AUSTIN, Texas, March 10, 2011 /PRNewswire/ -- Citizens, Inc. reported results today for the fourth quarter and full-year ended December 31, 2010.
Rick D. Riley, Vice Chairman and President, said, "During 2010, Citizens continued to offer life insurance products emphasizing living benefits in our targeted domestic and international markets. While the business and investing environments remained challenging, the Company experienced growth in revenues and net income, reflecting both an increase in premiums from our insurance operations and an increase in investment income over 2009 as higher invested assets offset declining yields over the course of 2010."
Riley noted, "In keeping with the long-term horizon of our policyholders, we manage our business with long-range objectives and have responded to conditions of recent years by continuing to foster the relationships that support new insurance sales and high persistency."
Q410 Q409 (In thousands, except share amounts) Premiums $42,131 40,786 Net investment income $6,181 7,869 Net realized gains (losses), net $7,364 5,213 Change in fair value of warrants $(148) 73 Total revenue $55,734 54,049 Net income applicable to common stock $9,055 7,627 Net income per diluted share of Class A common stock $0.19 0.16 Weighted average shares of Class A common stock (diluted) 48,718 48,687
2010 2009 (In thousands, except share amounts) Premiums 152,052 147,280 Net investment income 30,077 29,602 Net realized gains (losses), net 8,012 8,040 Change in fair value of warrants 232 3,154 Total revenue 191,181 188,980 Net income applicable to common stock 15,511 14,835 Net income per diluted share of Class A common stock 0.32 0.31 Weighted average shares of Class A common stock (diluted) 48,688 47,556
Riley added, "Full-year 2010 net realized gains were comparable to 2009 as the Company again sold previously impaired mutual fund holdings as well as below investment-grade securities in order to recover taxes paid on prior year gains and to accomplish current year consolidated return tax-savings. Though the contribution to net income of full-year realized gains were unchanged, the year-over-year comparison was impacted by another non-operating item -- a significantly lower gain on the change in the fair value of outstanding warrants, which relates to changes in the market value of our Class A common stock."
Consolidated results
-- Total revenues - Total revenues increased 3.1% for the quarter ended
December 31, and 1.2% for full-year 2010, due to growth in both premiums
and investment income. Total revenue, excluding the change in fair
value of warrants, increased 3.5% and 2.8% for the same periods.
-- Net income - Net income rose by $1.4 million for the quarter ended
December 31, and $0.7 million for full-year 2010. On an after-tax
basis, realized gains contributed $5.2 million, or $0.11 per share of
Class A common stock, to full-year net income, unchanged from 2009. On
an after-tax basis, the non-cash charge for the change in fair value of
warrants increased net income in 2010 by $0.2 million, which would be
less than 1 cent per share of Class A common stock, compared with $3.2
million, or $0.04 per share of Class A common stock, in 2009.
-- Book value - Book value per share of Class A common stock rose 5.3% to
$4.58 at December 31, 2010, compared with $4.35 at year-end 2009.
Year-end 2010 book value declined $0.19 from September 30, 2010, due to
market declines in bond values.
Insurance operations
-- Premiums - Premium growth for the fourth quarter and full-year was
driven by strong persistency and higher endowment sales in the
international life insurance business. Life first-year premiums
increased 2.8% for 2010 and represented approximately 15% of total life
premiums for 2010 and 2009.
-- Endowment sales now represent a significant portion of international
new business sales, reflecting increased interest in guaranteed
products in recent years from the Pacific Rim and Latin America.
Endowment sales rose 10.6% to $9.4 million in 2010.
-- Most of our life insurance policies contain a policy loan provision,
which allows the policyholder to tap the cash value of a policy to
pay premiums and keep policies in force. The policy loan asset
balance increased 10.9% year over year.
-- Underwriting profit - Total benefits and expenses rose less rapidly than
premiums for the fourth quarter and full-year. For those periods,
increases in insurance benefits paid or provided and commissions, which
were related to premium growth, particularly the higher endowment sales,
were offset by lower expenses and changes in capitalization and
amortization of deferred acquisition costs and other items. Investment
income is a factor in profitability, but the Company's product design
does not depend solely on interest rate spreads, but also relies on the
mortality, expense and persistency margins.
Investments
-- Invested assets - Total invested assets grew 8.1% to $725.7 million at
December 31, 2010, from $671.3 million at December 31, 2009, reflecting
additional premium income from new and renewal business over the past
year. Fixed maturity securities represented 90.4% of the portfolio at
year-end 2010, compared with 88.3% at year-end 2009. Cash and cash
equivalents were 6.4% at year-end 2010, down from 6.8% in 2009 of total
cash, cash equivalents and invested assets, reflecting the timing of
calls relating to higher-yielding fixed maturity investments.
