- Q1 2023 net income of $4.9
million, or $0.10 per fully
diluted class A share
- Total revenues of $55.9
million grew 1%, driven by new business and higher net
investment income
- Q1 2023 first year premiums increased 24% year-over-year,
driven by growth across Life Insurance and Home Service Insurance
segments
- Book value per class A share of $3.09 increased 24% over the year-ago quarter;
book value per class A share excluding accumulated other
comprehensive income (AOCI) of $5.41
increased 10% over the year-ago quarter.
- Enhanced distribution channel through two new white-label
partnerships
AUSTIN,
Texas, May 8, 2023 /PRNewswire/ -- Citizens,
Inc. (NYSE: CIA), today reported financial results for the
first quarter ended March 31,
2023.
Net income for the first quarter of 2023 totaled $4.9 million, or $0.10 per fully diluted class A share, compared
to net income of $6.4 million, or
$0.13 per fully diluted class A
share, in the prior year quarter. Although revenues increased
year-over-year, driven by higher net investment income and first
year premium sales, net income decreased primarily due to higher
federal income tax expense, lower renewal premium revenues and
higher total insurance benefits paid.
Adjusted operating income, which is a pre-tax measure that
excludes investment related gains and losses, totaled $7.0 million for the first quarter of 2023,
compared to $7.8 million in the first
quarter of 2022.
Management Commentary
"Our strong overall performance
in the first quarter affirms our strategic direction and the
effectiveness of our new products and enhanced sales practices to
drive durable growth," said Company Vice Chairman and CEO,
Gerald W. Shields. "Our newly
introduced products continue to see significant demand and have
been a major contributing factor in the persistent expansion of our
customer base. Overall, we are delivering innovative, high-quality
products to customers who need them, and we remain committed to
further enhancing our distribution capabilities going forward. As
part of this commitment, we continued our push into white-label
distribution with two new partnerships in the first quarter, which
we believe will enhance our revenue and policy diversification and
overall reach in our key target markets. Looking ahead, we believe
continued execution on our strategic plan will translate to
sustainable growth and profitability over the long term."
First Quarter 2023 Financial Highlights
Total insurance issued for the first quarter of 2023 increased
by 75% compared to the prior year quarter, to $170.3 million, driven by increases in both of
our segments. Average face value per policy issued for the first
quarter of 2023 in the Life Insurance and Home Service Insurance
segments increased by 38% and 31%, respectively, compared to the
prior year quarter, reflecting the Company's strategic shift toward
higher face value policies and the successful execution of targeted
sales programs.
Total premium revenue for the first quarter of 2022 was
$38.2 million, compared to
$39.4 million in the same year-ago
period.
First year premiums for the first quarter of 2023 increased 24%
compared to the same year-ago period, to $4.2 million, with growth in both the Life
Insurance and Home Service Insurance segments. The increase in
first year premiums was primarily due to continued strong demand
for the Company's new international whole life product that was
introduced last year and the success of focused marketing campaigns
in both core insurance segments.
Renewal premiums for the first quarter of 2023 were $34 million, compared to $36 million in the same year-ago period. The
decrease was due in part to higher matured endowments in the Life
Insurance segment and the residual impact of higher surrenders
experienced in prior years. The level of matured endowments was
expected based on contractual maturity dates.
Total claims and surrenders for the first quarter of 2023 were
$30 million, compared to $28 million in the same year-ago period. The
increase was primarily due to an increase in matured endowment
benefits paid, partially offset by significantly lower death claim
benefits. Overall, death claim benefits decreased 23% or
$1.6 million. Surrenders were
relatively flat, compared to the prior year period, which the
Company believes is the result of successful efforts to mitigate
surrenders and improve retention.
General expenses for the first quarter of 2023 increased by
$0.2 million.
Investments
Net investment income for the first
quarter of 2023 increased $1.6
million, or 10%, compared to the prior year period. The
increase in net investment income was driven by higher income from
fixed maturity securities resulting from rising interest rates and
growth in the Company's limited partnership asset base. The average
pre-tax yield on the investment portfolio was 4.5%, an increase of
30 basis points compared to the first quarter of 2022.
Investment related losses decreased to $0.3 million for the first quarter of 2023
compared to a $0.6 million loss in
the first quarter of 2022. The improvement was primarily due to
gains related to the change in fair value of equity securities,
partially offset by the fair market value changes in the Company's
limited partnership portfolio.
