Company Quick10K Filing
Citizens
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 -0 $-0
10-Q 2019-11-06 Quarter: 2019-09-30
10-Q 2019-08-07 Quarter: 2019-06-30
10-Q 2019-05-10 Quarter: 2019-03-31
10-K 2019-03-26 Annual: 2018-12-31
10-Q 2018-11-07 Quarter: 2018-09-30
10-Q 2018-08-07 Quarter: 2018-06-30
10-Q 2018-05-04 Quarter: 2018-03-31
10-K 2018-03-29 Annual: 2017-12-31
10-Q 2017-11-07 Quarter: 2017-09-30
10-Q 2017-08-04 Quarter: 2017-06-30
10-Q 2017-05-09 Quarter: 2017-03-31
10-K 2017-04-27 Annual: 2016-12-31
10-Q 2016-11-07 Quarter: 2016-09-30
10-Q 2016-08-09 Quarter: 2016-06-30
10-Q 2016-05-03 Quarter: 2016-03-31
10-K 2016-03-24 Annual: 2015-12-31
10-Q 2015-11-09 Quarter: 2015-09-30
10-Q 2015-08-06 Quarter: 2015-06-30
10-Q 2015-05-06 Quarter: 2015-03-31
10-K 2015-04-06 Annual: 2014-12-31
10-Q 2014-11-05 Quarter: 2014-09-30
10-Q 2014-08-07 Quarter: 2014-06-30
10-Q 2014-05-06 Quarter: 2014-03-31
10-K 2014-03-11 Annual: 2013-12-31
10-Q 2013-11-06 Quarter: 2013-09-30
10-Q 2013-08-06 Quarter: 2013-06-30
10-Q 2013-05-02 Quarter: 2013-03-31
10-K 2013-03-12 Annual: 2012-12-31
10-Q 2012-11-06 Quarter: 2012-09-30
10-Q 2012-08-06 Quarter: 2012-06-30
10-Q 2012-05-07 Quarter: 2012-03-31
10-K 2012-03-12 Annual: 2011-12-31
10-Q 2011-11-03 Quarter: 2011-09-30
10-Q 2011-08-08 Quarter: 2011-06-30
10-Q 2011-05-06 Quarter: 2011-03-31
10-K 2011-03-11 Annual: 2010-12-31
10-Q 2010-11-05 Quarter: 2010-09-30
10-Q 2010-08-06 Quarter: 2010-06-30
10-Q 2010-05-07 Quarter: 2010-03-31
10-K 2010-03-12 Annual: 2009-12-31
8-K 2019-11-08 Officers
8-K 2019-09-20 Officers, Exhibits
8-K 2019-07-12 Other Events
8-K 2019-06-04 Shareholder Vote
8-K 2019-03-27 Officers
8-K 2019-01-23 Officers, Exhibits
8-K 2019-01-18 Officers, Exhibits
8-K 2018-08-22 Other Events
8-K 2018-08-16 Officers
8-K 2018-06-11 Officers, Exhibits
8-K 2018-06-05 Shareholder Vote, Exhibits
8-K 2018-05-29 Other Events, Exhibits
8-K 2018-04-25 Other Events
8-K 2018-01-22 Officers, Exhibits
CIA 2019-09-30
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 cia-201993010qex311.htm
EX-31.2 cia-201993010qex312.htm
EX-32.1 cia-201993010qex321.htm
EX-32.2 cia-201993010qex322.htm

Citizens Earnings 2019-09-30

CIA 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
SLF
AEB
MFC
PJH
GL
AEG 392,633 370,065 0 0 0 0 -3,725 0%
CIA 1,702 1,466 246 0 -25 5 -35 0% -6.5 -1%
LFC 3,254,403 2,931,113 0 0 0 0 -50,792 0%
NWLI 12,613 10,558 679 0 136 165 -141 0% -0.9 1%
ATH 138,980 126,615 12,072 0 1,964 2,023 -5,239 0% -2.6 1%

10-Q 1 cia-201993010q.htm 10-Q Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2019
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
COMMISSION FILE NUMBER:  000-16509
citizenslogoa36.jpg
CITIZENS, INC.
(Exact name of registrant as specified in its charter)
Colorado
84-0755371
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
14231 Tandem Blvd, 2nd Floor
 
Austin, Texas
78728
(Address of principal executive offices)
(Zip Code)
 
 
 
2900 Esperanza Crossing, 2nd Floor
(512) 837-7100
Austin, Texas 78758
(Registrant's telephone number, including area code:)
(Former name, former address and former fiscal year,
if changed since last report:)
Securities registered pursuant to Section 12(b) of the Act
 
Class A Common Stock
CIA 
NYSE
(Title of Each Class)
(Trading Symbol(s))
(Name of Each Exchange on Which Registered)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o  No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o  No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:
 
Large accelerated
filer o
Accelerated
filer x
Non-accelerated
filer o
Smaller reporting
company o
Emerging growth
company o
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No
As of November 1, 2019, the Registrant had 52,364,993 shares of Class A common stock, no par value, outstanding and 1,001,714 shares of Class B common stock, no par value, outstanding.































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citizenslogoa36.jpg

TABLE OF CONTENTS
 
 
 
Page Number
Part I. FINANCIAL INFORMATION
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
Part II. OTHER INFORMATION
 
 
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
Item 5.
 
 
 
 
 
Item 6.