-- Investment income - Net investment income decreased 21.5% for the
quarter ended December 31, 2010, but rose 1.6% for the full-year. Lower
yields on invested assets continue to offset higher average investment
balances. As noted above, the policy loan asset balance rose by 10.9%
in 2010, resulting in an increase in policy loan income, which is
included in investment income.
-- Yield and duration - During 2010, average invested assets rose 12.6%
while average yield declined to 4.32% compared with 4.75% in 2009. The
average annualized yield for the quarter ended December 31, 2010 was
3.47% compared to 4.87% for the quarter ended December 31, 2009.
Significant calls by issuers of fixed maturity securities has resulted
in the Company reinvesting proceeds at lower yields as market rates have
declined. During 2010, the Company continued to invest in bonds of U.S.
Government-sponsored enterprises. In addition, the Company made
additional investments in high quality corporate and municipal bonds to
obtain higher yields.
-- Realized gains - Realized gains for the full year ended 2010 were
comparable to net realized gains from 2009. In 2010 and 2009, the
Company sold equity mutual funds, which were previously impaired, and
realized gains of $6.4 million and $4.9 million, respectively. During
the current year, the Company also realized net gains of $1.3 million on
sales of securities related to an acquired entity that were primarily
below investment grade quality. The Company also sold a number of fixed
maturity investments in 2009, resulting in a total gain of over $8.0
million that was offset by realized losses from impairments of $0.3
million.
Investor Conference Call
On Friday, March 11, Citizens will host a conference call to discuss operating results at 10 a.m. Central Time. The conference call will be hosted by Rick D. Riley, Vice Chairman and President, Kay Osbourn, Chief Financial Officer, and other members of the Company's management team. To participate, please dial (888) 674-0222 and ask to join the Citizens, Inc. call. We recommend accessing the call three to five minutes before the call is scheduled to begin. A recording of the conference call will be available on Citizens' website at www.citizensinc.com in the Investor Information section under News Release & Publications following the call.
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 the acquisition of other U.S. based life insurance companies.
Safe Harbor
Information herein contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by words such as "may," "will," "expect," "anticipate" or "continue" or comparable words. In addition, all statements other than statements of historical facts that address activities that the Company expects or anticipates will or may occur in the future are forward-looking statements. Readers are encouraged to read the SEC reports of the Company, particularly its Form 10-K for the fiscal year ended December 31, 2010, its quarterly reports on Form 10Q and its current reports on Form 8-K, for the meaningful cautionary language disclosing why actual results may vary materially from those anticipated by management. The Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in the Company's expectations. The Company also disclaims any duty to comment upon or correct information that may be contained in reports published by the investment community.
FOR FURTHER INFORMATION CONTACT: Kay Osbourn Chief Financial Officer (512) 837-7100 PR@citizensinc.com
Consolidated Statements of Operations (In thousands, except per share amounts)
Three Months Ended December 31, ------------ Unaudited 2010 2009 ---- ---- Revenues: Premiums: Life insurance $40,551 39,143 Accident and health insurance 362 396 Property insurance 1,218 1,247 Net investment income 6,181 7,869 Realized gains (losses), net 7,364 5,213 Decrease (increase) in fair value of warrants (148) 73 Other income 206 108 --- --- Total revenues 55,734 54,049 ------ ------ Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 14,628 15,734 Increase in future policy benefit reserves 15,694 12,769 Policyholders' dividends 2,161 1,938 ----- ----- Total insurance benefits paid or provided 32,483 30,441 Commissions 10,200 10,074 Other underwriting, acquisition and insurance expenses 6,516 6,451 Capitalization of deferred policy acquisition costs (7,414) (7,450) Amortization of deferred policy acquisition costs 3,278 5,538 Amortization of cost of customer relationships acquired and other intangibles 754 864 --- --- Total benefits and expenses 45,817 45,918 ------ ------ Income (loss) before income tax expense 9,917 8,131 Income tax expense (benefit) 862 504 --- --- Net income (loss) $9,055 7,627 ====== ===== Net income (loss) applicable to common stockholders $9,055 7,627 ====== ===== Per Share Amounts: Basic and diluted earnings (loss) per share of Class A common stock $0.19 0.16 ===== ==== Basic and diluted earnings (loss) per share of Class B common stock $0.09 0.08 ===== ====