The carrying value of the Company's fixed maturity securities
investment portfolio at March 31, 2023 was $1.2 billion, a 4% increase compared to the same
year ago period. The increase reflects the impact of interest rate
sensitivity on the fair value of the Company's fixed maturity
securities.
Book Value
As of March 31,
2023, book value per Class A common share, including
Accumulated Other Comprehensive Income
(loss) (AOCI), increased 24% to $3.09, compared to $2.49 in the prior year period.
Adjusted book value per Class A common share, which excludes
AOCI, increased 10% to $5.41,
compared to $4.91 in the prior-year
period.
About Citizens, Inc
Citizens, Inc. (NYSE: CIA) is a
diversified financial services company providing life, final
expense, and limited liability property insurance and other
financial products to individuals and small businesses in the U.S.,
Latin America, and Asia. Through its customer-centric growth
strategy, Citizens offers innovative products to address the
evolving needs of its customers. The Company operates two primary
segments: Life Insurance, where the Company is a market leader of
U.S. dollar-denominated whole life cash value insurance policies in
Latin America, and Home Services,
which operates primarily in the U.S. Gulf coast region. For more
information about Citizens and CICA Life Insurance Company of
America, please visit www.citizensinc.com.
Adoption of New Accounting Standard
Effective January 1, 2023, the
Company adopted Accounting Standard Update ("ASU") No. 2018-12,
which amended the accounting and disclosure requirements related to
targeted improvements to the accounting for long-duration
contracts. All prior periods presented have been recast in
accordance with the new standard.
Explanatory Notes on Use of Non-GAAP Measures
Adjusted Operating Income
Adjusted Operating Income is
a non-GAAP measure that is computed as pre-tax GAAP operating
income, excluding net investment related gains (losses) and unusual
one-time items. Management believes that this metric is meaningful,
as it allows investors to evaluate underlying profitability and
enhances comparability across periods, by excluding items that are
heavily impacted by investment market fluctuations and other
economic factors and are not indicative of operating trends.
Management believes that the pre-tax metric is a more useful
comparison than the post-tax metric, as the Company's effective tax
rate can fluctuate significantly from quarter-to-quarter.
Adjusted Book Value Per Class A Common Share
Adjusted
book value per Class A common share is a non-GAAP measure that is
calculated by dividing actual Class A common stockholders' equity,
excluding AOCI, by the number of Class A common shares outstanding
at the end of the period. Management believes this metric is
meaningful, as it allows investors to evaluate underlying book
value growth by excluding the impact of interest rate
volatility.
Selected
Consolidated Financial Data
|
|
|
Three months
ended
|
For the periods
ended as of
|
March
31,
|
(In thousands,
except per share data)
|
2023
|
2022
|
|
|
|
Balance sheet
data
|
|
|
Total assets
|
$ 1,638,481
|
1,750,786
|
Total
liabilities
|
1,484,190
|
1,625,311
|
Total stockholders'
equity
|
154,291
|
125,475
|
Life insurance in
force, net
|
4,297,228
|
4,152,574
|
|
|
|
Operating
items
|
|
|
Insurance
premiums
|
$
38,249
|
39,364
|
Net investment
income
|
17,074
|
15,487
|
Investment related
gains (losses) net
|
(288)
|
(582)
|
Total
revenues
|
55,914
|
55,357
|
|
|
|
Claims and
surrenders
|
30,299
|
28,434
|
Other general
expenses
|
11,260
|
11,030
|
Total benefits and
expenses
|
49,199
|
48,179
|
|
|
|
Income (loss) before
federal income tax
|
6,715
|
7,178
|
Federal income tax
expense (benefit)
|
1,843
|
729
|
Net income
(loss)
|
4,872
|
6,449
|
|
|
|
Per share
data
|
|
|
Book value per
share
|
$
3.09
|
2.49
|
Basic income (loss) per
Class A share
|
0.10
|
0.13
|
Definition of Reported Segments
The Company is
comprised of two operating business segments and other
non-insurance enterprises as detailed below. The insurance
operations are the Company's primary focus and are the lead income
generators of the business.
Life Insurance – The Life Insurance segment primarily issues
U.S. dollar-denominated ordinary whole life insurance and endowment
policies predominantly sold to non-U.S. residents located
principally in Latin America and
the Pacific Rim. These products
are sold through independent marketing consultants.