September 30, 2019 Form | 10-Q 1


PART I.  FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Financial Position
 
 
 
 
 
 
 
 
(In thousands)
September 30, 2019
 
December 31, 2018
Assets
(Unaudited)
 
 
Investments:
 
 
 
Fixed maturities available-for-sale, at fair value (cost: $1,278,293 and $1,223,747 in 2019 and 2018, respectively)
$
1,369,648

 
1,231,039

Equity securities, at fair value
15,845

 
15,068

Mortgage loans on real estate
180

 
186

Policy loans
81,964

 
80,825

Real estate held for investment (less $1,284 accumulated depreciation in 2018)

 
5,718

Real estate held-for-sale (less $1,325 and $4,411 accumulated depreciation in 2019 and 2018, respectively)
2,571

 
1,483

Other long-term investments
22

 
22

Short-term investments
2,453

 
7,865

Total investments
1,472,683

 
1,342,206

Cash and cash equivalents
47,147

 
45,492

Accrued investment income
17,648

 
18,467

Reinsurance recoverable
3,596

 
3,664

Deferred policy acquisition costs
150,289

 
155,747

Cost of customer relationships acquired
13,741

 
15,225

Goodwill
12,624

 
12,624

Other intangible assets
953

 
956

Property and equipment, net
6,639

 
5,943

Due premiums, net (less $1,640 and $1,990 allowance for doubtful accounts in 2019 and 2018, respectively)
10,737

 
13,325

Prepaid expenses
983

 
284

Other assets
1,319

 
1,628

Total assets
$
1,738,359

 
1,615,561


See accompanying Notes to Consolidated Financial Statements.



September 30, 2019 Form | 10-Q 2


CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Financial Position, Continued

 
 
 
 
(In thousands, except share amounts)
September 30, 2019
 
December 31, 2018
Liabilities and Stockholders' Equity
(Unaudited)
 
 
Liabilities:
 
 
 
Policy liabilities:
 
 
 
Future policy benefit reserves:
 
 
 
Life insurance
$
1,206,042

 
1,179,946

Annuities
76,427

 
76,377

Accident and health
997

 
944

Dividend accumulations
28,400

 
26,250

Premiums paid in advance
42,591

 
48,553

Policy claims payable
8,095

 
7,614

Other policyholders' funds
16,400

 
10,760

Total policy liabilities
1,378,952

 
1,350,444

Commissions payable
2,096

 
1,901

Current federal income tax payable
47,861

 
41,281

Deferred federal income tax payable
12,081

 
5,709

Payable for securities in process of settlement
6,030

 

Other liabilities
29,997

 
28,493

Total liabilities
1,477,017

 
1,427,828

Commitments and contingencies (Note 7)


 


Stockholders' equity:
 

 
 

Class A, no par value, 100,000,000 shares authorized, 52,364,993 and 52,215,852 shares issued and outstanding in 2019 and 2018, respectively, including shares in treasury of 3,135,738 in 2019 and 2018
261,346

 
259,793

Class B, no par value, 2,000,000 shares authorized, 1,001,714 shares issued and outstanding in 2019 and 2018
3,184

 
3,184

Accumulated deficit
(75,920
)
 
(69,599
)
Accumulated other comprehensive income:
 

 
 

Net unrealized gains on securities, net of tax
83,743

 
5,366

Treasury stock, at cost
(11,011
)
 
(11,011
)
Total stockholders' equity
261,342

 
187,733

Total liabilities and stockholders' equity
$
1,738,359

 
1,615,561


See accompanying Notes to Consolidated Financial Statements.




September 30, 2019 Form | 10-Q 3


CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)

Three Months Ended September 30,
(In thousands, except per share amounts)
2019
 
2018
(As Restated*)
Revenues:
 
 
 
Premiums:
 
 
 
Life insurance
$
44,502

 
45,898

Accident and health insurance
350

 
323

Property insurance
1,157

 
1,208

Net investment income
15,039

 
13,587

Realized investment gains (losses), net
72

 
(498
)
Other income
347

 
643

Total revenues
61,467

 
61,161

Benefits and Expenses:
 

 
 

Insurance benefits paid or provided:
 

 
 

Claims and surrenders
28,751

 
25,076

Increase in future policy benefit reserves
6,409

 
1,653

Policyholders' dividends
1,560

 
1,595

Total insurance benefits paid or provided
36,720

 
28,324

Commissions
8,879

 
8,656

Other general expenses
11,530

 
12,402

Capitalization of deferred policy acquisition costs
(5,984
)
 
(5,561
)
Amortization of deferred policy acquisition costs
7,835

 
11,412

Amortization of cost of customer relationships acquired
355

 
366

Total benefits and expenses
59,335

 
55,599

Income before federal income tax
2,132

 
5,562

Federal income tax expense
86

 
12,671

Net income (loss)
2,046

 
(7,109
)
Per Share Amounts:
 

 
 

Basic and diluted earnings (losses) per share of Class A common stock
0.04

 
(0.14
)
Basic and diluted earnings (losses) per share of Class B common stock
0.02

 
(0.07
)
Other Comprehensive Income (Loss):
 

 
 

Unrealized gains (losses) on available-for-sale debt securities:
 

 
 

Unrealized holding gains (losses) arising during period
24,201

 
(2,236
)
Reclassification adjustment for losses (gains) included in net income
(53
)
 
656

Unrealized gains (losses) on available-for-sale debt securities, net
24,148

 
(1,580
)
Income tax expense on unrealized gains (losses) on available-for-sale debt securities
1,627

 
454

Other comprehensive income (loss)
22,521

 
(2,034
)
Total comprehensive income (loss)
$
24,567

 
(9,143
)
* See Note 1 in the Notes to Consolidated Financial Statements

See accompanying Notes to Consolidated Financial Statements.