Twelve Months Ended December 31, ------------ Unaudited 2010 2009 ---- ---- Revenues: Premiums: Life insurance 145,665 141,001 Accident and health insurance 1,577 1,531 Property insurance 4,810 4,748 Net investment income 30,077 29,602 Realized gains (losses), net 8,012 8,040 Decrease (increase) in fair value of warrants 232 3,154 Other income 808 904 --- --- Total revenues 191,181 188,980 ------- ------- Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 61,038 59,988 Increase in future policy benefit reserves 46,420 40,790 Policyholders' dividends 7,485 6,680 ----- ----- Total insurance benefits paid or provided 114,943 107,458 Commissions 36,585 35,536 Other underwriting, acquisition and insurance expenses 27,057 28,340 Capitalization of deferred policy acquisition costs (27,960) (27,132) Amortization of deferred policy acquisition costs 17,840 20,678 Amortization of cost of customer relationships acquired and other intangibles 3,086 3,494 ----- ----- Total benefits and expenses 171,551 168,374 ------- ------- Income (loss) before income tax expense 19,630 20,606 Income tax expense (benefit) 4,119 3,266 ----- ----- Net income (loss) 15,511 17,340 ====== ====== Net income (loss) applicable to common stockholders 15,511 14,835 ====== ====== Per Share Amounts: Basic and diluted earnings (loss) per share of Class A common stock 0.32 0.31 ==== ==== Basic and diluted earnings (loss) per share of Class B common stock 0.16 0.15 ==== ====
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Financial Position December 31, (In thousands)
Assets 2010 2009 ------ ---- ---- Unaudited Investments: Fixed maturities held-to-maturity, at amortized cost (fair value $0 and $9,144 in 2006 and 2005, respectively) Fixed maturities available-for-sale, at fair value (cost: $578,412 in 2010 and $389,195 in 2009) $575,737 385,579 Fixed maturities held-to-maturity, at amortized cost (fair value: $79,103 in 2010 and $199,767 in 2009) 80,232 206,909 Equity securities available-for-sale, at fair value (cost: $19,844 in 2010 and $25,899 in 2009) 23,304 33,477 Mortgage loans on real estate 1,489 1,533 Policy loans 35,585 32,096 Real estate held for investment (less $1,017 and $913 accumulated depreciation in 2010 and 2009, respectively) 9,200 9,032 Other long-term investments 148 184 Short-term investments - 2,510 --- ----- Total investments 725,695 671,320 Cash and cash equivalents 49,723 48,625 Accrued investment income 7,433 7,455 Reinsurance recoverable 9,729 11,587 Deferred policy acquisition costs 125,684 115,570 Cost of customer relationships acquired 31,631 34,728 Goodwill 17,160 17,160 Other intangible assets 1,019 1,046 Federal income tax receivable 1,914 4,023 Property and equipment, net 7,101 6,018 Due premiums, net (less $1,568 and $1,644 allowance for doubtful accounts in 2010 and 2009, respectively) 8,537 8,960 Prepaid expenses 474 288 Other assets 406 546 --- --- Total assets $986,506 927,326 ======== ======= (Continued)
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Financial Position, Continued December 31, 2010 and 2009 (In thousands)
Liabilities and Stockholders' Equity 2010 2009 ------------------------------------ ---- ---- Unaudited Liabilities: Future policy benefit reserves: Life insurance $637,140 592,358 Annuities 42,096 37,882 Accident and health 5,910 6,399 Dividend accumulations 9,498 5,621 Premiums paid in advance 23,675 20,373 Policy claims payable 10,540 10,222 Other policyholders' funds 8,191 8,105 ----- ----- Total policy liabilities 737,050 680,960 Commissions payable 2,538 2,434 Deferred federal and state income taxes 9,410 8,052 Payable for securities in process of settlement - 6,000 Warrants outstanding 1,587 1,819 Other liabilities 8,287 11,986 ----- ------ Total liabilities 758,872 711,251 ------- ------- Commitments and contingencies Stockholders' equity: Common stock: Class A, no par value, 100,000,000 shares authorized, 51,822,497 shares issued and outstanding in 2010 and 2009, 256,703 256,703 including shares in treasury of 3,135,738 in 2010 and 2009 Class B, no par value, 2,000,000 shares authorized, 1,001,714 shares issued and outstanding in 2010 and 2009 3184 3184 Accumulated deficit (22,581) (38,092) Accumulated other comprehensive income (loss): Unrealized gains (losses) on securities, net of tax 1,339 5,291 ----- ----- 238,645 227,086 Treasury stock, at cost (11,011) (11,011) ------- ------- Total stockholders' equity 227,634 216,075 ------- ------- Total liabilities and stockholders' equity $986,506 927,326 ======== =======
Citizens, Inc.
CONTACT: Kay Osbourn, Chief Financial Officer of Citizens, Inc.,
+1-512-837-7100, PR@citizensinc.com
Web site: http://www.citizensinc.com/
