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.) |
400 East Anderson Lane, Austin, TX | 78752 |
(Address of principal executive offices) | (Zip Code) |
(512) 837-7100 |
N/A |
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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, or a smaller reporting company. See the definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): | |||
Large accelerated filer ¨ | Accelerated filer x | Non-accelerated filer ¨ | Smaller reporting company ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No |
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. |
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Financial Position (In thousands) | ||||||
September 30, 2016 | December 31, 2015 | |||||
Assets | (Unaudited) | |||||
Investments: | ||||||
Fixed maturities available-for-sale, at fair value (cost: $826,271 and $714,137 in 2016 and 2015, respectively) | $ | 875,217 | 735,648 | |||
Fixed maturities held-to-maturity, at amortized cost (fair value: $264,176 and $264,966 in 2016 and 2015, respectively) | 251,637 | 259,953 | ||||
Equity securities available-for-sale, at fair value (cost: $22,577 and $23,727 in 2016 and 2015, respectively) | 23,347 | 23,438 | ||||
Mortgage loans on real estate | 237 | 594 | ||||
Policy loans | 64,714 | 60,166 | ||||
Real estate held for investment (less $1,831 and $1,721 accumulated depreciation in 2016 and 2015, respectively) | 7,862 | 7,956 | ||||
Other long-term investments | 39 | 75 | ||||
Short-term investments | 514 | 251 | ||||
Total investments | 1,223,567 | 1,088,081 | ||||
Cash and cash equivalents | 32,323 | 82,827 | ||||
Accrued investment income | 16,739 | 15,406 | ||||
Reinsurance recoverable | 3,682 | 4,166 | ||||
Deferred policy acquisition costs | 166,849 | 165,362 | ||||
Cost of customer relationships acquired | 19,546 | 21,585 | ||||
Goodwill | 17,255 | 17,255 | ||||
Other intangible assets | 968 | 971 | ||||
Deferred tax asset | 65,506 | 68,764 | ||||
Property and equipment, net | 6,816 | 6,338 | ||||
Due premiums, net (less $1,393 and $1,490 allowance for doubtful accounts in 2016 and 2015, respectively) | 10,937 | 11,819 | ||||
Prepaid expenses | 844 | 162 | ||||
Other assets | 1,306 | 1,304 | ||||
Total assets | $ | 1,566,338 | 1,484,040 |
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Financial Position (In thousands, except share amounts) | ||||||
September 30, 2016 | December 31, 2015 | |||||
Liabilities and Stockholders' Equity | (Unaudited) | |||||
Liabilities: | ||||||
Policy liabilities: | ||||||
Future policy benefit reserves: | ||||||
Life insurance | $ | 1,045,531 | 995,972 | |||
Annuities | 68,288 | 64,933 | ||||
Accident and health | 1,051 | 1,118 | ||||
Dividend accumulations | 20,220 | 18,465 | ||||
Premiums paid in advance | 45,254 | 43,220 | ||||
Policy claims payable | 9,265 | 9,653 | ||||
Other policyholders' funds | 7,358 | 7,518 | ||||
Total policy liabilities | 1,196,967 | 1,140,879 | ||||
Commissions payable | 2,387 | 2,757 | ||||
Federal income tax payable | 78,479 | 71,225 | ||||
Payable for securities in process of settlement | 1,476 | 2,457 | ||||
Other liabilities | 24,258 | 24,205 | ||||
Total liabilities | 1,303,567 | 1,241,523 | ||||
Commitments and contingencies (Note 7) | ||||||
Stockholders' equity: | ||||||
Class A, no par value, 100,000,000 shares authorized, 52,215,852 shares issued and outstanding in 2016 and 2015, including shares in treasury of 3,135,738 in 2016 and 2015 | 259,383 | 259,383 | ||||
Class B, no par value, 2,000,000 shares authorized, 1,001,714 shares issued and outstanding in 2016 and 2015 | 3,184 | 3,184 | ||||
Accumulated deficit | (20,712 | ) | (22,626 | ) | ||
Accumulated other comprehensive income: | ||||||
Unrealized gains on securities, net of tax | 31,927 | 13,587 | ||||
Treasury stock, at cost | (11,011 | ) | (11,011 | ) | ||
Total stockholders' equity | 262,771 | 242,517 | ||||
Total liabilities and stockholders' equity | $ | 1,566,338 | 1,484,040 |
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Comprehensive Income Three Months Ended September 30, (In thousands, except per share amounts) (Unaudited) | |||||||||||||
2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||
Premiums: | |||||||||||||
Life insurance | $ | 47,513 | 47,219 | ||||||||||
Accident and health insurance | 385 | 387 | |||||||||||
Property insurance | 1,274 | 1,302 | |||||||||||
Net investment income | 12,320 | 11,325 | |||||||||||
Realized investment gains (losses), net | 46 | (2,407 | ) | ||||||||||
Other income | 203 | 298 | |||||||||||
Total revenues | 61,741 | 58,124 | |||||||||||
Benefits and expenses: | |||||||||||||
Insurance benefits paid or provided: | |||||||||||||
Claims and surrenders | 21,014 | 19,528 | |||||||||||
Increase in future policy benefit reserves | 19,267 | 19,276 | |||||||||||
Policyholders' dividends | 1,620 | 2,719 | |||||||||||
Total insurance benefits paid or provided | 41,901 | 41,523 | |||||||||||
Commissions | 10,852 | 11,388 | |||||||||||
Other general expenses | 5,076 | 6,958 | |||||||||||
