Now that the initial enrollment period for health care is over, it's time to sift through the data and get ready for the next enrollment period.
Citizens Inc. reported results for the fourth quarter and full year ended December 31, 2012.
AUSTIN, Texas, March11, 2013 /PRNewswire/ --Citizens, Inc. (NYSE: CIA) reported results today for the fourth quarter and full year ended December31, 2012.
Rick D. Riley, Vice Chairman and President, said, "Our 2012 results reflect increased new business and retention through the low interest rate environment for both of our insurance segments. For the year, our consolidated life insurance premiums increased 5%, driven largely by strong persistency and continued expansion in our international business, where endowment products continue to be our strongest selling product. In addition, we have continued to see modest growth in our home service segment with premiums increasing 1.5% year over year."
Riley added, "We were able to increase invested assets by 7.3% to $901 million from $839 million at year-end 2011 due to premium growth.As a result, we reported investment income growth for the fourth quarter and full year as the higher balances offset the lower yields available in this market.With our conservative investment philosophy, our portfolio is currently yielding just over 3.8% compared with 3.9% in 2011."
(In thousands, except for per share amounts)
Net investment income
Net realized investment gains (losses), net
Change in fair value of warrants
Net income (loss) applicable to common stock
Net income (loss) per diluted share of Class A common stock
Diluted weighted average shares of Class A common stock
"Further, book value per share of Class A common stock increased 6% to $5.25 at December 31, 2012, compared with $4.97 at year-end 2011. The 2012 increase was due primarily to fluctuations in the market values of bonds and stocks in our portfolio," Riley said.
Riley commented, "We recognized investment losses in the quarter ending December 31, 2012 related to a $1.3 million other-than-temporary impairment of one coal producing energy bond issuer. Including that impairment, net realized gains on investments for the full year were lower than the prior year, although we sold previously impaired stock mutual fund holdings in both years. The sale of those securities allowed us to recover taxes paid on prior year gains and to achieve consolidated return tax savings. No warrants were outstanding at December 31, 2012, as they were exercised or expired during the year."
Turning to operating income, Riley noted, "Income for the year was reduced by the pressures of the current low interest rate environment on investment income and reserves. The assumption regarding investment income is a lead driver in the development of reserves and endowment products, which are comprising a significant amount of our new sales, and require higher reserve balances to be established earlier in the product duration. Whole life products, which accumulate initial reserves at a slower pace, were a smaller percentage of new business in 2012."
Reconciliation of Net Income to Operating Income (a non-GAAP measure)
(in thousands, except for per share data)
Net Income (loss)
Items excluded in the calculation of operating income:
Net realized investment (gains) and losses
Changes in the fair value of warrants
Pre tax effect of exclusions
Tax effect at 35%
Non-GAAP Financial Measures - The table above reconciles Net Income to Operating Income. Operating Income is a "Non-GAAP" financial measure that is widely used in our industry to evaluate the performance of underwriting operations. Operating Income excludes the Fair Value Changes of Warrants and the after-tax net effects of Net Realized Investment Gains and Losses. We believe it presents a useful view of the performance of our insurance operations. While we believe disclosure of certain Non-GAAP information is informative, you should not consider this information without also considering the information we present in accordance with GAAP.
INVESTOR CONFERENCE CALL
On Tuesday, March 12, 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) 637-2456 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.
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, 2012, its quarterly reports on Form 10-Q 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:
Chief Financial Officer
Consolidated Statements of Comprehensive Income
(In thousands, except per share amounts)
Three Months Ended
Twelve Months Ended
Accident and health insurance
Net investment income
Realized investment gains (losses), net
Decrease (increase) in fair value of warrants
Benefits and expenses:
Insurance benefits paid or provided:
Claims and surrenders
Increase in future policy benefit reserves
Total insurance benefits paid or provided
Other general expenses
Capitalization of deferred policy acquisition costs
Amortization of deferred policy acquisition costs
Amortization of cost of customer relationships acquired
Total benefits and expenses
Income (loss) before income tax expense
Income tax expense (benefit)
Net income (loss)
Per Share Amounts:
Basic and diluted earnings (loss) per share of Class A common stock
Basic and diluted earnings per share of Class B common stock
Other comprehensive income (loss):
Unrealized gains on available-for-sale securities:
Unrealized holding gains (losses) arising during period
Reclassification adjustment for (gains) losses included in net income
Unrealized gains (losses) on available-for-sale securities, net
Income tax expense (benefit) on unrealized gains on available-for-sale securities
Other comprehensive income (loss)
Comprehensive income (loss)
Consolidated Statements of Financial Position
Fixed maturities available-for-sale, at fair value (cost: $559,736 and $484,809 in 2012 and 2011, respectively)
Fixed maturities held-to-maturity, at amortized cost (fair value: $193,739 and $230,093 in 2012 and 2011, respectively)
Equity securities available-for-sale, at fair value (cost: $52,744 and $45,599 in 2012 and 2011, respectively)
Mortgage loans on real estate
Real estate held for investment (less $1,287 and $1,149 accumulated depreciation in 2012 and 2011, respectively)
Other long-term investments
Cash and cash equivalents
Accrued investment income
Deferred policy acquisition costs
Cost of customer relationships acquired
Other intangible assets
Federal income tax receivable
Property and equipment, net
Due premiums, net (less $1,345 and $1,698 allowance for doubtful accounts in 2012 and 2011, respectively)
Consolidated Statements of Financial Position, Continued
Liabilities and Stockholders' Equity
Future policy benefit reserves:
Accident and health
Premiums paid in advance
Policy claims payable
Other policyholders' funds
Total policy liabilities
Deferred federal income tax
Payable for securities in process of settlement
Class A, no par value, 100,000,000 shares authorized, 52,215,852 and 52,089,189 shares issued and outstanding 2012 and 2011, including shares in treasury of 3,135,738 in 2012 and 2011
Class B, no par value, 2,000,000 shares authorized, 1,001,714 shares issued and outstanding in 2012 and 2011
Accumulated other comprehensive income:
Unrealized gains on securities, net of tax
Treasury stock, at cost
Total stockholders' equity
Total liabilities and stockholders' equity
SOURCE Citizens, Inc.