September 30, 2019 Form | 10-Q 4


CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)

Nine Months Ended September 30,
(In thousands, except per share amounts)
2019
 
2018
(As Restated*)
Revenues:
 
 
 
Premiums:
 
 
 
Life insurance
$
127,795

 
133,058

Accident and health insurance
1,018

 
915

Property insurance
3,464

 
3,615

Net investment income
44,150

 
41,169

Realized investment gains (losses), net
3,164

 
(1,251
)
Other income
1,148

 
930

Total revenues
180,739

 
178,436

Benefits and Expenses:
 

 
 

Insurance benefits paid or provided:
 

 
 

Claims and surrenders
78,808

 
66,844

Increase in future policy benefit reserves
28,180

 
32,816

Policyholders' dividends
4,165

 
4,516

Total insurance benefits paid or provided
111,153

 
104,176

Commissions
25,147

 
26,284

Other general expenses
37,611

 
33,375

Capitalization of deferred policy acquisition costs
(16,224
)
 
(17,164
)
Amortization of deferred policy acquisition costs
21,043

 
26,218

Amortization of cost of customer relationships acquired
1,192

 
1,517

Total benefits and expenses
179,922

 
174,406

Income before federal income tax
817

 
4,030

Federal income tax expense
7,138

 
13,660

Net loss
(6,321
)
 
(9,630
)
Per Share Amounts:
 

 
 

Basic and diluted losses per share of Class A common stock
(0.13
)
 
(0.19
)
Basic and diluted losses per share of Class B common stock
(0.06
)
 
(0.10
)
Other Comprehensive Income (Loss):
 

 
 

Unrealized gains (losses) on available-for-sale debt securities:
 

 
 

Unrealized holding gains (losses) arising during period
84,222

 
(32,663
)
Reclassification adjustment for losses (gains) included in net income
(30
)
 
1,002

Unrealized gains (losses) on available-for-sale debt securities, net
84,192

 
(31,661
)
Income tax expense (benefit) on unrealized gains (losses) on available-for-sale debt securities
5,815

 
(5,852
)
Other comprehensive income (loss)
78,377

 
(25,809
)
Total comprehensive income (loss)
$
72,056

 
(35,439
)
* See Note 1 in the Notes to Consolidated Financial Statements

See accompanying Notes to Consolidated Financial Statements.



September 30, 2019 Form | 10-Q 5


CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Accumulated
deficit
 
Accumulated other comprehensive income
 
Treasury
stock
 
Total
Stock-holders'
equity
(In thousands)
Class A
 
Class B
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018
$
259,793

 
3,184

 
(69,599
)
 
5,366

 
(11,011
)
 
187,733

Comprehensive income:
 
 
 
 
 
 
 
 
 
 
 
Net loss

 

 
(3,802
)
 

 

 
(3,802
)
Unrealized investment gains, net

 

 

 
26,880

 

 
26,880

Total comprehensive income

 

 
(3,802
)
 
26,880

 

 
23,078

Stock-based compensation
1,083

 

 

 

 

 
1,083

Balance at March 31, 2019
260,876

 
3,184

 
(73,401
)
 
32,246

 
(11,011
)
 
211,894

Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

Net loss

 

 
(4,565
)
 

 

 
(4,565
)
Unrealized investment gains, net

 

 

 
28,976

 

 
28,976

Total comprehensive income

 

 
(4,565
)
 
28,976

 

 
24,411

Stock-based compensation
127

 

 

 

 

 
127

Balance at June 30, 2019
261,003

 
3,184

 
(77,966
)
 
61,222

 
(11,011
)
 
236,432

Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

Net income

 

 
2,046

 

 

 
2,046

Unrealized investment gains, net

 

 

 
22,521

 

 
22,521

Total comprehensive income

 

 
2,046

 
22,521

 

 
24,567

Stock-based compensation
343

 

 

 

 

 
343

Balance at September 30, 2019
$
261,346

 
3,184

 
(75,920
)
 
83,743

 
(11,011
)
 
261,342


See accompanying Notes to Consolidated Financial Statements.




September 30, 2019 Form | 10-Q 6


CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Stockholders' Equity, Continued
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Accumulated
deficit
 
Accumulated other comprehensive income (loss)
 
Treasury
stock
 
Total
Stock-holders'
equity
(In thousands)
Class A
 
Class B
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2017
$
259,383

 
3,184

 
(54,375
)
 
26,332

 
(11,011
)
 
223,513

Accounting standards adopted January 1, 2018

 

 
(4,162
)
 
4,162

 

 

Balance at January 1, 2018
259,383

 
3,184

 
(58,537
)
 
30,494

 
(11,011
)
 
223,513

Comprehensive loss:
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 
37

 

 

 
37

Unrealized investment losses, net

 

 

 
(14,104
)
 

 
(14,104
)
Total comprehensive loss

 

 
37

 
(14,104
)
 

 
(14,067
)
Balance at March 31, 2018
259,383

 
3,184

 
(58,500
)

16,390

 
(11,011
)
 
209,446

Comprehensive loss:
 

 
 

 
 

 
 

 
 

 
 

Net loss

 

 
(2,558
)
 

 