Capitalization of deferred policy acquisition costs | (7,890 | ) | (8,482 | ) | |||||||||
Amortization of deferred policy acquisition costs | 6,889 | 6,271 | |||||||||||
Amortization of cost of customer relationships acquired | 641 | 605 | |||||||||||
Total benefits and expenses | 57,469 | 58,263 | |||||||||||
Income (loss) before federal income tax | 4,272 | (139 | ) | ||||||||||
Federal income tax expense (benefit) | 1,728 | (242 | ) | ||||||||||
Net income | 2,544 | 103 | |||||||||||
Per Share Amounts: | |||||||||||||
Basic earnings per share of Class A common stock | $ | 0.05 | — | ||||||||||
Basic earnings per share of Class B common stock | 0.03 | — | |||||||||||
Diluted earnings per share of Class A common stock | 0.05 | — | |||||||||||
Diluted earnings per share of Class B common stock | 0.03 | — | |||||||||||
Other comprehensive income (loss): | |||||||||||||
Unrealized gains (losses) on available-for-sale securities: | |||||||||||||
Unrealized holding gains (losses) arising during period | (1,261 | ) | (1,803 | ) | |||||||||
Reclassification adjustment for (gains) losses included in net income | (47 | ) | 2,405 | ||||||||||
Unrealized gains (losses) on available-for-sale securities, net | (1,308 | ) | 602 | ||||||||||
Income tax expense (benefit) on unrealized gains (losses) on available-for-sale securities | (458 | ) | 210 | ||||||||||
Other comprehensive income (loss) | (850 | ) | 392 | ||||||||||
Comprehensive income | $ | 1,694 | 495 | ||||||||||
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Comprehensive Income Nine Months Ended September 30, (In thousands, except per share amounts) (Unaudited) | ||||||||||||||
2016 | 2015 | |||||||||||||
Revenues: | ||||||||||||||
Premiums: | ||||||||||||||
Life insurance | $ | 137,637 | 136,866 | |||||||||||
Accident and health insurance | 1,170 | 1,183 | ||||||||||||
Property insurance | 3,811 | 3,885 | ||||||||||||
Net investment income | 36,051 | 33,595 | ||||||||||||
Realized investment losses, net | (1,776 | ) | (2,486 | ) | ||||||||||
Other income | 610 | 1,020 | ||||||||||||
Total revenues | 177,503 | 174,063 | ||||||||||||
Benefits and expenses: | ||||||||||||||
Insurance benefits paid or provided: | ||||||||||||||
Claims and surrenders | 60,988 | 58,171 | ||||||||||||
Increase in future policy benefit reserves | 52,932 | 56,334 | ||||||||||||
Policyholders' dividends | 4,985 | 7,568 | ||||||||||||
Total insurance benefits paid or provided | 118,905 | 122,073 | ||||||||||||
Commissions | 31,097 | 32,052 | ||||||||||||
Other general expenses | 22,960 | 24,954 | ||||||||||||
Capitalization of deferred policy acquisition costs | (22,257 | ) | (23,374 | ) | ||||||||||
Amortization of deferred policy acquisition costs | 20,424 | 17,217 | ||||||||||||
Amortization of cost of customer relationships acquired | 1,588 | 1,768 | ||||||||||||
Total benefits and expenses | 172,717 | 174,690 | ||||||||||||
Income (loss) before federal income tax | 4,786 | (627 | ) | |||||||||||
Federal income tax expense | 2,872 | 759 | ||||||||||||
Net income (loss) | 1,914 | (1,386 | ) | |||||||||||
Per Share Amounts: | ||||||||||||||
Basic earnings (losses) per share of Class A common stock | $ | 0.04 | $ | (0.03 | ) | |||||||||
Basic earnings (losses) per share of Class B common stock | 0.02 | (0.02 | ) | |||||||||||
Diluted earnings (losses) per share of Class A common stock | 0.04 | (0.03 | ) | |||||||||||
Diluted earnings (losses) per share of Class B common stock | 0.02 | (0.02 | ) | |||||||||||
Other comprehensive income (loss): | ||||||||||||||
Unrealized gains (losses) on available-for-sale securities: | ||||||||||||||
Unrealized holding gains (losses) arising during period | 26,446 | (13,574 | ) | |||||||||||
Reclassification adjustment for losses included in net income | 1,769 | 2,449 | ||||||||||||
Unrealized gains (losses) on available-for-sale securities, net | 28,215 | (11,125 | ) | |||||||||||
Income tax expense (benefit) on unrealized gains (losses) on available-for-sale securities | 9,875 | (3,894 | ) | |||||||||||
Other comprehensive income (loss) | 18,340 | (7,231 | ) | |||||||||||
Comprehensive income (loss) | $ | 20,254 | (8,617 | ) |
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows Nine Months Ended September 30, (In thousands) (Unaudited) | ||||||
2016 | 2015 | |||||
Cash flows from operating activities: | ||||||
Net income (loss) | $ | 1,914 | (1,386 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
Realized losses on sale of investments and other assets | 1,776 | 2,486 | ||||
Net deferred policy acquisition costs | (1,833 | ) | (6,157 | ) | ||
Amortization of cost of customer relationships acquired | 1,588 | 1,768 | ||||
Depreciation | 600 | 571 | ||||
Amortization of premiums and discounts on investments | 10,709 | 8,785 | ||||
Deferred federal income tax benefit | (6,616 | ) | (1,291 | ) | ||
Change in: | ||||||
Accrued investment income | (1,333 | ) | (1,763 | ) | ||
Reinsurance recoverable | 484 | 371 | ||||
Due premiums | 882 | (242 | ) | |||
