Citizens Announces 2019 Financial Results

AUSTIN, Texas, March 11, 2020 /PRNewswire/ -- Citizens, Inc. (NYSE: CIA) today announced full-year 2019 financial results showing an earnings per share improvement of $0.19 over 2018. Highlights included:  

• Net Loss ($1.4) million or ($0.03) per share of class A common stock--$0.19 per share improvement versus full-year 2018
• Net Income before federal income taxes of $5.7 million--an increase of 187%
• Revenue up 2.7%--driven by higher portfolio yields and realized investment gains
• Total assets up 8%--reaching $1.7 billion

Geoffrey M. Kolander, President and CEO, said, "Three years ago, we endeavored to transform Citizens, setting the course for a sustainable future.  We took clear and decisive actions to improve internal controls, remediate weaknesses in our financial and operational structures, and redefine our culture.  We assessed the strength of our people, products, and operations.  Based on clearly defined values and priorities, we made the hard decisions to recruit new talent, replace underperforming team members, exit unprofitable or undesirable markets, realign our distributors, improve the profitability of our product offerings and replace board members --all while navigating complex legal and regulatory challenges.

Today, we emerge a stronger company—defined by a focused strategy, tested leadership team, and improving financial position.  With a renewed culture, we enter this exciting next phase focused on creating enduring value for all our stakeholders."

Our Core Strategy

Cultivating Enduring Values and Customer Centric Growth

• Redefine and fortify our core business model to create, optimize and capture value
• Cultivate growth initiatives, new capabilities, a strong foundation, and focused operations

As we implement our enduring value and customer-centric growth strategy, we are focused on our core strengths, emphasizing people, processes, and technology. In our current operational environment, change is embraced--creating the best atmosphere for creating and capturing value--as we embark on the next phase of our transformation.

Transformation Update

Turning the corner at the three-year mark

Stabilized the Core Business

Evaluated, Rationalized and Aligned

Focused and Enabled

Mr. Kolander continued— "We have made tremendous progress over the past three years modernizing and executing a broad transformation plan. We enter 2020 with clearly defined priorities, a solid financial foundation, improving operations, and a clear customer strategy.

I am proud of the culture that we have built a culture of accountability with a performance-based mindset that is grounded in our well-defined core values.  While there is more work to be done, we are pleased to see our efforts beginning to show up in results.  Earnings per share improved in 2019, even after making tough decisions to stop selling new products in certain high producing areas.  With a stable core and a talented leadership team, we are poised to unleash the underlying potential of the business and create and capture value for shareholders."

Full-year 2019 Financial Update (compared with 2018)

Transformational improvements are beginning to impact trends

• Net Loss ($1.4) million or ($0.03) per Class A share--$0.19 per Class A share improvement vs. 2018
• Net Income before federal income taxes of $5.7 million-- up 187%
• Revenue up 2.7%--driven by higher portfolio yields and realized investment gains
• Total assets up 8%--reaching $1.7 billion
• Stockholders' equity rose 38.4%--primarily due to a change in unrealized gains on securities as market interest rates decreased from 2018 levels
• Life insurance in force of $4.2 billion down from $4.4 billion, driven by fewer policies from older business maturing and surrendering exceeding the volume of new business over the past year
• Increase of 2.1% over 2018 in Life Segment first-year sales to a total of $11.7 million

Net income improved $0.19 per share as transformational work begins to take hold. Revenue grew 2.7% driven by strong portfolio returns and realized gains, partially offset by lower insurance premiums.  As part of a new investment management strategy, our investment portfolio was repositioned into more diversified holdings and maturities, resulting in higher yields. This improvement, coupled with net realized gains, more than offset a decline in premiums stemming from fewer polices issued after decisions to exit products, realign our distributors, and improve product profitability. The rate of decline from selling fewer policies was lowered by higher face amounts.

We continue to employ process improvements to reduce expenses and fuel our transformation effort.  Over the past three years, our management team has devoted significant resources to achieving compliance with regulatory requirements and demonstrated an unwavering commitment to addressing deficiencies in our internal control environment. As a result, and for the first time in over five years, we have concluded that our internal controls over financial reporting were effective as of December 31, 2019. Although the burden of addressing internal control and compliance matters from past leadership teams has required significant cost of internal and external resources, we are now beginning to see the return with reductions in external audit fees, legal fees and outside consulting fees.  This decline has been offset by compensation and benefits for hiring talented executives and operational leaders.  To retain that talent, the Company introduced a long-term incentive program that issues restricted stock units based on executive performance, which had its first vesting of awards in 2019.  Finally, investments in sales and marketing activities were introduced to align collaborators, resulting in an improvement in new business production.

Selected Consolidated Financial Data

Segment Operations

Our business is comprised of two operating business segments and other non-insurance enterprises as detailed below. Our insurance operations are the primary focus of the Company, as those operations generate most of our income.

Life Insurance

Our Life Insurance segment primarily issues ordinary whole life insurance and endowment policies in U.S. dollar-denominated amounts to foreign residents in more than 20 countries through independent marketing consultants.

Home Service Insurance

Our Home Service Insurance segment provides pre-need and final expense ordinary life insurance and annuities to middle- and lower-income individuals primarily in Louisiana, Mississippi, and Arkansas. Our policies in this segment are sold and serviced through a home service marketing distribution system and funeral homes utilizing employees and independent agents.

Other Non-Insurance Enterprises

Other Non-Insurance Enterprises primarily includes the Company's IT and Corporate support functions, which are included in the table presentation below to properly reconcile the segment information with the consolidated financial statements of the Company.

Quarterly Financial Information (Unaudited)

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 final expense and limited liability property product sales in the U.S. 

Forward-Looking Statements

This press release 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", "believe", "project", "intends," "continue" or comparable words.  Such forward-looking statements may relate to business performance, operational strategy, capital expenditures, technological changes, regulatory actions, and other financial and operational measures. 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. Such statements are not guarantee of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control. Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements. The risks, uncertainties and assumptions that are involved in our forward-looking statements include, but are not limited to the risk factors discussed in detail in "Part I. Item 1A. – Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.  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.  Accordingly, you should not unduly rely on these forward-looking statements.  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:
Investor Relations [email protected]

SOURCE Citizens, Inc.

Related Links

http://www.citizensinc.com