 
(2,558
)
Unrealized investment losses, net

 

 

 
(9,671
)
 

 
(9,671
)
Total comprehensive loss

 

 
(2,558
)
 
(9,671
)
 

 
(12,229
)
Stock-based compensation
213

 

 

 

 

 
213

Balance at June 30, 2018
259,596

 
3,184

 
(61,058
)
 
6,719

 
(11,011
)
 
197,430

Comprehensive loss:
 

 
 

 
 

 
 

 
 

 
 

Net loss (as restated*)

 

 
(7,109
)
 

 

 
(7,109
)
Unrealized investment losses, net

 

 

 
(2,854
)
 

 
(2,854
)
Unrealized gain from held-to-maturity securities transferred to available-for-sale

 

 

 
820

 

 
820

Total comprehensive loss (as restated*)

 

 
(7,109
)
 
(2,034
)
 

 
(9,143
)
Stock-based compensation
97

 

 

 

 

 
97

Balance at September 30, 2018 (as restated*)
$
259,693

 
3,184

 
(68,167
)
 
4,685

 
(11,011
)
 
188,384

* See Note 1 in the Notes to Consolidated Financial Statements

See accompanying Notes to Consolidated Financial Statements.





September 30, 2019 Form | 10-Q 7


CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)

Nine Months Ended September 30,
(In thousands)
2019
 
2018
(As Restated*)
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(6,321
)
 
(9,630
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 

 
 

Realized (gains) losses on sale of investments and other assets
(3,164
)
 
1,251

Net deferred policy acquisition costs
4,819

 
9,054

Amortization of cost of customer relationships acquired
1,192

 
1,517

Depreciation
1,269

 
921

Amortization of premiums and discounts on investments
10,422

 
12,781

Stock-based compensation
1,930

 
310

Deferred federal income tax benefit
560

 
59,329

Change in:
 

 
 

Accrued investment income
819

 
673

Reinsurance recoverable
68

 
89

Due premiums
2,588

 
427

Future policy benefit reserves
27,994

 
33,425

Other policyholders' liabilities
2,309

 
1,413

Federal income tax payable
6,580

 
(45,678
)
Commissions payable and other liabilities
1,699

 
558

Other, net
(1,851
)
 
(1,205
)
Net cash provided by operating activities
50,913

 
65,235

Cash flows from investing activities:
 

 
 

Purchase of fixed maturities, available-for-sale
(210,445
)
 
(109,642
)
Sale of fixed maturities, available-for-sale
39,708

 
1,084

Maturities and calls of fixed maturities, available-for-sale
111,757

 
51,190

Maturities and calls of fixed maturities, held-to-maturity

 
20,699

Purchase of equity securities

 
(9
)
Principal payments on mortgage loans
6

 
7

Increase in policy loans, net
(1,141
)
 
(5,277
)
Sale of other long-term investments and real estate
6,981

 
14

Sale of property and equipment
15

 

Purchase of property and equipment
(509
)
 
(437
)
Maturity of short-term investments
7,940

 

Purchase of short-term investments
(2,456
)
 

Net cash used in investing activities
(48,144
)
 
(42,371
)
* See Note 1 in the Notes to Consolidated Financial Statements
 
 
 

See accompanying Notes to Consolidated Financial Statements.
 



September 30, 2019 Form | 10-Q 8


CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(Unaudited)

Nine Months Ended September 30,
(In thousands)
2019
 
2018
(As Restated*)
Cash flows from financing activities:
 

 
 

Annuity deposits
$
4,948

 
5,222

Annuity withdrawals
(5,685
)
 
(5,397
)
Other
(377
)
 

Net cash used in financing activities
(1,114
)
 
(175
)
Net increase in cash and cash equivalents
1,655

 
22,689

Cash and cash equivalents at beginning of year
45,492

 
46,064

Cash and cash equivalents at end of period
$
47,147

 
68,753

* See Note 1 in the Notes to Consolidated Financial Statements
 
 
 


SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:

During the nine months ended September 30, 2019 and 2018, various fixed maturity issuers exchanged securities with book values of $12.2 million and $2.5 million, respectively, for securities of equal value.

The Company had net unsettled security trades of $6.0 million at September 30, 2019 and none at September 30, 2018.


See accompanying Notes to Consolidated Financial Statements.




September 30, 2019 Form | 10-Q 9


CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
(Unaudited)
 
 
 


(1) FINANCIAL STATEMENTS

BASIS OF PRESENTATION AND CONSOLIDATION

The consolidated financial statements include the accounts and operations of Citizens, Inc. ("Citizens"), a Colorado corporation, and its wholly-owned subsidiaries, CICA Life Insurance Company of America ("CICA"), Citizens National Life Insurance Company ("CNLIC"), CICA Life Ltd. ("CICA Ltd."), Security Plan Life Insurance Company ("SPLIC"), Security Plan Fire Insurance Company ("SPFIC"), Magnolia Guaranty Life Insurance Company ("MGLIC") and Computing Technology, Inc. ("CTI"). All significant inter-company accounts and interactions have been eliminated. Citizens and its wholly-owned subsidiaries are collectively referred to as the "Company", "we", "us" or "our".