Future policy benefit reserves | 51,559 | 56,185 | ||||
Other policyholders' liabilities | 3,241 | 5,487 | ||||
Federal income tax payable | 7,254 | (1,250 | ) | |||
Commissions payable and other liabilities | (317 | ) | (121 | ) | ||
Other, net | (670 | ) | (717 | ) | ||
Net cash provided by operating activities | 69,238 | 62,726 | ||||
Cash flows from investing activities: | ||||||
Sale of fixed maturities, available-for-sale | — | — | ||||
Maturities and calls of fixed maturities, available-for-sale | 44,301 | 46,723 | ||||
Maturities and calls of fixed maturities, held-to-maturity | 9,790 | 15,755 | ||||
Purchase of fixed maturities, available-for-sale | (165,539 | ) | (88,107 | ) | ||
Purchase of fixed maturities, held-to-maturity | (5,507 | ) | (41,291 | ) | ||
Sale of equity securities, available-for-sale | 403 | — | ||||
Calls of equity securities, available-for-sale | 422 | 150 | ||||
Purchase of equity securities, available-for-sale | — | (602 | ) | |||
Principal payments on mortgage loans | 357 | 29 | ||||
Increase in policy loans, net | (4,548 | ) | (4,936 | ) | ||
Sale of other long-term investments | 1 | 59 | ||||
Purchase of other long-term investments | (36 | ) | — | |||
Sale of property and equipment | 59 | — | ||||
Purchase of property and equipment | (978 | ) | (240 | ) | ||
Maturity of short-term investments | 250 | — | ||||
Purchase of short-term investments | (522 | ) | (254 | ) | ||
Net cash used in investing activities | (121,547 | ) | (72,714 | ) |
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows, Continued Nine Months Ended September 30, (In thousands) (Unaudited) | ||||||
2016 | 2015 | |||||
Cash flows from financing activities: | ||||||
Annuity deposits | $ | 6,243 | 6,077 | |||
Annuity withdrawals | (4,438 | ) | (3,966 | ) | ||
Net cash provided by financing activities | 1,805 | 2,111 | ||||
Net decrease in cash and cash equivalents | (50,504 | ) | (7,877 | ) | ||
Cash and cash equivalents at beginning of year | 82,827 | 50,708 | ||||
Cash and cash equivalents at end of period | $ | 32,323 | 42,831 | |||
Supplemental disclosures of operating activities: | ||||||
Cash paid during the period for income taxes, net | $ | 2,234 | 3,300 |
Three Months Ended | ||||||||||||
September 30, 2016 | ||||||||||||
Life Insurance | Home Service Insurance | Other Non-Insurance Enterprises | Consolidated | |||||||||
(In thousands) | ||||||||||||
Revenues: | ||||||||||||
Premiums | $ | 37,572 | 11,600 | — | 49,172 | |||||||
Net investment income | 8,473 | 3,467 | 380 | 12,320 | ||||||||
Realized investment gains, net | — | 46 | — | 46 | ||||||||
Other income | 166 | 2 | 35 | 203 | ||||||||
Total revenue | 46,211 | 15,115 | 415 | 61,741 | ||||||||
Benefits and expenses: | ||||||||||||
Insurance benefits paid or provided: | ||||||||||||
Claims and surrenders | 14,980 | 6,034 | — | 21,014 | ||||||||
Increase in future policy benefit reserves | 18,319 | 948 | — | 19,267 | ||||||||
Policyholders' dividends | 1,604 | 16 | — | 1,620 | ||||||||
Total insurance benefits paid or provided | 34,903 | 6,998 | — | 41,901 | ||||||||
Commissions | 6,973 | 3,879 | — | 10,852 | ||||||||
Other general expenses | 1,074 | 3,610 | 392 | 5,076 | ||||||||
Capitalization of deferred policy acquisition costs | (6,346 | ) | (1,544 | ) | — | (7,890 | ) | |||||
Amortization of deferred policy acquisition costs | 5,870 | 1,019 | — | 6,889 | ||||||||
Amortization of cost of customer relationships acquired | 119 | 522 | — | 641 | ||||||||
Total benefits and expenses | 42,593 | 14,484 | 392 | 57,469 | ||||||||
Income before income tax expense | $ | 3,618 | 631 | 23 | 4,272 |
Nine Months Ended | ||||||||||||
September 30, 2016 | ||||||||||||
Life Insurance | Home Service Insurance | Other Non-Insurance Enterprises | Consolidated | |||||||||
(In thousands) | ||||||||||||
Revenues: | ||||||||||||
Premiums | $ | 107,531 | 35,087 | — | 142,618 | |||||||
Net investment income | 24,534 | 10,386 | 1,131 | 36,051 | ||||||||
Realized investment losses, net | (660 | ) | (1,116 | ) | — | (1,776 | ) | |||||
Other income | 537 | 5 | 68 | 610 | ||||||||
Total revenue | 131,942 | 44,362 | 1,199 | 177,503 | ||||||||
Benefits and expenses: | ||||||||||||
Insurance benefits paid or provided: | ||||||||||||
Claims and surrenders | 43,601 | 17,387 | — | 60,988 | ||||||||
Increase in future policy benefit reserves | 49,482 | 3,450 | — | 52,932 | ||||||||
Policyholders' dividends | 4,942 | 43 | — | 4,985 | ||||||||
Total insurance benefits paid or provided | 98,025 | 20,880 | — | 118,905 | ||||||||
Commissions | 19,544 | 11,553 | — | 31,097 | ||||||||
Other general expenses | 9,199 | 11,357 | 2,404 | 22,960 | ||||||||
Capitalization of deferred policy acquisition costs | (17,764 | ) | (4,493 | ) | — | (22,257 | ) | |||||
Amortization of deferred policy acquisition costs | 17,813 | 2,611 | — | 20,424 | ||||||||
Amortization of cost of customer relationships acquired | 419 | 1,169 | — | 1,588 | ||||||||
Total benefits and expenses | 127,236 | 43,077 | 2,404 | 172,717 | ||||||||
