Chief Executive Officer & Director, CNO FINANCIAL GROUP INC
Gary Bhojwani, CEO, CNO Financial Group Joins Live at NYSETV
About Gary Bhojwani
Gary Bhojwani, CEO of CNO Financial Group, has discussed the company's focus on middle-income Americans approaching retirement. He stated that 11,000 people turn 65 each day and that this demographic needs to prepare for retirement regardless of economic conditions. Bhojwani said that CNO's clients typically have total assets between $100,000 and $200,000, which he contrasted with larger companies that focus on those with assets over $1 million. He described CNO's distribution model as using face-to-face agents, phone, and online channels, and said the company provides both its own and third-party products based on consumer need. Bhojwani has commented on the sustainability of Social Security, stating that he personally believes changes such as raising the eligibility age or reducing benefits are likely, as the program was not designed to fund people for 20 to 30 years of retirement. He noted that surveys of baby boomers have shown a preference for guaranteed returns over higher potential returns with market risk, and that annuities are the only products that can guarantee lifetime income by pooling longevity risk. Bhojwani described CNO's investment portfolio as heavily invested in bonds and said the life insurance industry is the largest buyer of corporate debt in the United States.
Transcript (21 segments)
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Interviewer0:00
Well, joining me now with more is Gary Bhojwani. He's the CEO of CNO Financial Group. Gary, welcome. Thank you. Congratulations on an upbeat report.
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Gary Bhojwani0:08
Thank you. How are you navigating this current environment at your firm? You know, we've been very fortunate. We've been focused on the same group of customers, specifically middle-income Americans. And honestly, they're obviously facing a lot of different pressures, but some of the things that just don't change no matter what's going on in the economy. There's still 11,000 folks turning 65 every day. We've got this population that's just coming through and the reality is that no matter what's happening in the economy, they need to prepare for retirement.
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Interviewer0:38
Yeah. And what we see, what we specialize in is people who are approaching age 65 and they're considering Medicare, that's usually one of our key door openers and virtually every American when they turn 65 at least looks at it. And how do they engage with your company when they are in that stage of their life?
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Gary Bhojwani0:53
So we have a number of different ways to engage and that's one of the other things that makes us unique. Our first thing is we focus on middle-income America. The second thing is the way we'll interact with consumers. We have captive agents, independent agents or direct to consumer. Most of our Medicare as an example is sold through our Bankers Life subsidiary. We have several hundred offices around the country and we believe that the right way to serve this population is to actually rely on face-to-face agents and build that relationship. So, we're pretty different than many businesses in that we use technology to supplement our relationships, not replace them.
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Interviewer1:28
Interesting. How do you plan to expand earnings from here?
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Gary Bhojwani1:33
We continue to recruit new agents. We continue to build new products. We continue to have more customers coming to us. And one of the things that's happened over the last 20 years or so, we've seen a shift in America, and maybe it's been going on a little longer than 20 years, where people instead of worrying about dying too young, they're actually much more worried about living too long, meaning outliving their assets.
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Interviewer1:52
Yes. And so that will continue to be a pressure and presents an opportunity for us. And how do you map out a plan for them to make sure that they can maximize their lifespan with those assets?
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Gary Bhojwani2:03
So we've got a variety of techniques that we use and we have agents and advisers that are really specialists in this and we train them in this and as I say often times the relationship begins with a Medicare product and then as that relationship develops we talk to them about other needs and as appropriate talk to their spouses or beneficiaries children and so on.
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Interviewer2:22
What is the data that you're seeing in terms of the trends in these spaces right now?
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Gary Bhojwani2:28
Well, the first thing that we watch very closely, how many people are going to be coming into retirement? As I say, that's 11,000 folks a day. Then we look at lifespans. We look at health care costs and we look at what the average savings rates are for Americans and so on. All of those point to continued very strong need and very strong demand for us. And what's really interesting for us, because we focus on middle-income Americans, this is a sector of the population that frankly has a very significant need, but most people aren't focusing on them. The bigger companies are all focusing on Americans with assets north of a million dollars.
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Interviewer2:59
Yeah. Most of our clients have a total asset pool of between $100 and $200,000. So much more modest. So in an environment like this where we do see uncertainty out there, we've even heard from the White House, the president's own cabinet, that strategic uncertainty is part of its game theory here when it comes to these trade negotiations. What does that mean for how you're navigating these particular life moments for your customers?
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Gary Bhojwani3:27
For us, I think we're not nearly as impacted as other businesses because if you're turning 65 and you're getting ready to retire, whether the economy is booming or not, whether you can afford $2 or $30 for Christmas, the reality is you're retiring. You're leaving your job and you've got to prepare for that. So we've seen our demand stay relatively robust. Even if I think about the COVID period when there was so much uncertainty, of course, some of our consumers are impacted. I'm not saying they're not, but the demand stays strong and we've been able to continue growing right through those cycles. We expect that to happen this time.
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Interviewer4:01
And do you have expectations in terms of how this shakes out in terms of trade policy?
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Gary Bhojwani4:06
We do, but I stay focused on talking about insurance.
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Interviewer4:09
Do interest rates impact your business at all? Of course, we have the Fed decision on tap this afternoon.
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Gary Bhojwani4:14
Absolutely. If you really simplify what we do, we take in money from consumers and then we make 10 and 20 and 30-year promises. And how we keep those promises is with investments. We have an investment portfolio north of $35 billion. Heavily invested in bonds. And one of the things most people don't realize, the single largest buyer of corporate debt in America is the life insurance industry. Nobody finances more American companies than life insurers. And in addition, the only entity out there that puts more money in the hands of Americans every day is Social Security. Otherwise, life and health companies pay out significant amounts of money every single day. So, we're very impacted by the interest rates, by investment markets, and by what's happening.
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Interviewer4:57
Are you projecting or planning for any changes to Social Security with the new administration?
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Gary Bhojwani5:03
We are not at this time. I will tell you personally, I do not see how we don't change it somehow. Either means test it, raise the eligibility age, reduce the benefits at some point in time, some combination of those things is going to have to happen. It doesn't appear that it's going to happen in this administration, but if you just look at the long-term trends, it will have to happen. And I would argue indeed most of our clients actually know that. They may not like it, but they also know it. And that's why they really take to heart this notion that they have to plan for themselves.
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Interviewer5:35
And what is behind that, the need for that that you see?
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Gary Bhojwani5:37
Well, if we look at where the stability is of the system itself, and you know, you've seen all the data about how it's going to run out of money, we also got to remember when Social Security was started, the average lifespan wasn't 65 years old, let alone the eligibility age. It was never meant to fund people for 20 and 30 years. It was never designed for that. So, when we look at it, again, I'm speaking personally here, I really think that that's going to have to change. And that represents an opportunity for companies like ours.
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Interviewer6:07
All right. That is the CEO of CNO Financial Group. Joining me in studio here, Gary Bhojwani. Gary, thank you so much for joining. Thank you for your time.