The consolidated statements of financial position as of September 30, 2019, the consolidated statements of comprehensive income and stockholders' equity for the three and nine months ended September 30, 2019 and September 30, 2018 and the consolidated statements of cash flows for the nine months ended September 30, 2019 and September 30, 2018 have been prepared by the Company without audit.  In the opinion of management, all normal and recurring adjustments to present fairly the financial position, results of operations, and changes in cash flows at September 30, 2019 and for comparative periods have been made.  The consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission ("SEC").  Accordingly, the consolidated financial statements do not include all the information and footnotes required for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.  Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

We provide primarily life insurance and a small amount of health insurance policies through our insurance subsidiaries - CICA, CNLIC, CICA Ltd., SPLIC and MGLIC.  CICA and CNLIC issued ordinary whole-life policies, credit life and disability, and accident and health related policies, throughout the Midwest and southern U.S. until they ceased most domestic sales beginning January 1, 2017.  CICA Ltd. primarily issues endowment and ordinary whole-life policies to non-U.S. residents. SPLIC offers final expense and home service life insurance in Louisiana, Arkansas and Mississippi. SPFIC, a wholly-owned subsidiary of SPLIC, writes a limited amount of property insurance in Louisiana. MGLIC provides industrial life policies through independent funeral homes in Mississippi.

CTI provides data processing systems and services to the Company.




September 30, 2019 Form | 10-Q 10


CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
(Unaudited)
 
 
 

We converted to a new actuarial valuation software solution impacting both the Home Service Insurance and Life Insurance segments, providing enhanced modeling capabilities for the ordinary whole life policies of SPLIC as of July 1, 2019 and the ordinary whole life and endowment policies of CICA and CICA Ltd. as of July 1, 2018. The total impact of these system conversions reflected in the accompanying consolidated financial statements as of and for the three and nine months ended September 30, 2019 and 2018 are summarized in the table below.
(In thousands)
 
September 30, 2019
 
September 30, 2018
Increase (Decrease)
 
 
 
 
Consolidated Statements of Financial Position
 
 
 
 
Deferred policy acquisition costs
 
$
(1,396
)
 
(4,339
)
Future policy benefit reserves:
 
 
 
 
Life insurance
 
(2,299
)
 
(10,197
)
 
 
 
 
 
Consolidated Statement of Comprehensive Income
 
 
 
 
Decrease in future policy benefit reserves
 
(2,299
)
 
(10,197
)
Amortization of deferred policy acquisition costs
 
1,396

 
4,339

Income before federal income tax
 
903

 
5,858

Federal income tax expense
 
190

 
1,230

Net income
 
$
713

 
4,628


USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Significant estimates include those used in the evaluation of other-than-temporary impairments on debt and equity securities, actuarially determined assets and liabilities and assumptions, tests of goodwill impairment, valuation allowance on deferred tax assets, valuation of uncertain tax positions and contingencies relating to litigation and regulatory matters.  Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the consolidated financial statements.

RESTATEMENT

As disclosed in Note 14. Quarterly Financial Information (Unaudited) in the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, the Company has restated its unaudited consolidated financial information as of and for the three and nine month periods ended September 30, 2018 to correct an immaterial error related to the accounting for the income tax effects of the novation of international insurance policies to our Bermuda-based subsidiary on July 1, 2018.




September 30, 2019 Form | 10-Q 11


CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
(Unaudited)
 
 
 

Federal income tax expense and net income (loss) have been restated herein to properly reflect the reduction in federal income tax expense as compared to originally reported amounts. Basic & diluted earnings (losses) per share of Class A common stock and Class B common stock were also restated. The table below reflects the line items adjusted as a result of the restatement as of September 30, 2018 and for the three and nine months ended September 30, 2018.

(In thousands, except per share amounts)
 
As Previously Reported
 
Adjustments
 
As Restated
For the Three Months Ended September 30, 2018
 
 
 
 
 
 
Consolidated Statement of Comprehensive Income
 
 
 
 
 
 
Federal income expense (benefit)
 
$
20,316

 
(7,645
)
 
12,671

Net income (loss)
 
(14,754
)
 
7,645

 
(7,109
)
Basic and diluted earnings (losses) per share of Class A common stock
 
(0.30
)
 
0.16

 
(0.14
)
Basic and diluted earnings (losses) per share of Class B common stock
 
(0.14
)
 
0.07

 
(0.07
)
Total comprehensive income (loss)
 
(16,788
)
 
7,645

 
(9,143
)
For the Nine Months Ended September 30, 2018
 
 
 
 
 
 
Consolidated Statement of Comprehensive Income
 
 
 
 
 
 
Federal income expense (benefit)
 
$
21,305

 
(7,645
)
 
13,660

Net income (loss)
 
(17,275
)
 
7,645

 
(9,630
)
Basic and diluted earnings (losses) per share of Class A common stock
 
(0.35
)
 
0.16

 
(0.19
)
Basic and diluted earnings (losses) per share of Class B common stock
 
(0.17
)
 
0.07

 
(0.10
)
Total comprehensive income (loss)
 
(43,084
)
 
7,645

 
(35,439
)
As of September 30, 2018
 
 
 
 
 
 
Consolidated Statements of Stockholders' Equity
 
 
 
 
 
 
Balance at June 30, 2018
 
$
197,430

 

 
197,430

Net income (loss)
 
(14,754
)
 
7,645

 
(7,109
)
Total comprehensive income (loss)
 
(16,788
)
 
7,645

 
(9,143
)
Accumulated deficit
 
(75,812
)
 
7,645

 
(68,167
)
Balance at September 30, 2018
 
180,739

 
7,645

 
188,384

For the Nine Months Ended September 30, 2018
 
 
 
 
 
 
Consolidated Statements of Cash Flows
 
 
 
 
 
 
Net income (loss)
 
$
(17,275
)
 
7,645

 
(9,630
)
Deferred federal income tax (expense) benefit
 
67,040

 
(7,711
)
 
59,329

Federal income tax payable
 
(45,744
)
 
66

 
(45,678
)
Net cash provided by operating activities
 
65,235

 

 
65,235


SIGNIFICANT ACCOUNTING POLICIES

For a description of our significant accounting policies, see Note 1. Summary of Significant Accounting Policies in the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, which should be read in conjunction with these accompanying consolidated financial statements.