Income (loss) before income tax expense | $ | 4,706 | 1,285 | (1,205 | ) | 4,786 |
Three Months Ended | ||||||||||||
September 30, 2015 | ||||||||||||
Life Insurance | Home Service Insurance | Other Non-Insurance Enterprises | Consolidated | |||||||||
(In thousands) | ||||||||||||
Revenues: | ||||||||||||
Premiums | $ | 37,213 | 11,695 | — | 48,908 | |||||||
Net investment income | 7,512 | 3,436 | 377 | 11,325 | ||||||||
Realized investment losses, net | (1,901 | ) | (506 | ) | — | (2,407 | ) | |||||
Other income | 217 | 8 | 73 | 298 | ||||||||
Total revenue | 43,041 | 14,633 | 450 | 58,124 | ||||||||
Benefits and expenses: | ||||||||||||
Insurance benefits paid or provided: | ||||||||||||
Claims and surrenders | 13,727 | 5,801 | — | 19,528 | ||||||||
Increase in future policy benefit reserves | 18,337 | 939 | — | 19,276 | ||||||||
Policyholders' dividends | 2,708 | 11 | — | 2,719 | ||||||||
Total insurance benefits paid or provided | 34,772 | 6,751 | — | 41,523 | ||||||||
Commissions | 7,609 | 3,779 | — | 11,388 | ||||||||
Other general expenses | 3,026 | 3,391 | 541 | 6,958 | ||||||||
Capitalization of deferred policy acquisition costs | (7,050 | ) | (1,432 | ) | — | (8,482 | ) | |||||
Amortization of deferred policy acquisition costs | 5,359 | 912 | — | 6,271 | ||||||||
Amortization of cost of customer relationships acquired | 171 | 434 | — | 605 | ||||||||
Total benefits and expenses | 43,887 | 13,835 | 541 | 58,263 | ||||||||
Income (loss) before income tax expense | $ | (846 | ) | 798 | (91 | ) | (139 | ) |
Nine Months Ended | ||||||||||||
September 30, 2015 | ||||||||||||
Life Insurance | Home Service Insurance | Other Non-Insurance Enterprises | Consolidated | |||||||||
(In thousands) | ||||||||||||
Revenues: | ||||||||||||
Premiums | $ | 106,899 | 35,035 | — | 141,934 | |||||||
Net investment income | 22,130 | 10,341 | 1,124 | 33,595 | ||||||||
Realized investment losses, net | (1,959 | ) | (527 | ) | — | (2,486 | ) | |||||
Other income | 591 | 78 | 351 | 1,020 | ||||||||
Total revenue | 127,661 | 44,927 | 1,475 | 174,063 | ||||||||
Benefits and expenses: | ||||||||||||
Insurance benefits paid or provided: | ||||||||||||
Claims and surrenders | 40,752 | 17,419 | — | 58,171 | ||||||||
Increase in future policy benefit reserves | 52,964 | 3,370 | — | 56,334 | ||||||||
Policyholders' dividends | 7,530 | 38 | — | 7,568 | ||||||||
Total insurance benefits paid or provided | 101,246 | 20,827 | — | 122,073 | ||||||||
Commissions | 20,450 | 11,602 | — | 32,052 | ||||||||
Other general expenses | 11,057 | 11,680 | 2,217 | 24,954 | ||||||||
Capitalization of deferred policy acquisition costs | (18,816 | ) | (4,558 | ) | — | (23,374 | ) | |||||
Amortization of deferred policy acquisition costs | 14,849 | 2,368 | — | 17,217 | ||||||||
Amortization of cost of customer relationships acquired | 493 | 1,275 | — | 1,768 | ||||||||
Total benefits and expenses | 129,279 | 43,194 | 2,217 | 174,690 | ||||||||
Income (loss) before income tax expense | $ | (1,618 | ) | 1,733 | (742 | ) | (627 | ) |
Three Months Ended | ||||||
September 30, 2016 | September 30, 2015 | |||||
(In thousands, except per share amounts) | ||||||
Basic and diluted earnings per share: | ||||||
Numerator: | ||||||
Net income | $ | 2,544 | 103 | |||
Net income allocated to Class A common stock | $ | 2,519 | 102 | |||
Net income allocated to Class B common stock | 25 | 1 | ||||
Net income | $ | 2,544 | 103 | |||
Denominator: | ||||||
Weighted average shares of Class A outstanding - basic | 49,080 | 49,080 | ||||
Weighted average shares of Class A outstanding - diluted | 49,080 | 49,080 | ||||
Weighted average shares of Class B outstanding - basic and diluted | 1,002 | 1,002 | ||||
Basic earnings per share of Class A common stock | $ | 0.05 | — | |||
Basic earnings per share of Class B common stock | 0.03 | — | ||||
Diluted earnings per share of Class A common stock | 0.05 | — | ||||
Diluted earnings per share of Class B common stock | 0.03 | — |
Nine Months Ended | ||||||
September 30, 2016 | September 30, 2015 | |||||
(In thousands, except per share amounts) | ||||||
Basic and diluted earnings per share: | ||||||
Numerator: | ||||||
Net income (loss) | $ | 1,914 | (1,386 | ) | ||
Net income (loss) allocated to Class A common stock | $ | 1,895 | (1,372 | ) | ||
Net income (loss) allocated to Class B common stock | 19 | (14 | ) | |||
Net loss | $ | 1,914 | (1,386 | ) | ||
Denominator: | ||||||
Weighted average shares of Class A outstanding - basic | 49,080 | 49,080 | ||||
Weighted average shares of Class A outstanding - diluted | 49,080 | 49,080 | ||||
Weighted average shares of Class B outstanding - basic and diluted | 1,002 | 1,002 | ||||
Basic earnings (losses) per share of Class A common stock | $ | 0.04 | (0.03 | ) | ||
Basic earnings (losses) per share of Class B common stock | 0.02 | (0.02 | ) | |||
Diluted earnings (losses) per share of Class A common stock | 0.04 | (0.03 | ) | |||
Diluted earnings (losses) per share of Class B common stock | 0.02 | (0.02 | ) |
September 30, 2016 | December 31, 2015 | ||||||||||||
