Citizens, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results
- Total revenues increased to $240.7 million in 2023 from $232.5 million in 2022.
- Net income decreased to $24.4 million in 2023 from $26.0 million in 2022.
- First year life and A&H premiums grew by 4% in Q4 2023, marking five consecutive quarters of growth.
- Positive net cash provided by operating activities annually since 2004.
- Book value per Class A share increased by 36% over the year-ago quarter.
- Insurance issued increased by 10% in Q4 2023 compared to 2022.
- Global network of producing agents expanded by 85% in 2023.
- Introducing new products and major enhancements in 2024.
- Net investment income increased to $17.6 million in Q4 2023.
- Share repurchase program with $4.4 million remaining for repurchases.
- Net income declined in Q4 2023 compared to the same period in 2022.
- Total insurance premium revenues decreased slightly in Q4 2023.
- Higher surrenders in the international business impacted benefits and expenses.
- Adjusted operating income before taxes decreased in Q4 2023.
- Decline in net income attributed to higher commission expenses and policyholder liability remeasurement expenses.
Insights
The reported financial results from Citizens, Inc. for the fourth quarter and full year of 2023 reflect a mixed performance. Despite an increase in total revenues year-over-year, net income has declined. This suggests that while the company is growing its top line, it's facing challenges in translating that growth into net profitability. The reported increase in book value per share is a positive indicator of the company's asset value growth, but the decrease in net income could raise concerns about the company's operational efficiency and cost management.
Investors should note the strategic exit from the Louisiana property insurance business, which could imply a more focused approach to core operations but also raises questions about the impact of such strategic shifts on long-term revenue streams. Additionally, the reported increase in the global network of producing agents by 85% in 2023 is a significant expansion, potentially indicating a strong future sales pipeline, yet it comes with the cost of increased commission expenses that have impacted net income.
The growth in first year life and A&H premiums for five consecutive quarters, driven by new products and marketing campaigns, shows Citizens, Inc.'s ability to innovate and attract new customers. However, the slight decrease in total insurance premium revenues due to lower renewal premiums points to potential issues with customer retention or market saturation. The planned introduction of new products or major product enhancements in 2024 could be a move to address this and stimulate further growth.
It's also important to consider the broader economic context, particularly the impact of inflationary pressures and increasing interest rates on policyholder behavior. The report indicates higher surrenders in the international business, which could be a response to these macroeconomic factors, suggesting that the company's performance is not immune to external economic conditions.
The insurance industry is traditionally sensitive to economic cycles and Citizens, Inc.'s performance reflects this. The increased benefits and expenses due to higher surrenders in the international business are indicative of the challenges faced when policyholders reassess the value of their policies in light of changing economic circumstances. The company's shift from Bermuda to Puerto Rico for its international business could be a strategic move to optimize tax and regulatory conditions, which could have long-term financial benefits.
The focus on expanding the global network of producing agents aligns with industry trends towards increasing distribution channels to drive sales. However, the impact on the company's expenses, particularly commissions, needs to be monitored closely to ensure that this expansion doesn't erode profitability.
Austin, Texas--(Newsfile Corp. - March 14, 2024) - Citizens, Inc. (NYSE: CIA), a leading diversified financial services company specializing in life, living benefits and final expense insurance, today reported financial results for the fourth quarter 2023 and full year ended December 31, 2023.
"We achieved another quarter of significant progress on our strategic roadmap, designed to deliver sustainable increased book value per share and enhanced operating results, and that progress has continued into 2024. The quarter capped a year of customers in large and underserved markets embracing our innovative new products on their path toward financial security. First year premiums have increased year-over-year for five consecutive quarters," said Company Vice Chairman and CEO, Gerald W. Shields. "Our expanding sales force and profitable product development expertise continued the persistent expansion of our customer base and strong results."
"We remain fully committed to persistent and profitable growth, prudent liquidity, and sound capital management, as evidenced by our positive net cash from operations annually since 2004. With competitive advantages in growing niche markets globally, rapid expansion of the sales force, strategic focus, and financial strength, we remain well positioned to drive sustainable, long-term growth and profitability on behalf of our investors," concluded Shields.
