buy a supplement plan because some of the other support programs that are out there are likely to dissipate.
Excellent. Thank you for that one. This is along a similar trend. On Medigap, CNO still has a relatively small market share of 1.5%. Do you think there is significant opportunity to grow market share from here?
We do. We are very bullish about it. First of all, when you have 1.5% market share, you are just scratching the surface, right? More than competition, our growth is dependent on ourselves. As I talked about, as well as Karen and Richard, at CNO, we have exclusive distribution, so a lot of our throughput, our production, is based on the size of our footprint.
We have been aggressively recruiting, we have been increasing retention, we have been growing our field force at both the worksite business and the consumer division, and I think that leads to higher sales. I think over time, you will see us make gains in market share as a result of our exclusive distribution and the advantages that it brings to us in the marketplace with consumers, having those feet on the street that can win over consumers hand by hand, day by day.
All right. Thank you for that. Next one is a little bit about compliance. Can you speak to compliance? How do you manage the field force around product suitability?
Yeah. Look, we sell a lot of products where all of our products, where suitability is the utmost importance, particularly our financial products, our annuities, and so forth. For Medicare, we really want to make sure we are matching the right product with the right person. A lot of the compliance rules are around when you can sell, how you can sell, getting permission to sell, and so forth, and we follow all of those.
Even more importantly, what is ingrained in our culture is making sure that we are doing the right thing for the client. Is their doctor in the network? Are they traveling abroad? Are they in multiple locations? Do they need these ancillary benefits? What can they afford? We go through, and we do a needs-based fact finder to determine what is the right solution for the consumer, and that's the best thing you can do to make a compliant and suitable sale.
All right, next question. This is around Medicare for All. Some politicians are pushing for Medicare for All. If we got something like that, how would it impact your business?
Yes, I'll take a run at this. Jeremy, I'll let you chime in for your own thoughts. Obviously, this is all speculation here. Medicare for All has been talked about for quite a long time. There's pros and cons to it, at least from our standpoint. If Medicare was suddenly eligible for all Americans or all Americans over a certain age or what have you, that would expand our addressable market considerably. I think we'd be in a really good position to capitalize on that. What that means for government spending and other types of private products, that's all conjecture and remains to be seen. But the idea that we're going to change the age from age 65 to something lower, at a glance, that really opens up the market to us.
Yeah, I don't know that I have a lot to add there. Whatever coverage will be in place, and who knows what that is. To your point, it's been around for a long time, and we'll see if anything is implemented. But they will need supplemental coverage in some form, and that will be ripe for us to move in and fill that need.
That concludes the Medicare Q&A portion of today's event. Again, if we did not get your question, please reach out to the investor relations team. Thank you, Scott and Jeremy, for a great presentation and Q&A session. As today's discussion demonstrated, we believe CNO is uniquely positioned to serve the growing needs of middle-income America through differentiated distribution, attractive growth opportunities, and a proven track record of delivering results. Thank you for joining us. If you have any additional questions or would like to learn more about CNO, please contact the investor relations team. We thank you for your support of and interest in CNO Financial Group. Have a great rest of your day.