Carrying Value | % of Total Carrying Value | Carrying Value | % of Total Carrying Value | ||||||||||
(In thousands) | |||||||||||||
Fixed maturity securities | $ | 1,126,854 | 89.7 | $ | 995,601 | 85.0 | |||||||
Equity securities | 23,347 | 1.9 | 23,438 | 2.0 | |||||||||
Mortgage loans | 237 | — | 594 | 0.1 | |||||||||
Policy loans | 64,714 | 5.2 | 60,166 | 5.1 | |||||||||
Real estate and other long-term investments | 7,901 | 0.6 | 8,031 | 0.7 | |||||||||
Short-term investments | 514 | — | 251 | — | |||||||||
Cash and cash equivalents | 32,323 | 2.6 | 82,827 | 7.1 | |||||||||
Total cash, cash equivalents and investments | $ | 1,255,890 | 100.0 | $ | 1,170,908 | 100.0 |
September 30, 2016 | ||||||||||||
Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||
(In thousands) | ||||||||||||
Fixed maturities: | ||||||||||||
Available-for-sale: | ||||||||||||
U.S. Treasury securities | $ | 9,946 | 2,968 | — | 12,914 | |||||||
U.S. Government-sponsored enterprises | 7,670 | 1,302 | — | 8,972 | ||||||||
States and political subdivisions | 528,607 | 27,241 | 1,179 | 554,669 | ||||||||
Foreign governments | 103 | 29 | — | 132 | ||||||||
Corporate | 277,550 | 20,447 | 2,075 | 295,922 | ||||||||
Commercial mortgage-backed | 73 | 2 | — | 75 | ||||||||
Residential mortgage-backed | 2,322 | 213 | 2 | 2,533 | ||||||||
Total available-for-sale securities | 826,271 | 52,202 | 3,256 | 875,217 | ||||||||
Held-to-maturity securities: | ||||||||||||
U.S. Government-sponsored enterprises | 2,005 | 57 | — | 2,062 | ||||||||
States and political subdivisions | 228,564 | 12,515 | 539 | 240,540 | ||||||||
Corporate | 21,068 | 1,040 | 534 | 21,574 | ||||||||
Total held-to-maturity securities | 251,637 | 13,612 | 1,073 | 264,176 | ||||||||
Total fixed maturities | $ | 1,077,908 | 65,814 | 4,329 | 1,139,393 | |||||||
Short-term investments | $ | 514 | — | — | 514 | |||||||
Equity securities: | ||||||||||||
Stock mutual funds | $ | 2,866 | 57 | — | 2,923 | |||||||
Bond mutual funds | 18,451 | 521 | 2 | 18,970 | ||||||||
Common stock | 39 | 2 | 17 | 24 | ||||||||
Preferred stock | 1,221 | 209 | — | 1,430 | ||||||||
Total equity securities | $ | 22,577 | 789 | 19 | 23,347 |
December 31, 2015 | ||||||||||||
Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||
(In thousands) | ||||||||||||
Fixed maturities: | ||||||||||||
Available-for-sale securities: | ||||||||||||
U.S. Treasury securities | $ | 9,995 | 2,597 | — | 12,592 | |||||||
U.S. Government-sponsored enterprises | 19,676 | 1,104 | — | 20,780 | ||||||||
States and political subdivisions | 470,319 | 15,815 | 3,085 | 483,049 | ||||||||
Foreign governments | 104 | 27 | — | 131 | ||||||||
Corporate | 211,245 | 9,683 | 4,847 | 216,081 | ||||||||
Commercial mortgage-backed | 140 | 5 | — | 145 | ||||||||
Residential mortgage-backed | 2,658 | 214 | 2 | 2,870 | ||||||||
Total available-for-sale securities | 714,137 | 29,445 | 7,934 | 735,648 | ||||||||
Held-to-maturity securities: | ||||||||||||
U.S. Government-sponsored enterprises | 2,010 | 110 | — | 2,120 | ||||||||
States and political subdivisions | 236,776 | 6,756 | 883 | 242,649 | ||||||||
Corporate | 21,167 | 530 | 1,500 | 20,197 | ||||||||
Total held-to-maturity securities | 259,953 | 7,396 | 2,383 | 264,966 | ||||||||
Total fixed maturity securities | $ | 974,090 | 36,841 | 10,317 | 1,000,614 | |||||||
Short-term investments | $ | 251 | — | — | 251 | |||||||
Equity securities: | ||||||||||||
Stock mutual funds | $ | 3,270 | — | 237 | 3,033 | |||||||
Bond mutual funds | 18,798 | 55 | 349 | 18,504 | ||||||||
Common stock | 65 | — | 22 | 43 | ||||||||
Preferred stock | 1,594 | 266 | 2 | 1,858 | ||||||||
Total equity securities | $ | 23,727 | 321 | 610 | 23,438 |
September 30, 2016 | |||||||||||||||||||||||||||||
Less than 12 months | Greater than 12 months | Total | |||||||||||||||||||||||||||
Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities | |||||||||||||||||||||
(In thousands, except for # of securities) | |||||||||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||||||||||
States and political subdivisions | $ | 30,962 | 219 | 32 | $ | 8,568 | 960 | 7 | $ | 39,530 | 1,179 | 39 | |||||||||||||||||
Corporate | 30,891 | 1,588 | 25 | 10,286 | 487 | 13 | 41,177 | 2,075 | 38 | ||||||||||||||||||||
Residential mortgage-backed | 120 | 1 | 3 | 107 | 1 | 2 | 227 | 2 | 5 | ||||||||||||||||||||
Total available-for-sale securities | 61,973 | 1,808 | 60 | 18,961 | 1,448 | 22 | 80,934 | 3,256 | 82 | ||||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||||||||||||
States and political subdivisions | 4,947 | 510 | 6 | 2,853 | 29 | 2 | 7,800 | 539 | 8 | ||||||||||||||||||||
Corporate | — | — | — | 5,339 | 534 | 4 | 5,339 | 534 | 4 | ||||||||||||||||||||
Total held-to-maturity securities | 4,947 | 510 | 6 | 8,192 | 563 | 6 | 13,139 | 1,073 | 12 | ||||||||||||||||||||
Total fixed maturities | $ | 66,920 | 2,318 | 66 | $ | 27,153 | 2,011 | 28 | $ | 94,073 | 4,329 | 94 | |||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Bond mutual funds | $ | 1,968 | 2 | 1 | $ | — | — | — | $ | 1,968 | 2 | 1 | |||||||||||||||||