Fourth Quarter and Full Year 2023 Financial Highlights
- Total revenues of
$240.7 million in the full year 2023 compared to$232.5 million in the full year 2022. Total revenues of$66.8 million in Q4 2023, from$67.3 million in the year-ago quarter. - First year life and A&H premiums increased
4% in Q4 2023, the fifth consecutive quarter of year-over-year growth in first year premiums, driven by new products and focused marketing campaigns. - Net income of
$24.4 million ,$0.48 per fully diluted Class A share, in the full year 2023, from$26.0 million ,$0.51 per share, in the full year 2022. Net income of$10.7 million ,$0.21 per share, in Q4 2023, from$13.7 million ,$0.27 per share, in Q4 2022. - Positive net cash provided by operating activities of
$22.1 million in the full year 2023 and$6.6 million in Q4 2023. The Company has had positive net cash provided by operating activities annually since 2004. - Cash and cash equivalents of
$27.0 million and no debt at December 31, 2023. - Book value per Class A share of
$3.47 increased36% over the year-ago quarter. Book value per Class A share excluding accumulated other comprehensive income (loss) (AOCI) of$5.85 increased10% over the year-ago quarter.
Recent Business Highlights
- Insurance issued increased
10% in Q4 2023 and increased10% in the full year 2023 compared to the same periods in 2022, primarily from new products and an increase in producing agent count. Over$4.9 billion of direct insurance in force at December 31, 2023. - Increased global network of producing agents by
85% in 2023. - Expanded existing white-label partnership to deliver unique products through established fast-growing distribution channels.
2024 Milestones
For 2024, the Company has set the following milestones:
- Increase first year life and A&H premium revenues at least
6% - Improve policyholder retention metrics at least
4% - Expand global network of producing agents at least
20% - Introduce 2 to 3 new products or major product enhancements. Citizens delivered a new product in Q1 2024
Fourth Quarter 2023 Performance and Highlights
Total revenues of
First year life and A&H premiums increased
Total benefits and expenses increased by
Net income for the fourth quarter of 2023 of
Investments
Net investment income for the fourth quarter of 2023 increased to
Investment related gain of
The carrying value of the Company's fixed maturity securities investment portfolio at December 31, 2023 was
Cash Flow/Capital/Share Repurchase
Positive net cash provided by operating activities was
The Board of Directors is confident in the Company's strategy and future and authorized a share repurchase program in May 2022 under which the Company may repurchase up to
About Citizens, Inc.
Citizens, Inc. (NYSE: CIA) is a diversified financial services company providing life, living benefits and final expense 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 in their native languages of Spanish, Portuguese, and Mandarin. The Company operates two primary segments: Life Insurance, where internationally the Company is a market leader in US Dollar denominated life insurance and domestically where it is growing niche markets in the United States with new products developed for its white-label distributional channel, and Home Service Insurance, which operates primarily in the U.S. Gulf coast region. For more information about Citizens, please visit the website at www.citizensinc.com and LinkedIn.
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, or LDTI. While the new guidance has had a significant impact on existing GAAP financial statements and disclosures, it does not impact the cash flows or underlying economics of the business, business strategy, statutory net income (loss) or management of capital. All prior periods presented in this press release 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 with discrete adjustments that exclude net investment related gains (losses) and income and loss from ceased businesses. 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
| As of and for the periods ended | Three Months Ended December 31, | Years Ended December 31, | ||||||||||
| (In thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||
| Balance sheet data | ||||||||||||
| Total assets | $ | 1,668,928 | 1,590,703 | $ | 1,668,928 | 1,590,703 | ||||||
| Total liabilities | 1,495,503 | 1,462,913 | 1,495,503 | 1,462,913 | ||||||||
| Total stockholders' equity | 173,425 | 127,790 | 173,425 | 127,790 | ||||||||
| Life insurance in force, net | 4,306,429 | 4,257,148 | 4,306,429 | 4,257,148 | ||||||||
| Operating items | ||||||||||||
| Insurance premiums | $ | 47,038 | 48,251 | $ | 167,039 | 173,714 | ||||||
| Net investment income | 17,567 | 17,443 | 69,254 | 65,426 | ||||||||
| Investment related gains (losses), net | 1,237 | 298 | 760 | (10,291 | ) | |||||||
| Total revenues | 66,849 | 67,257 | 240,680 | 232,524 | ||||||||
| Claims and surrenders | 35,195 | 33,675 | 135,993 | 119,935 | ||||||||
| Other general expenses | 11,654 | 12,188 | 47,131 | 45,177 | ||||||||
| Total benefits and expenses | 58,075 | 55,846 | 214,506 | 205,147 | ||||||||
| Income (loss) before federal income tax | 8,774 | 11,411 | 26,174 | 27,377 | ||||||||
| Federal income tax expense (benefit) | (1,967 | ) | (2,248 | ) | 1,737 | 1,370 | ||||||
| Net income (loss) | 10,741 | 13,659 | 24,437 | 26,007 | ||||||||
| Per share data | ||||||||||||
| Book value per share | $ | 3.47 | 2.56 | $ | 3.47 | 2.56 | ||||||
| Diluted income (loss) per Class A share | 0.21 | 0.27 | 0.48 | 0.51 | ||||||||
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. Domestically, we sell whole life insurance, life insurance with living benefits, critical illness, credit life and disability products throughout the U.S. These products are sold through independent marketing consultants.
