Citizens(US:CIA)2019-05-10 14:52Insurance Premiums and Revenue - Insurance premiums for Q1 2019 totaled $42.5 million, a decrease of 3.6% from $44.0 million in Q1 2018, primarily due to fewer first year and renewal premiums in the Life Insurance segment [149]. - Premium revenue decreased by 4.5% to $30,914,000 for the three months ended March 31, 2019, compared to $32,360,000 in the same period in 2018, primarily due to a decline in first year and renewal international business [192]. - Direct premiums from the top five premium-producing countries in the international life insurance business totaled $29.726 million for the three months ended March 31, 2019, down from $31.240 million in 2018 [184]. - Direct premiums from Venezuela have declined due to ongoing political and economic instability, impacting overall premium collections [185]. - Home Service Insurance premiums slightly decreased to $11,550,000 for the three months ended March 31, 2019, compared to $11,669,000 in the same period in 2018 [216]. - Total revenue increased to $46,723,000 for the three months ended March 31, 2019, from $42,514,000 in the same period in 2018 [192]. Investment Income and Gains - Net investment income for Q1 2019 was $13.8 million, relatively flat compared to $13.8 million in Q1 2018, with an annualized yield of 4.08%, down from 4.31% in the same period last year [149][159]. - Investment income from debt securities accounted for approximately 87.5% of total investment income for Q1 2019 [162]. - Realized investment gains for the three months ended March 31, 2019, were $5.5 million from the sale of the former corporate headquarters, while realized losses were $104,000 related to fixed maturity securities [164]. - Net investment income increased to $10,169,000 for the three months ended March 31, 2019, compared to $10,130,000 in the same period in 2018, driven by growth in average invested assets [192]. - Realized investment gains were $5,457,000 for the three months ended March 31, 2019, compared to a loss of $185,000 in the same period in 2018, mainly due to the sale of the former corporate headquarters [192][198]. Claims and Expenses - Claims and surrenders expense increased by 8.9% in Q1 2019 compared to Q1 2018, driven by higher surrender benefits and matured endowments in the Life Insurance segment [149]. - Total claims and surrenders increased to $17,162,000 for the three months ended March 31, 2019, compared to $15,291,000 in the same period in 2018, with death claims rising to $1,848,000 [201]. - Death claims increased by 4.9% for the three months ended March 31, 2019, compared to the same period in 2018, while surrenders increased by 6.3% [167]. - Commissions for the three months ended March 31, 2019, were $7.884 million, down from $8.959 million in the same period of 2018 [166]. - Other general expenses increased significantly to $14.132 million for the three months ended March 31, 2019, compared to $6.507 million in the same period of 2018 [171]. Financial Position and Capital - The company maintains a risk-based capital level above 350% to comply with regulatory requirements [258]. - All U.S. insurance subsidiaries were above the RBC minimums as of March 31, 2019, with CICA Ltd. holding capital in excess of the BSCR requirements [261]. - The total fixed maturities portfolio had an amortized cost of $1,259.4 million and a fair value of $1,295.5 million, resulting in net unrealized gains of $36.2 million as of March 31, 2019 [269]. - The liquidity is primarily supported by funds from operations, with 92.1% of investments in marketable debt securities classified as available-for-sale [250]. - The company anticipates that available liquidity sources will be adequate to meet future cash flow needs [252]. Operational Changes and Strategy - The company is focusing on strategic modernization of its technology systems and operations, including a potential restructuring of its international business [146]. - The company aims to optimize its investment portfolio strategy as part of its ongoing assessment of business models and strategies [146]. - The company has established an estimated liability of $10.0 million related to a tax compliance matter as of March 31, 2019 [255]. - The company performs periodic projections of asset and liability cash flows to manage interest rate risk [271]. Market and Economic Conditions - The interest rate of the ten-year U.S. Treasury bond decreased to 2.41% during the three months ended March 31, 2019, down from 2.69% at December 31, 2018 [272]. - The annualized yield on average invested assets decreased to 4.05% as of March 31, 2019, down from 4.32% in the same period in 2018 [197]. - The percentage of total carrying value for corporate securities rose to 31.5% from 27.5% year-over-year [231].