Common stocks | — | — | — | 1 | 17 | 1 | 1 | 17 | 1 | ||||||||||||||||||||
Total equities | $ | 1,968 | 2 | 1 | $ | 1 | 17 | 1 | $ | 1,969 | 19 | 2 |
December 31, 2015 | |||||||||||||||||||||||||||||
Less than 12 months | Greater than 12 months | Total | |||||||||||||||||||||||||||
Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities | Fair Value | Unrealized Losses | # of Securities | |||||||||||||||||||||
(In thousands, except for # of securities) | |||||||||||||||||||||||||||||
Fixed maturities: | |||||||||||||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||||||||||
States and political subdivisions | $ | 136,862 | 1,474 | 129 | $ | 12,633 | 1,611 | 12 | $ | 149,495 | 3,085 | 141 | |||||||||||||||||
Corporate | 70,081 | 4,330 | 69 | 3,308 | 517 | 3 | 73,389 | 4,847 | 72 | ||||||||||||||||||||
Residential mortgage-backed | 57 | 1 | 2 | 133 | 1 | 3 | 190 | 2 | 5 | ||||||||||||||||||||
Total available-for-sale securities | 207,000 | 5,805 | 200 | 16,074 | 2,129 | 18 | 223,074 | 7,934 | 218 | ||||||||||||||||||||
Held-to-maturity securities: | |||||||||||||||||||||||||||||
States and political subdivisions | 74,628 | 774 | 59 | 2,404 | 109 | 5 | 77,032 | 883 | 64 | ||||||||||||||||||||
Corporate | 4,585 | 641 | 4 | 2,160 | 859 | 2 | 6,745 | 1,500 | 6 | ||||||||||||||||||||
Total held-to-maturity securities | 79,213 | 1,415 | 63 | 4,564 | 968 | 7 | 83,777 | 2,383 | 70 | ||||||||||||||||||||
Total fixed maturities | $ | 286,213 | 7,220 | 263 | $ | 20,638 | 3,097 | 25 | $ | 306,851 | 10,317 | 288 | |||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Stock mutual funds | $ | 3,030 | 237 | 4 | $ | 2 | — | 1 | $ | 3,032 | 237 | 5 | |||||||||||||||||
Bond mutual funds | 10,158 | 318 | 2 | 108 | 31 | 1 | 10,266 | 349 | 3 | ||||||||||||||||||||
Preferred stocks | 101 | 1 | 1 | 1 | 1 | 1 | 102 | 2 | 2 | ||||||||||||||||||||
Common stock | 22 | 1 | 2 | 21 | 21 | 2 | 43 | 22 | 4 | ||||||||||||||||||||
Total equities | $ | 13,311 | 557 | 9 | $ | 132 | 53 | 5 | $ | 13,443 | 610 | 14 |
September 30, 2016 | ||||||
Amortized Cost | Fair Value | |||||
(In thousands) | ||||||
Available-for-sale securities: | ||||||
Due in one year or less | $ | 48,418 | 49,177 | |||
Due after one year through five years | 105,628 | 108,283 | ||||
Due after five years through ten years | 117,132 | 126,595 | ||||
Due after ten years | 555,093 | 591,162 | ||||
Total available-for-sale securities | 826,271 | 875,217 | ||||
Held-to-maturity securities: | ||||||
Due in one year or less | 5,633 | 5,671 | ||||
Due after one year through five years | 51,097 | 53,479 | ||||
Due after five years through ten years | 51,165 | 54,583 | ||||
Due after ten years | 143,742 | 150,443 | ||||
Total held-to-maturity securities | 251,637 | 264,176 | ||||
Total fixed maturities | $ | 1,077,908 | 1,139,393 |
Fixed Maturities Available-for-Sale | Equity Securities | |||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Three Months Ended | Nine Months Ended | |||||||||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Proceeds | $ | — | — | — | — | — | — | 403 | — | |||||||||||||||
Gross realized gains | $ | — | — | — | — | — | — | 40 | — | |||||||||||||||
Gross realized losses | $ | — | — | — | — | — | — | 36 | — |
• | Level 1 - Quoted prices for identical instruments in active markets. |
• | Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs or whose significant value drivers are observable. |
• | Level 3 - Instruments whose significant value drivers are unobservable. |
September 30, 2016 | ||||||||||||
Available-for-sale investments | Level 1 | Level 2 | Level 3 | Fair Value | ||||||||
(In thousands) | ||||||||||||
Financial assets: | ||||||||||||
Fixed maturities: | ||||||||||||
U.S. Treasury and U.S. Government-sponsored enterprises | $ | 12,914 | 8,972 | — | 21,886 | |||||||
States and political subdivisions | — | 554,669 | — | 554,669 | ||||||||
Corporate | — | 295,922 | — | 295,922 | ||||||||
Commercial mortgage-backed | — | — | 75 | 75 | ||||||||
Residential mortgage-backed | — | 2,533 | — | 2,533 | ||||||||
Foreign governments | — | 132 | — | 132 | ||||||||
Total fixed maturities | 12,914 | 862,228 | 75 | 875,217 | ||||||||
Equity securities: | ||||||||||||
Stock mutual funds | 2,923 | — | — | 2,923 | ||||||||
Bond mutual funds | 18,970 | — | — | 18,970 | ||||||||
Common stock | 24 | — | — | 24 | ||||||||
Preferred stock | 1,430 | — | — | 1,430 | ||||||||
Total equity securities | 23,347 | — | — | 23,347 | ||||||||
Total financial assets | $ | 36,261 | 862,228 | 75 | 898,564 |
December 31, 2015 | ||||||||||||
Available-for-sale investments | Level 1 | Level 2 | Level 3 | Fair Value | ||||||||
(In thousands) | ||||||||||||
Financial assets: | ||||||||||||
Fixed maturities: | ||||||||||||
U.S. Treasury and U.S. Government-sponsored enterprises | $ | 12,592 | 20,780 | — | 33,372 | |||||||
States and political subdivisions | — | 483,049 | — | 483,049 | ||||||||
Corporate | — | 216,081 | — | 216,081 | ||||||||
Commercial mortgage-backed | — | — | 145 | 145 | ||||||||