September 30, 2019 Form | 10-Q 12


CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
(Unaudited)
 
 
 


(2) ACCOUNTING PRONOUNCEMENTS

ACCOUNTING STANDARDS RECENTLY ADOPTED

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842). The ASU requires organizations that lease assets, referred to as "lessees," to recognize on the consolidated statement of financial position the rights and obligations created by those leases. The ASU also requires disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the consolidated financial statements. The ASU on leases became effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

The Company has several lease agreements, such as district office locations related to our Home Service Insurance segment. The Company adopted this standard effective January 1, 2019 and recognizes these lease agreements on the consolidated statements of financial position as a right-of-use asset and a corresponding lease liability. See Note 9. Leases for further discussion.

In March 2017, the FASB issued ASU No. 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20). The amendments in this ASU shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The Company has a large portfolio of callable debt securities purchased at a premium. As such, the Company had already been amortizing the premium to the earliest call date (yield to worst), thus adoption of this guidance as of January 1, 2019 did not have a material impact on our consolidated financial statements. For public business entities, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. This ASU is intended to simplify aspects of share-based compensation issued to non-employees by making the guidance consistent with the accounting for employee share-based compensation. This ASU is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods, with early adoption permitted. We adopted the provisions of this ASU as of January 1, 2019. This guidance did not have a material impact on our consolidated financial statements.

ACCOUNTING STANDARDS NOT YET ADOPTED

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), with the main objective to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The ASU requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the increases or decreases of expected credit losses that have taken place during the period. Credit losses on available-for-sale debt securities should be measured in a manner similar to current U.S. GAAP; however, the credit losses are recorded through an allowance for credit losses rather than as a write-down. This approach is an improvement to current U.S. GAAP because an entity will be able to record reversals of credit losses (in situations in which the estimate of credit losses declines) in current period net income, which in turn should align the income statement recognition of credit losses with the reporting period in which changes occur. Current U.S. GAAP prohibits reflecting those improvements in current-period earnings. For public business entities, the amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.



September 30, 2019 Form | 10-Q 13


CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
(Unaudited)
 
 
 

The Company has evaluated the impact this guidance will have on our consolidated financial statements and expects the impact to be immaterial.

In August 2018, the FASB issued ASU No. 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. This ASU amends four key areas of the accounting and impacts disclosures for long-duration insurance and investment contracts:

Requires updated assumptions for liability measurement. Assumptions used to measure the liability for traditional insurance contracts, which are typically determined at contract inception, will now be reviewed at least annually, and, if there is a change, updated, with the effect recorded in net income;
Standardizes the liability discount rate. The liability discount rate will be a market-observable discount rate (upper-medium grade fixed-income instrument yield), with the effect of rate changes recorded in other comprehensive income;
Provides greater consistency in measurement of market risk benefits. The two previous measurement models have been reduced to one measurement model (fair value), resulting in greater uniformity across similar market-based benefits and better alignment with the fair value measurement of derivatives used to hedge capital market risk;
Simplifies amortization of deferred acquisition costs. Previous earnings-based amortization methods have been replaced with a more level amortization basis; and
Requires enhanced disclosures. The new disclosures include rollforwards and information about significant assumptions and the effects of changes in those assumptions.

For calendar-year public companies, the changes will be effective on January 1, 2022. The Company is evaluating the impact this guidance will have on our consolidated financial statements. This new guidance is expected to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This ASU will be effective for interim and annual reporting periods beginning after December 15, 2019; however, early adoption is permitted. Entities are also allowed to elect early adoption of the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective date. As this ASU only revises disclosure requirements, it is not expected to have a material impact on the Company’s consolidated financial statements.

In September 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU requires an entity in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. Capitalized implementation costs should be presented in the same line item on the balance sheet as amounts prepaid for the hosted service, if any (generally as an "other asset"). The capitalized costs will be amortized over the term of the hosting arrangement, with the amortization expense being presented in the same income statement line item as the fees paid for the hosted service. This ASU will be effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted. We are evaluating the impact of this guidance on our limited cloud computing arrangements and our consolidated financial statements.

No other new accounting pronouncement issued or effective during the year had, or is expected to have, a material impact on our consolidated financial statements.

(3) SEGMENT INFORMATION

The Company has two reportable segments:  Life Insurance and Home Service Insurance.  The Life Insurance and



September 30, 2019 Form | 10-Q 14


CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
(Unaudited)
 
 
 

Home Service Insurance portions of the Company constitute separate businesses. CICA, CICA Ltd. and CNLIC constitute the Life Insurance segment, and SPLIC, SPFIC and MGLIC constitute the Home Service Insurance segment. In addition to the Life Insurance and Home Service Insurance business, the Company also operates other non-insurance ("Other Non-Insurance Enterprises") portions of the Company, which primarily include the Company's IT and Corporate-support functions, and are included in the tables presented below to properly reconcile the segment information with the consolidated financial statements of the Company.

