Citizens Reports Second Quarter 2022 Financial Results
Citizens, Inc. (CIA) reported a net loss of $3.5 million, or $0.07 per share, for Q2 2022, down from a net income of $5.0 million or $0.10 per share in Q2 2021. Adjusted operating income rose to $1.4 million, up from $0.7 million year-over-year. New product sales in Life and Home Service Insurance segments showed strong initial traction. Total insurance issued increased 51% year-over-year to $171.1 million. However, premium revenue fell 1% to $42.2 million. General expenses decreased by 10% year-over-year, but investment losses were significant due to market volatility.
- Adjusted operating income improved by 100% year-over-year to $1.4 million.
- New products in both insurance segments are gaining traction, driving a 51% increase in total insurance issued.
- General expenses decreased by $1.1 million, or 10%, year-over-year.
- Net loss of $3.5 million compared to a net income of $5.0 million in Q2 2021.
- Total premium revenue decreased by 1% to $42.2 million.
- Net investment related losses of $5.0 million primarily due to market volatility.
- Net loss of
$3.5 million , or$0.07 per share, compared to net income of$5.0 million , or$0.10 per share, in the second quarter of 2021 - Adjusted operating income of
$1.4 million , an improvement compared to adjusted operating income of$0.7 million in the second quarter of 2021 - New products continue to gain traction across both the Life Insurance and Home Service Insurance segments
- Total claims and surrenders continue to improve, declining
8% year-over-year - General expenses decreased by
$1.1 million or10% year-over-year
AUSTIN, Texas, Aug. 4, 2022 /PRNewswire/ -- Citizens, Inc. (NYSE: CIA), today reported financial results for the second quarter ended June 30, 2022.
Net loss for the second quarter of 2022 totaled
Net loss of
Adjusted operating income, which excludes investment related gains and losses, totaled
Management Commentary
"I am encouraged by the underlying fundamental strength of our business and ability to advance our strategic growth initiatives, despite industrywide headwinds related to inflation and volatile equity markets," said Company Vice Chairman and CEO, Gerald W. Shields. "The second quarter highlights the successful implementation and execution of our strategic plan, which has translated to several significant achievements across the organization. Our newly introduced products are delivering strong initial sales across both segments, our retention initiatives continue to drive lower surrender benefits, and our efficiency initiatives continue to reduce operating expenses. We remain confident that continued execution of our strategic plan will drive sustainable growth and long-term shareholder value."
Second Quarter 2022 Financial Highlights
Total amount of insurance issued for the second quarter of 2022 increased by
Total premium revenue for the second quarter of 2022 decreased
First year premiums for the second quarter of 2022 were
Renewal premiums for the second quarter of 2022 decreased less than
Total claims and surrenders benefits for the second quarter of 2022 decreased
General expenses for the second quarter of 2022 decreased by
Second Quarter 2022 Segment Performance and Highlights
Life Insurance
Overall premium revenue in the Life Insurance segment for the second quarter of 2022 decreased by
First year premiums for the second quarter of 2022 increased by
Strong sales of the Whole Life 360 product positively impacted the amount of insurance issued and number of policies issued, which increased by
Renewal premiums for the second quarter of 2022 decreased
Total claims and surrenders benefits for the second quarter of 2022 declined
Home Service Insurance
Total premium revenue in the Home Service Insurance segment for the second quarter of 2022 decreased
First year premiums for the second quarter of 2022 were
Renewal premiums for the second quarter of 2022 of
Total claims and surrenders benefits for the second quarter of 2022 decreased
Investments
Net investment income for the second quarter of 2022 was
The Company invests the vast majority of total investments into fixed maturity securities. We reported a pre-tax net unrealized loss of
The carrying value of the Company's fixed maturity securities investment portfolio at June 30, 2022 was
Investment related gains (losses), net
Investment related losses in the second quarter of 2022 were
Book Value
As of June 30, 2022, book value per Class A common share, including Accumulated Other Comprehensive Income (AOCI), was
Book value per Class A common share, excluding AOCI, was
About Citizens, Inc.
Citizens, Inc. is a financial services company listed on the New York Stock Exchange under the symbol CIA. The Company utilizes a three-pronged strategy for growth based upon worldwide sales of U.S. dollar denominated whole life cash value insurance policies, life insurance product sales in the U.S. and final expense and limited liability property product sales in the U.S. For more information, visit www.citizensinc.com.