Home Service Insurance – The Home Service Insurance segment
provides final expense life insurance and limited liability
property insurance policies marketed to middle- and lower-income
households, and whole life products with higher allowable face
values in Louisiana, Mississippi, and Arkansas. These products are sold through
independent agents and funeral homes.
Selected Segment
Financial Data
|
|
|
Three months
ended
|
For the periods
ended as of
|
March
31,
|
(In thousands,
except per share data)
|
2023
|
2022
|
|
|
|
LIFE
SEGMENT
|
|
|
|
|
|
Total assets
|
$
1,234,151
|
1,309,378
|
|
|
|
Operating
items
|
|
|
Insurance
premiums
|
$
26,207
|
26,931
|
Net investment
income
|
13,311
|
11,971
|
Investment related
gains (losses) net
|
(437)
|
(293)
|
Total
revenues
|
39,960
|
39,697
|
|
|
|
Claims and
surrenders
|
24,439
|
21,458
|
Total benefits and
expenses
|
33,588
|
33,833
|
|
|
|
Net income before
federal income taxes
|
6,372
|
5,864
|
|
|
|
HOME SERVICE
SEGMENT
|
|
|
|
|
|
Total assets
|
$ 348,890
|
381,306
|
|
|
|
Operating
items
|
|
|
Insurance
premiums
|
$
12,042
|
12,433
|
Net investment
income
|
3,470
|
3,244
|
Investment related
gains (losses) net
|
99
|
(242)
|
Total
revenues
|
15,611
|
15,435
|
|
|
|
Claims and
surrenders
|
5,860
|
6,976
|
Total benefits and
expenses
|
14,278
|
13,357
|
|
|
|
Net income before
federal income taxes
|
1,333
|
2,078
|
GAAP to Non-GAAP
Reconciliation
Reconciliation of
Adjusted Income (Loss) Before Federal Income Tax
|
|
|
Three months
ended
March 31,
|
For the periods
ended
|
Unaudited (In
thousands)
|
|
2023
|
|
2022
|
|
|
|
|
|
Adjusted Operating
Income
|
|
|
|
|
Income (loss) before
federal income tax
|
$
|
6,715
|
|
7,178
|
Less:
|
|
|
|
|
Excluded investment
related gains (losses)
|
|
(288)
|
|
(582)
|
Adjusted income
(loss) before federal
income
tax
|
$
|
7,003
|
|
7,760
|
Reconciliation of Stockholders' Equity and Book Value
per Class A Common Share
|
For the periods ended as of
|
Three months
ended
March
31,
|
Unaudited (In thousands, except share
data)
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity, end of
period
|
$
|
154,291
|
|
125,475
|
|
|
|
|
|
Less: accumulated
other comprehensive income (loss) (AOCI)
|
|
(115,464)
|
|
(121,800)
|
Stockholders' equity, excluding
AOCI
|
$
|
269,755
|
|
247,275
|
|
|
|
|
|
|
|
|
|
|
Book value per common share –
diluted
|
$
|
3.09
|
|
2.49
|
|
|
|
|
|
Less: per share impact of
AOCI
|
|
(2.32)
|
|
(2.42)
|
Book value excluding AOCI per share -
diluted
|
$
|
5.41
|
|
4.91
|
Forward-Looking Statements
This press release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, which can be identified
by words such as "may," "will," "expect," "anticipate", "believe",
"project", "intends," "continue" or comparable words. Such
forward-looking statements may relate to the Company's expectations
regarding the impact of the COVID-19 pandemic, business
performance, operational strategy, capital expenditures,
technological changes, regulatory actions, and other financial and
operational measures. In addition, all statements other than
statements of historical facts that address activities that the
Company expects or anticipates will or may occur in the future are
forward-looking statements. Such statements are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions, which are difficult to predict and many of which are
beyond our control. Therefore, actual outcomes and results may
differ materially from those matters expressed or implied in such
forward-looking statements. The risks, uncertainties and
assumptions that are involved in our forward-looking statements
include, but are not limited to the risk factors discussed in our
most recently filed periodic reports on Form 10-Q. The Company
undertakes no duty or obligation to update any forward-looking
statements contained in this release as a result of new
information, future events or changes in the Company's
expectations. Accordingly, you should not unduly rely on these
forward-looking statements. The Company also disclaims any duty to
comment upon or correct information that may be contained in
reports published by the investment community.
Contact Information
Investors
Matthew
Hausch and Matt Glover
Gateway Group, Inc.
(949) 574-3860
CIA@gatewayir.com
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SOURCE Citizens, Inc.