Citizens(US:CIA)2024-08-06 20:13Financial Performance - Total assets reached $1.7 billion, with total investments of $1.4 billion, and fixed maturity securities comprised 88% of total investments [123]. - Net income before federal income taxes decreased to $3.3 million for the three months ended June 30, 2024, down from $6.0 million in the same period of 2023 [121]. - Total revenues increased to $62,084,000 for the three months ended June 30, 2024, up from $58,527,000 in the prior year, and $119,796,000 for the six months ended June 30, 2024, compared to $114,441,000 [128]. - The company reported a net income per share of Class A common stock of $0.08 and $0.17 for the three and six months ended June 30, 2024, respectively [123]. - Total income before federal income tax for the three months ended June 30, 2024, was $3.3 million, a decrease from $6.0 million in the same period of 2023 [143]. Insurance Segment Performance - First year premiums in the Life Insurance segment more than doubled quarter-over-quarter and almost doubled year-to-date compared to 2023 [113]. - Total insurance issued increased by 73% in the six months ended June 30, 2024, compared to the prior year period, driven by new products and expanded distribution channels [125]. - Life Insurance segment growth driven by strong sales of new domestic final expense products, accounting for over 50% of insurance issued through June 30, 2024 [126]. - Life Insurance segment premiums increased by 10% to $31.6 million for the three months ended June 30, 2024, compared to $28.8 million in 2023, driven by a 103% increase in first-year premiums [146]. - International whole life product sales represented 65% of total insurance issued internationally in the Life Insurance segment for the six months ended June 30, 2024 [126]. Investment Income - Net investment income increased by 2% for both the three and six months ended June 30, 2024, reaching $18 million and $36 million respectively [117]. - Net investment income for the three months ended June 30, 2024, was $17,540,000, compared to $17,241,000 in the prior year, and $35,027,000 for the six months ended June 30, 2024, compared to $34,315,000 [131]. - Net investment income rose by 2% to $13.8 million for the three months ended June 30, 2024, compared to $13.5 million in the same period of 2023 [149]. Claims and Benefits - Claims and surrenders expenses included a $1.8 million increase in benefits paid due to higher matured endowments reaching their contractual maturity dates [121]. - Total insurance benefits paid increased to $36,029,000 for the three months ended June 30, 2024, from $34,049,000 in the prior year, and $71,149,000 for the six months ended June 30, 2024, compared to $65,358,000 [133]. - Claims and surrenders totaled $34,530,000 for the three months ended June 30, 2024, compared to $32,776,000 in the prior year, and $67,643,000 for the six months ended June 30, 2024, compared to $63,075,000 [134]. - Death benefit payments increased in the first half of 2024 due to a significant rise in insurance issued, while surrender benefits slightly decreased [180]. - The company reported a decrease in death claim benefits to $1.2 million for the three months ended June 30, 2024, from $1.4 million in 2023 [151]. Operating Expenses - Operating expenses increased due to the accrual of $3.5 million in legal fees related to a trade secret lawsuit [119]. - The company experienced a slight decline in renewal premiums for the six months ended June 30, 2024, due to high surrenders and matured endowments [146]. Reinsurance and Risk Management - The company entered into a coinsurance agreement with RGA Reinsurance Company to reinsure 50% of its newly written final expense business [113]. - Reinsurance ceded premiums increased due to a new coinsurance agreement with RGA entered in the second quarter of 2024 [130]. - The company is closely monitoring policyholder behavior patterns to manage liquidity risks associated with commission advances and policy surrenders [182]. Capital and Liquidity - The company has no debt as of June 30, 2024, and liquidity is primarily derived from cash flow from operations and marketable securities [172]. - The company renewed its Credit Facility with Regions Bank on May 3, 2024, providing additional liquidity for short-term or long-term needs [176]. - Citizens may need to contribute capital to CICA Domestic to maintain the required RBC ratio if growth exceeds current resources, impacting overall liquidity [185]. - Approximately 18% of endowments, representing about 6% of in-force business, are set to mature within the next five years, posing potential liquidity risks if policyholders opt for lump sum distributions [181]. Investment Portfolio - The carrying value of fixed maturity securities was $1.21 billion as of June 30, 2024, down from $1.24 billion at December 31, 2023, indicating a slight reduction in investment portfolio size [161]. - Cash and cash equivalents decreased to $26.34 million as of June 30, 2024, from $26.99 million at December 31, 2023, reflecting fluctuations due to operating and investing activities [162]. - Other long-term investments increased by $9.4 million as of June 30, 2024, attributed to additional funding and increases in fair market value of limited partnership investments [162]. - The Company’s municipal bond portfolio included $277.2 million in obligations of states and political subdivisions as of June 30, 2024, down from $287.2 million at December 31, 2023 [163]. - The total fair value of the company's municipal bonds in Texas was $61,564,000, while in California it was $42,406,000 as of June 30, 2024 [168][169].