Home Service Insurance - The Home Service Insurance segment provides final expense life 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
| As of and for the periods ended | Three Months Ended December 31, | Years Ended December 31, | ||||||||||
| (In thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||
| LIFE INSURANCE SEGMENT | ||||||||||||
| Balance sheet data | ||||||||||||
| Total assets | $ | 1,267,243 | 1,194,285 | $ | 1,267,243 | 1,194,285 | ||||||
| Operating items | ||||||||||||
| Insurance premiums | $ | 36,017 | 36,192 | $ | 122,145 | 124,653 | ||||||
| Net investment income | 13,882 | 13,556 | 54,352 | 50,680 | ||||||||
| Investment related gains (losses), net | 424 | (182 | ) | 301 | (8,826 | ) | ||||||
| Total revenues | 51,309 | 50,831 | 180,403 | 170,175 | ||||||||
| Claims and surrenders | 29,602 | 27,808 | 113,428 | 95,576 | ||||||||
| Total benefits and expenses | 43,083 | 39,680 | 151,782 | 144,752 | ||||||||
| Income (loss) before federal income tax | 8,226 | 11,151 | 28,621 | 25,423 | ||||||||
| HOME SERVICE INSURANCE SEGMENT | ||||||||||||
| Balance sheet data | ||||||||||||
| Total assets | $ | 359,773 | 341,671 | $ | 359,773 | 341,671 | ||||||
| Operating items | ||||||||||||
| Insurance premiums | $ | 11,021 | 12,059 | $ | 44,894 | 49,061 | ||||||
| Net investment income | 3,453 | 3,578 | 13,832 | 13,632 | ||||||||
| Investment related gains (losses), net | 805 | 352 | 522 | (1,277 | ) | |||||||
| Total revenues | 15,295 | 15,989 | 59,265 | 61,417 | ||||||||
| Claims and surrenders | 5,593 | 5,867 | 22,565 | 24,359 | ||||||||
| Total benefits and expenses | 13,796 | 14,456 | 56,252 | 54,854 | ||||||||
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FAQ
What were Citizens, Inc.'s total revenues in 2023?
Total revenues were $240.7 million in 2023.
How did net income change in 2023 compared to 2022?
Net income decreased to $24.4 million in 2023 from $26.0 million in 2022.
What was the growth rate of first year life and A&H premiums in Q4 2023?
First year life and A&H premiums grew by 4% in Q4 2023.
Did Citizens, Inc. have positive net cash provided by operating activities in 2023?
Yes, the company had positive net cash provided by operating activities annually since 2004.
How much did the book value per Class A share increase by over the year-ago quarter?
Book value per Class A share increased by 36% over the year-ago quarter.
What was the increase in the global network of producing agents in 2023?
The global network of producing agents expanded by 85% in 2023.
What is one of the milestones set by Citizens, Inc. for 2024?
One of the milestones for 2024 is to introduce 2 to 3 new products or major product enhancements.
How much did net investment income increase to in Q4 2023?
Net investment income increased to $17.6 million in Q4 2013.
How much remains for share repurchases under the current authorization?
$4.4 million of available repurchases remain on the current authorization at December 31, 2023.
Citizens, Inc.
NYSE:CIACIA RankingsCIA Latest NewsCIA Stock Data
228.31M
44.70M
10.43%
13.6%
8.33%
Insurance - Life
Life Insurance
United States of America
AUSTIN
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