Residential mortgage-backed | — | 2,870 | — | 2,870 | ||||||||
Foreign governments | — | 131 | — | 131 | ||||||||
Total fixed maturities | 12,592 | 722,911 | 145 | 735,648 | ||||||||
Equity securities: | ||||||||||||
Stock mutual funds | 3,033 | — | — | 3,033 | ||||||||
Bond mutual funds | 18,504 | — | — | 18,504 | ||||||||
Common stock | 43 | — | — | 43 | ||||||||
Preferred stock | 1,858 | — | — | 1,858 | ||||||||
Total equity securities | 23,438 | — | — | 23,438 | ||||||||
Total financial assets | $ | 36,030 | 722,911 | 145 | 759,086 |
September 30, 2016 | December 31, 2015 | |||||
(In thousands) | ||||||
Balance at beginning of period | $ | 145 | 231 | |||
Total realized and unrealized gains (losses) | ||||||
Included in net income | — | — | ||||
Included in other comprehensive income | (3 | ) | (2 | ) | ||
Principal paydowns | (67 | ) | (84 | ) | ||
Transfer in and (out) of Level 3 | — | — | ||||
Balance at end of period | $ | 75 | 145 |
September 30, 2016 | December 31, 2015 | |||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||
(In thousands) | ||||||||||||
Financial assets: | ||||||||||||
Fixed maturities, held-to-maturity | $ | 251,637 | 264,176 | 259,953 | 264,966 | |||||||
Mortgage loans | 237 | 274 | 594 | 617 | ||||||||
Policy loans | 64,714 | 64,714 | 60,166 | 60,166 | ||||||||
Short-term investments | 514 | 514 | 251 | 251 | ||||||||
Cash and cash equivalents | 32,323 | 32,323 | 82,827 | 82,827 | ||||||||
Financial liabilities: | ||||||||||||
Annuity - investment contracts | 49,618 | 51,485 | 46,905 | 47,222 |
• | Changes in the application, interpretation or enforcement of foreign insurance laws that impact our business, which derives the majority of its revenues from residents of foreign countries; |
• | Potential changes in amounts reserved for in connection with the noncompliance of a portion of our insurance policies with Sections 7702 under the Internal Revenue Code and the failure of certain annuity contracts to qualify under Section 72(s) of the Internal Revenue Code; |
• | Changes in foreign and U.S. general economic, market, and political conditions, including the performance of financial markets and interest rates; |
• | Changes in consumer behavior or regulatory oversight, which may affect the Company's ability to sell its products and retain business; |
• | The timely development of and acceptance of new products of the Company and perceived overall value of these products and services by existing and potential customers; |
• | Fluctuations in experience regarding current mortality, morbidity, persistency and interest rates relative to expected amounts used in pricing the Company's products; |
• | The performance of our investment portfolio, which may be adversely affected by changes in interest rates, adverse developments and ratings of issuers whose debt securities we may hold, and other adverse macroeconomic events; |
• | Results of litigation we may be involved in; |
• | Changes in assumptions related to deferred acquisition costs and the value of any businesses we may acquire; |
• | Regulatory, accounting or tax changes that may affect the cost of, or the demand for, the Company's products or services; |
• | Our concentration of business from persons residing in Latin America and the Pacific Rim; |
• | Changes in tax laws; |
• | Effects of acquisitions and restructuring, including possible difficulties in integrating and realizing the projected results of acquisitions; |
• | Changes in statutory or U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), policies or practices; |
• | Our success at managing risks involved in the foregoing; |
• | The risk factors discussed in "Part II. - Item 1A - Risk Factors." of this report; and |
• | Changes in leadership among our board and senior management team. |
• | U.S. Dollar-denominated ordinary whole life insurance and endowment policies predominantly sold to foreign residents, located principally in Latin America and the Pacific Rim through independent marketing consultants; |
• | ordinary whole life insurance policies to middle income households concentrated in the Midwest, Mountain West and southern United States through independent marketing consultants; and |
• | final expense and limited liability property policies to middle and lower income households in Louisiana, Arkansas and Mississippi through employee and independent agents in our home service distribution channel and funeral homes. |
• | Insurance premiums increased slightly for the three and nine month periods ended September 30, 2016 to $49.2 million and $142.6 million from $48.9 million and $141.9 million for the corresponding periods in 2015, an increase of 0.5% and 0.5% driven primarily by an increase in renewal premiums, somewhat offset by a decrease in first year premiums in both our life insurance and home service segments. |