The accounting policies of the reportable segments and Other Non-Insurance Enterprises are presented in accordance with U.S. GAAP and are the same as those used in the preparation of the consolidated financial statements.  The Company evaluates profit and loss performance based on U.S. GAAP income before federal income taxes for its two reportable segments.

The Company's Other Non-Insurance Enterprises are the only reportable difference between segments and consolidated operations.
 
Life Insurance
 
Home Service Insurance
 
Other Non-Insurance Enterprises
 
Consolidated
Three Months Ended September 30, 2019
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Premiums
$
34,385

 
11,624

 

 
46,009

Net investment income
11,340

 
3,309

 
390

 
15,039

Realized investment gains, net
61

 
3

 
8

 
72

Other income (loss)
349

 
(2
)
 

 
347

Total revenue
46,135

 
14,934

 
398

 
61,467

Benefits and expenses:
 
 
 

 
 

 
 

Insurance benefits paid or provided:
 

 
 

 
 

 
 

Claims and surrenders
22,533

 
6,218

 

 
28,751

Increase in future policy benefit reserves
7,667

 
(1,258
)
 

 
6,409

Policyholders' dividends
1,551

 
9

 

 
1,560

Total insurance benefits paid or provided
31,751

 
4,969

 

 
36,720

Commissions
5,386

 
3,493

 

 
8,879

Other general expenses
5,358

 
4,669

 
1,503

 
11,530

Capitalization of deferred policy acquisition costs
(4,743
)
 
(1,241
)
 

 
(5,984
)
Amortization of deferred policy acquisition costs
5,960

 
1,875

 

 
7,835

Amortization of cost of customer relationships acquired
113

 
242

 

 
355

Total benefits and expenses
43,825

 
14,007

 
1,503

 
59,335

Income (loss) before income tax expense
$
2,310

 
927

 
(1,105
)
 
2,132




September 30, 2019 Form | 10-Q 15


CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
(Unaudited)
 
 
 

 
Life Insurance
 
Home Service Insurance
 
Other Non-Insurance Enterprises
 
Consolidated
Nine Months Ended September 30, 2019
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Premiums
$
97,439

 
34,838

 

 
132,277

Net investment income
33,121

 
9,720

 
1,309

 
44,150

Realized investment gains (losses), net
5,586

 
639

 
(3,061
)
 
3,164

Other income
1,146

 

 
2

 
1,148

Total revenue
137,292

 
45,197

 
(1,750
)
 
180,739

Benefits and expenses:
 
 
 

 
 

 
 

Insurance benefits paid or provided:
 

 
 

 
 

 
 

Claims and surrenders
61,011

 
17,797

 

 
78,808

Increase in future policy benefit reserves
27,499

 
681

 

 
28,180

Policyholders' dividends
4,136

 
29

 

 
4,165

Total insurance benefits paid or provided
92,646

 
18,507

 

 
111,153

Commissions
14,435

 
10,712

 

 
25,147

Other general expenses
18,021

 
15,071

 
4,519

 
37,611

Capitalization of deferred policy acquisition costs
(12,465
)
 
(3,759
)
 

 
(16,224
)
Amortization of deferred policy acquisition costs
17,454

 
3,589

 

 
21,043

Amortization of cost of customer relationships acquired
373

 
819

 

 
1,192

Total benefits and expenses
130,464

 
44,939

 
4,519

 
179,922

Income (loss) before federal income tax expense
$
6,828

 
258

 
(6,269
)
 
817





September 30, 2019 Form | 10-Q 16


CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
(Unaudited)
 
 
 

 
Life Insurance
 
Home Service Insurance
 
Other Non-Insurance Enterprises
 
Consolidated
Three Months Ended September 30, 2018
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Premiums
$
35,784

 
11,645

 

 
47,429

Net investment income
10,062

 
3,276

 
249

 
13,587

Realized investment gains (losses), net
(475
)
 
(32
)
 
9

 
(498
)
Other income
643

 

 

 
643

Total revenue
46,014

 
14,889

 
258

 
61,161

Benefits and expenses:
 

 
 

 
 

 
 

Insurance benefits paid or provided:
 

 
 

 
 

 
 

Claims and surrenders
19,212

 
5,864

 

 
25,076

Increase in future policy benefit reserves
544

 
1,109

 

 
1,653

Policyholders' dividends
1,581

 
14

 

 
1,595

Total insurance benefits paid or provided
21,337

 
6,987

 

 
28,324

Commissions
4,712

 
3,944

 

 
8,656

Other general expenses
6,583

 
4,502

 
1,317

 
12,402

Capitalization of deferred policy acquisition costs
(3,873
)
 
(1,688
)
 

 
(5,561
)
Amortization of deferred policy acquisition costs
10,132

 
1,280

 

 
11,412

Amortization of cost of customer relationships acquired
150

 
216

 

 
366

Total benefits and expenses
39,041

 
15,241

 
1,317

 
55,599

Income (loss) before income tax expense
$
6,973

 
(352
)
 
(1,059
)
 
5,562





September 30, 2019 Form | 10-Q 17


CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
(Unaudited)
 
 
 

 
Life Insurance
 
Home Service Insurance
 
Other Non-Insurance Enterprises
 
Consolidated
Nine Months Ended September 30, 2018
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Premiums
$
102,537

 
35,051

 

