Citizens(CIA) - 2022 Q3 - Quarterly Report

Revenue and Premiums - Premium revenues increased by 1.3% and 0.2% for the three and nine months ended September 30, 2022, respectively, primarily due to higher property insurance premiums [134]. - Total revenues decreased to $56.2 million for the three months ended September 30, 2022, compared to $61.6 million in the same period in 2021 [167]. - Total premium revenue increased by 9.4% to $12,179 thousand in Q3 2022 compared to Q3 2021, and by 3.4% to $37,002 thousand for the nine months ended September 30, 2022 compared to the same period in 2021 [207]. - Life insurance premiums decreased by 1.9% for the three months ended September 30, 2022, and by 1.1% for the nine months ended September 30, 2022 [168][169]. - Premiums in the Life Insurance segment decreased by 1.6% and 1.0% for the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021 [193]. Investment Income and Assets - Net investment income rose by $1.2 million, or 7.4%, for the three months ended September 30, 2022, driven by a higher average portfolio yield and a growing invested asset base [149]. - Net investment income increased by 7.9% for the three months ended September 30, 2022, totaling $16.6 million compared to $15.5 million in the same period in 2021 [171]. - The company's cash and invested assets totaled $1.3 billion as of September 30, 2022, with 86.9% invested in fixed maturity securities [212]. - The carrying value of fixed maturity securities decreased to $1.2 billion as of September 30, 2022 from $1.5 billion at December 31, 2021, reflecting interest rate sensitivity [216]. - Fixed maturity investments comprised 86.9% of the investment portfolio based on carrying value as of September 30, 2022 [251]. Claims and Benefits - Total claims and surrenders decreased to $30.7 million for the three months ended September 30, 2022, down from $31.8 million in the same period in 2021 [177]. - Death claims decreased in both the three and nine months ending September 30, 2022, compared to the prior year periods, largely due to a reduction in COVID-19 related deaths [141]. - Death claim benefits decreased by 29.8% in Q3 2022 and by 14.5% for the nine months ended September 30, 2022 compared to the same periods in 2021, attributed to a lower volume of reported claims [209]. - Claims and surrender benefits decreased by 29.8% to $5,987 thousand in Q3 2022 and by 17.0% to $18,492 thousand for the nine months ended September 30, 2022 compared to the same periods in 2021, primarily due to lower reported claims [209]. - Total claims and surrenders in the Life Insurance segment were $24.7 million for the three months and $67.8 million for the nine months ended September 30, 2022, compared to $22.6 million and $69.4 million in the same periods of 2021 [202]. Financial Performance - The company experienced net losses of $5.1 million and $10.0 million for the three and nine months ended September 30, 2022, respectively, compared to net losses of $2.8 million and $1.4 million in the prior year periods [146]. - Life Insurance segment reported a net loss of $2.9 million and $4.3 million for the three and nine months ended September 30, 2022, compared to net income of $1.7 million and $8.7 million in the prior year periods [189]. - The company reported a loss before federal income tax expense of $(656) thousand in Q3 2022, an improvement from a loss of $(4,099) thousand in Q3 2021 [207]. - The Home Service Insurance segment's net loss before federal income tax expense decreased by $3.4 million and $2.5 million for the three and nine months ended September 30, 2022, respectively, compared to the prior year periods [205]. Reserves and Expenses - Total benefits and expenses decreased by $3.3 million for the three months ended September 30, 2022, primarily due to a $5.2 million decrease in insurance benefits paid [152]. - Future policy benefit reserves decreased by 34.9% for the three months ended September 30, 2022, due to the impact of matured endowments [182]. - General expenses increased due to home office expenses and convention costs, which were not incurred in 2021 due to the COVID-19 pandemic [204]. - Amortization of deferred policy acquisition costs increased for the three and nine months ended September 30, 2022, influenced by changes in persistency and higher surrenders [210]. Market and Economic Conditions - The overall impact of the COVID-19 pandemic on the company's financial results remains uncertain, with potential future claims and revenue disruptions [159]. - The company anticipates potential higher surrenders and lapses in the coming months due to inflation and rising costs affecting policyholders [156]. - The interest rate of the ten-year U.S. Treasury bond increased to 3.83% at September 30, 2022, up from 1.52% at December 31, 2021, significantly impacting the fair values of fixed maturity securities [251]. - CICA International fell below the required long-term business minimum solvency margin due to rising interest rates, with unrealized losses reported at $213.7 million as of September 30, 2022, compared to unrealized gains of $126.9 million at December 31, 2021 [246][251].