Citizens Inc. (CIA, Financial) filed Quarterly Report for the period ended 2009-06-30.
Citizens Inc. operates primarily as an insurance holding company. Citizens Inc. has a market cap of $327.8 million; its shares were traded at around $6.98 with and P/S ratio of 2.3.
Other Non-Insurance. This segment consists of non-insurance entities. Income before Federal income tax was $0.1 million and $1.7 million for the three and six months ended June 30, 2009 compared to losses of $0.2 million and $1.1 million for the same period in 2008. The increase in 2009 income for this segment was related to a decrease in the fair value of warrants totaling $1.0 million and $3.1 million in the three and six months ended June 30, 2009 compared to income of $0.3 million and expense of $0.2 million for the three and six months ended June 30, 2008.
Premium Income. Premium income increased for the three and six months ended June 30, 2009 to $36.1 million and $70.3 million from $35.2 million and $67.9 million for the same period in 2008. The increase in 2009 was due primarily to an increase in renewal premiums totaling $32.1 million and $61.8 million for the three and six months ended June 30, 2009 compared to $29.2 million and $56.4 million for the same periods in 2008. In addition, approximately $1.0 million and $1.8 million of premium income for the three and six months ended June 30, 2009 related to the acquisitions of Integrity Capital Insurance Company (ICIC) and Ozark National Life Insurance Company (ONLIC), which were not included in the first six months of 2008.
Change in Fair Value of Warrants. The Company recognized revenues from adjusting the fair value of our Class A common stock warrants of $1.0 million and $3.1 million in the three and six months ended June 30, 2009 compared to a gain of $0.3 million and a loss of $0.2 million for the same periods in 2008. The Company adjusts the warrant liability at each reporting date to reflect the current fair value of warrants computed based upon the stock value and current market conditions, calculated using the Black-Scholes option pricing model. As the stock value increases and decreases, the warrant liability also increases and decreases in a like manner. The adjustment to fair value is recorded as an increase or decrease in fair value of warrants on the income statement.
Claims and Surrenders. As noted in the table below, claims and surrenders increased from $14.7 million and $27.8 million in the three and six months ended June 30, 2008 to $15.0 million and $29.8 million during the same periods in 2009.
Federal Income Tax. The effective tax rates for the three and six months ended June 30, 2009 were 25.0% and 24.6% versus 30.1% and 37.6% for the same periods in 2008. The rate variance from the statutory rate of 35% is due to the fact that the changes in fair value of our Class A common stock warrants, which resulted in a gain of $1.0 million and $3.1 million and a gain of $0.3 million and a loss of $0.2 million for the three and six months ended June 30, 2009 and 2008, respectively, are not tax effected. Additionally, the Company recorded an additional valuation allowance of $135,000 in the first six months of 2009 related to other-than-temporary impairments recognized in the quarter.
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Citizens Inc. operates primarily as an insurance holding company. Citizens Inc. has a market cap of $327.8 million; its shares were traded at around $6.98 with and P/S ratio of 2.3.
Highlight of Business Operations:
During the three and six months ended June 30, 2009, income before Federal income tax from this segment was $1.2 million and $2.3 million compared to $1.1 million and $3.0 million during the same periods in 2008. The decrease in income in 2009 is primarily the result of higher general expenses in the current year, in addition to a reserve increase related to ONLIC conversion adjustments. The 2008 income also reflected a reserve adjustment due to a SPLIC policy lapse issue that had the effect of decreasing reserves by $1.8 million and increasing income for the six months ended. ONLIC was acquired in the fourth quarter of 2008. The Company has noted improved sales related to ONLIC and SPLIC in 2009, which is a reflection of increased marketing efforts. The Company also recognized $1.3 million of capital gains from the sales of investment securities during the first six months ended June 30, 2009. The Home Service Insurance segment represented 24.0% of total income before Federal income tax for the six months ended June 30, 2009 compared to 34.8% for the same period in 2008. Our business strategy in this segment is to continue to serve existing customers in Louisiana and Arkansas, as well as expand the business through direct sales and the acquisition of similar operations.Other Non-Insurance. This segment consists of non-insurance entities. Income before Federal income tax was $0.1 million and $1.7 million for the three and six months ended June 30, 2009 compared to losses of $0.2 million and $1.1 million for the same period in 2008. The increase in 2009 income for this segment was related to a decrease in the fair value of warrants totaling $1.0 million and $3.1 million in the three and six months ended June 30, 2009 compared to income of $0.3 million and expense of $0.2 million for the three and six months ended June 30, 2008.
Premium Income. Premium income increased for the three and six months ended June 30, 2009 to $36.1 million and $70.3 million from $35.2 million and $67.9 million for the same period in 2008. The increase in 2009 was due primarily to an increase in renewal premiums totaling $32.1 million and $61.8 million for the three and six months ended June 30, 2009 compared to $29.2 million and $56.4 million for the same periods in 2008. In addition, approximately $1.0 million and $1.8 million of premium income for the three and six months ended June 30, 2009 related to the acquisitions of Integrity Capital Insurance Company (ICIC) and Ozark National Life Insurance Company (ONLIC), which were not included in the first six months of 2008.
Change in Fair Value of Warrants. The Company recognized revenues from adjusting the fair value of our Class A common stock warrants of $1.0 million and $3.1 million in the three and six months ended June 30, 2009 compared to a gain of $0.3 million and a loss of $0.2 million for the same periods in 2008. The Company adjusts the warrant liability at each reporting date to reflect the current fair value of warrants computed based upon the stock value and current market conditions, calculated using the Black-Scholes option pricing model. As the stock value increases and decreases, the warrant liability also increases and decreases in a like manner. The adjustment to fair value is recorded as an increase or decrease in fair value of warrants on the income statement.
Claims and Surrenders. As noted in the table below, claims and surrenders increased from $14.7 million and $27.8 million in the three and six months ended June 30, 2008 to $15.0 million and $29.8 million during the same periods in 2009.
Federal Income Tax. The effective tax rates for the three and six months ended June 30, 2009 were 25.0% and 24.6% versus 30.1% and 37.6% for the same periods in 2008. The rate variance from the statutory rate of 35% is due to the fact that the changes in fair value of our Class A common stock warrants, which resulted in a gain of $1.0 million and $3.1 million and a gain of $0.3 million and a loss of $0.2 million for the three and six months ended June 30, 2009 and 2008, respectively, are not tax effected. Additionally, the Company recorded an additional valuation allowance of $135,000 in the first six months of 2009 related to other-than-temporary impairments recognized in the quarter.
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