 
137,588

Net investment income
30,331

 
9,894

 
944

 
41,169

Realized investment losses, net
(684
)
 
(535
)
 
(32
)
 
(1,251
)
Other income (loss)
931

 
(1
)
 

 
930

Total revenue
133,115

 
44,409

 
912

 
178,436

Benefits and expenses:
 

 
 

 
 

 
 

Insurance benefits paid or provided:
 

 
 

 
 

 
 

Claims and surrenders
49,522

 
17,322

 

 
66,844

Increase in future policy benefit reserves
29,509

 
3,307

 

 
32,816

Policyholders' dividends
4,483

 
33

 

 
4,516

Total insurance benefits paid or provided
83,514

 
20,662

 

 
104,176

Commissions
14,717

 
11,567

 

 
26,284

Other general expenses
12,607

 
15,438

 
5,330

 
33,375

Capitalization of deferred policy acquisition costs
(12,663
)
 
(4,501
)
 

 
(17,164
)
Amortization of deferred policy acquisition costs
22,912

 
3,306

 

 
26,218

Amortization of cost of customer relationships acquired
434

 
1,083

 

 
1,517

Total benefits and expenses
121,521

 
47,555

 
5,330

 
174,406

Income (loss) before federal income tax expense
$
11,594

 
(3,146
)
 
(4,418
)
 
4,030





September 30, 2019 Form | 10-Q 18


CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
(Unaudited)
 
 
 

(4) EARNINGS PER SHARE

The following tables set forth the computation of basic and diluted earnings per share.
Three Months Ended September 30,
2019
 
2018
(As Restated*)
(In thousands, except per share amounts)
 
 
 
 
 
Basic and diluted earnings per share:
 
 
 
Numerator:
 
 
 
Net income (loss)
$
2,046

 
(7,109
)
Net income (loss) allocated to Class A common stock
$
2,026

 
(7,036
)
Net income (loss) allocated to Class B common stock
20

 
(73
)
Net income (loss)
$
2,046

 
(7,109
)
 
 
 
 
Denominator:
 
 
 
Weighted average shares of Class A outstanding - basic
49,229

 
49,080

Weighted average shares of Class A outstanding - diluted
49,327

 
49,127

Weighted average shares of Class B outstanding - basic and diluted
1,002

 
1,002

Basic and diluted earnings (loss) per share of Class A common stock
$
0.04

 
(0.14
)
Basic and diluted earnings (loss) per share of Class B common stock
0.02

 
(0.07
)
* See Note 1 in the Notes to Consolidated Financial Statements

Nine Months Ended September 30,
2019
 
2018
(As Restated*)
(In thousands, except per share amounts)
 
 
 
 
 
Basic and diluted earnings per share:
 
 
 
Numerator:
 
 
 
Net loss
$
(6,321
)
 
(9,630
)
Net loss allocated to Class A common stock
$
(6,257
)
 
(9,533
)
Net loss allocated to Class B common stock
(64
)
 
(97
)
Net loss
$
(6,321
)
 
(9,630
)
 
 
 
 
Denominator:
 
 
 
Weighted average shares of Class A outstanding - basic
49,229

 
49,080

Weighted average shares of Class A outstanding - diluted
49,327

 
49,127

Weighted average shares of Class B outstanding - basic and diluted
1,002

 
1,002

Basic and diluted loss per share of Class A common stock
$
(0.13
)
 
(0.19
)
Basic and diluted loss per share of Class B common stock
(0.06
)
 
(0.10
)
* See Note 1 in the Notes to Consolidated Financial Statements




September 30, 2019 Form | 10-Q 19


CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
(Unaudited)
 
 
 

(5) INVESTMENTS

The Company invests primarily in fixed maturity securities, which totaled 90.1% of total cash, cash equivalents and investments at September 30, 2019. The Company's cash, cash equivalents and investments are listed below.

Carrying Value
(In thousands, except for %)
September 30, 2019
 
December 31, 2018
Amount
 
%
 
Amount
 
%
 
 
 
 
 
 
 
 
Fixed maturity securities
$
1,369,648

 
90.1
%
 
$
1,231,039

 
88.7
%
Equity securities
15,845

 
1.0
%
 
15,068

 
1.1
%
Mortgage loans
180

 
%
 
186

 
%
Policy loans
81,964

 
5.4
%
 
80,825

 
5.8
%
Real estate and other long-term investments
2,593

 
0.2
%
 
7,223

 
0.5
%
Short-term investments
2,453

 
0.2
%
 
7,865

 
0.6
%
Cash and cash equivalents
47,147

 
3.1
%
 
45,492

 
3.3
%
Total cash, cash equivalents and investments
$
1,519,830

 
100.0
%
 
$
1,387,698

 
100.0
%

The following tables represent the cost or amortized cost, gross unrealized gains and losses and fair value of fixed maturities as of the dates indicated.
 
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
September 30, 2019
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 
 
 
 
 
 
Available-for-sale:
 
 
 
 
 
 
 
U.S. Treasury securities
$
9,729

 
1,775

 

 
11,504

U.S. Government-sponsored enterprises
3,522

 
1,124

 

 
4,646

States and political subdivisions
567,551

 
29,392

 
125

 
596,818

Corporate
560,701

 
45,148

 
1,741

 
604,108

Commercial mortgage-backed
1,107

 

 

 
1,107

Residential mortgage-backed
118,101

 
15,787

 
23

 
133,865

Asset-backed
17,480

 
11

 
11

 
17,480