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). 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 | Six months ended | ||||||||
For the periods ended as of | |||||||||
(In thousands, except share data) | 2022 | 2021 | 2022 | 2021 | |||||
Balance sheet data | |||||||||
Total assets | $ | 1,618,945 | 1,814,001 | $ | 1,618,945 | 1,814,001 | |||
Total liabilities | 1,542,706 | 1,544,876 | 1,542,706 | 1,544,876 | |||||
Total stockholders' equity | 76,239 | 269,125 | 76,239 | 269,125 | |||||
Life insurance in force | 4,218,214 | 4,151,475 | 4,218,214 | 4,151,475 | |||||
Net income (loss) items | |||||||||
Insurance premiums | $ | 42,224 | 42,826 | $ | 81,588 | 81,858 | |||
Net investment income | 15,892 | 15,320 | 31,379 | 30,564 | |||||
Investment related gains (losses) | (5,016) | 4,859 | (5,598) | 5,151 | |||||
Total Revenues | 53,734 | 63,558 | 109,091 | 119,041 | |||||
Claims and Surrenders | 27,097 | 29,296 | 55,531 | 59,885 | |||||
Other general expenses | 10,400 | 11,503 | 21,430 | 22,885 | |||||
Total benefits and expenses | 57,363 | 57,958 | 113,694 | 116,189 | |||||
Income (loss) before federal income tax | (3,629) | 5,600 | (4,603) | 2,852 | |||||
Federal income tax benefit | 81 | 578 | 278 | 1,403 | |||||
Net income (loss) | (3,548) | 5,022 | (4,881) | 1,449 | |||||
Per share data | |||||||||
Book value per share | 1.52 | 5.42 | 1.52 | 5.42 | |||||
Basic and diluted earnings (loss) per | |||||||||
share of Class A common stock | (0.07) | 0.10 | (0.10) | 0.03 |
Definition of Reported Segments
The Company operates in two business segments as detailed below.
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. A new whole life product was introduced in Florida in 2021.
Home Service Insurance – The Home Service Insurance segment provides final expense life insurance and property insurance policies marketed to middle- and lower-income households, and whole life products with higher face values, in Louisiana, Mississippi, and Arkansas. These products are sold through independent agents and funeral homes.
Selected Segment Financial Data | ||||||||||
Three months ended | Six months ended | |||||||||
For the periods ended as of | ||||||||||
(In thousands, except share data) | 2022 | 2021 | 2022 | 2021 | ||||||
LIFE INSURANCE SEGMENT | ||||||||||
Total assets | $ | 1,209,055 | 1,370,932 | $ | 1,209,055 | 1,370,932 | ||||
Net income (loss) items | ||||||||||
Insurance premiums | 29,834 | 30,138 | 56,765 | 57,201 | ||||||
Net investment income | 12,347 | 11,879 | 24,318 | 23,477 | ||||||
Investment related gains (losses) | (3,984) | 4,644 | (4,277) | 4,536 | ||||||
Total revenues | 38,830 | 47,214 | 78,527 | 86,680 | ||||||
Claims and surrenders | 21,568 | 23,531 | 43,026 | 46,801 | ||||||
Total benefits and expenses | 41,193 | 40,087 | 79,860 | 79,659 | ||||||
Income (loss) before federal income tax | (2,363) | 7,127 | (1,333) | 7,021 | ||||||
HOME SERVICE INSURANCE SEGMENT | ||||||||||
Total assets | $ | 355,732 | 390,280 | $ | 355,732 | 390,280 | ||||
Net income (loss) items | ||||||||||
Insurance premiums | 12,390 | 12,688 | 24,823 | 24,657 | ||||||
Net investment income | 3,283 | 3,243 | 6,527 | 6,588 | ||||||
Investment related gains (losses) | (925) | 206 | (1,167) | 429 | ||||||
Total revenues | 14,749 | 16,137 | 30,184 | 31,676 | ||||||
Claims and surrenders | 5,529 | 5,765 | 12,505 | 13,084 | ||||||
Total benefits and expenses | 14,643 | 15,599 | 31,318 | 31,896 | ||||||
Income (loss) before federal income tax | 106 | 538 | (1,134) | (220) | ||||||
GAAP to Non-GAAP Reconciliation
Reconciliation of Adjusted Income (Loss) Before Federal Income Tax | |||||||||
Three months ended | Six months ended | ||||||||
For the periods ended as of | |||||||||
Unaudited (thousands of dollars) | 2022 | 2021 | 2022 | 2021 | |||||
Adjusted Operating Income | |||||||||
Income (loss) before federal income tax | $ | (3,629) | 5,600 | $ | (4,603) | 2,852 | |||
Less: | |||||||||
Excluded investment related gains (losses) | (5,016) | 4,859 | (5,598) | 5,151 | |||||
Total adjustments | (5,016) | 4,859 | (5,598) | 5,151 | |||||
Adjusted income (loss) before federal income tax | $ | 1,387 | 741 | $ | 995 | (2,299) | |||
Reconciliation of Book Value per Class A Common Share | ||||||
As of June 30, | ||||||
Unaudited (thousands of dollars, except share data) | 2022 | 2021 | ||||
Stockholders' equity | ||||||
Stockholders' equity, including AOCI | $ | 76,239 | 269,125 | |||
AOCI | (122,948) | 103,885 | ||||
Stockholders' equity, excluding AOCI | $ | 199,187 | 165,240 | |||
Book value | ||||||
Book value, including AOCI | $ | 1.52 | 5.42 | |||
Per share impact of AOCI | (2.45) | 2.09 | ||||
Book value, excluding AOCI | $ | 3.97 | 3.33 | |||
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "intends," "plans," "predicts," "will," "would," "could," "can," "may," and similar terms. Such forward-looking statements may relate to the Company's expectations regarding the impact of the COVID-19 pandemic, business performance, operational strategy and other financial and operational measures. 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-K and Form 10-Q. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law. You should be aware that factors not referred to herein could affect the accuracy of our forward-looking statements and use caution and common sense when considering our forward-looking statements.
Contact Information
Investors
Matthew Hausch and Matt Glover
Gateway Group, Inc.
(949) 574-3860
CIA@gatewayir.com
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SOURCE Citizens, Inc.
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