• | Net investment income increased 8.8% and 7.3% for the three and nine month periods ended September 30, 2016, compared to the corresponding periods in 2015. The average yield on the consolidated portfolio as of the nine months ended September 30, 2016 increased to an annualized rate of 4.29% up from 4.24% for the same period in 2015. The increase in investment income was primarily due to growth in the invested asset portfolio, primarily fixed maturities. |
• | Other-than-temporary impairments were recorded for the nine month period ended September 30, 2016 totaling $2.3 million related to mutual fund impairments in the second quarter of 2016 and one available-for-sale fixed maturity security impairment in the first quarter of 2016. No other-than-temporary impairments were recorded for the three months ended September 30, 2016. |
• | Claims and surrenders expense increased 7.6% and 4.8% for the three and nine months ended 2016 compared to 2015, as surrender benefits increased in both periods in the life segment and death benefits reported in both insurance segments decreased year to date in the current year compared to 2015 levels. |
• | The change in reserves decreased in the nine month period ended September 30, 2016 compared to the corresponding period in 2015, primarily as a result of the increase in surrenders in the period, while premiums remained relatively flat. The change in reserves were flat for the three months ended September 31, 2016, compared to the same period in 2015. |
• | Policyholders' dividends decreased 40.4% and 34.1% for the three and nine months ended 2016 compared to 2015, due to the dividend rate actions taken late last year to improve our product profitability. |
• | General expenses decreased 27.0% and 8.0% for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015. The decrease was primarily driven by a decrease in our estimated potential liability related to our 7702 and 72(s) tax compliance issue for the three and nine months ended September 30, 2016 of $2.1 million and $2.2 million, respectively. |
• | Life Insurance |
• | Home Service Insurance |
• | Other Non-Insurance Enterprises |
Nine Months Ended September 30, | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Amount of Insurance Issued | Number of Policies Issued | Average Policy Face Amount Issued | Amount of Insurance Issued | Number of Policies Issued | Average Policy Face Amount Issued | ||||||||||||||||
Life | $ | 248,234,181 | 4,416 | $ | 56,212 | $ | 271,462,375 | 4,854 | $ | 55,925 | |||||||||||
Home Service | 137,691,263 | 20,847 | 6,605 | 145,190,327 | 21,790 | 6,663 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
Revenues: | ||||||||||||
Premiums: | ||||||||||||
Life insurance | $ | 47,513 | 47,219 | 137,637 | 136,866 | |||||||
Accident and health insurance | 385 | 387 | 1,170 | 1,183 | ||||||||
Property insurance | 1,274 | 1,302 | 3,811 | 3,885 | ||||||||
Net investment income | 12,320 | 11,325 | 36,051 | 33,595 | ||||||||
Realized investment gains (losses), net | 46 | (2,407 | ) | (1,776 | ) | (2,486 | ) | |||||
Other income | 203 | 298 | 610 | 1,020 | ||||||||
Total revenues | $ | 61,741 | 58,124 | 177,503 | 174,063 |
September 30, | December 31, | September 30, | |||||||
2016 | 2015 | 2015 | |||||||
(In thousands, except for %) | |||||||||
Net investment income, annualized | $ | 48,068 | 45,782 | 44,794 | |||||
Average invested assets, at amortized cost | 1,120,356 | 1,045,736 | 1,056,930 | ||||||
Annualized yield on average invested assets | 4.29 | % | 4.38 | % | 4.24 | % |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
Gross investment income: | ||||||||||||
Fixed maturity securities | $ | 10,984 | 9,947 | 32,432 | 29,524 | |||||||
Equity securities | 247 | 636 | 635 | 1,903 | ||||||||
Mortgage loans | 3 | 9 | 20 | 27 | ||||||||
Policy loans | 1,353 | 1,172 | 3,903 | 3,402 | ||||||||
Long-term investments | 77 | 62 | 229 | 209 | ||||||||
Other investment income | 40 | — | 70 | 34 | ||||||||
Total investment income | 12,704 | 11,826 | 37,289 | 35,099 | ||||||||
Investment expenses | (384 | ) | (501 | ) | (1,238 | ) | (1,504 | ) | ||||
Net investment income | $ | 12,320 | 11,325 | 36,051 | 33,595 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
Benefits and expenses: | ||||||||||||
Insurance benefits paid or provided: | ||||||||||||
Claims and surrenders | $ | 21,014 | 19,528 | 60,988 | 58,171 | |||||||
Increase in future policy benefit reserves | 19,267 | 19,276 | 52,932 | 56,334 | ||||||||
Policyholders' dividends | 1,620 | 2,719 | 4,985 | 7,568 | ||||||||
Total insurance benefits paid or provided | 41,901 | 41,523 | 118,905 | 122,073 | ||||||||
Commissions | 10,852 | 11,388 | 31,097 | 32,052 | ||||||||
Other general expenses | 5,076 | 6,958 | 22,960 | 24,954 | ||||||||
Capitalization of deferred policy acquisition costs | (7,890 | ) | (8,482 | ) | (22,257 | ) | (23,374 | ) | ||||
Amortization of deferred policy acquisition costs | 6,889 | 6,271 | 20,424 | 17,217 | ||||||||
Amortization of cost of customer relationships acquired | 641 | 605 | 1,588 | 1,768 | ||||||||
Total benefits and expenses | $ | 57,469 | 58,263 | 172,717 | 174,690 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
Death claims | $ | 5,795 | 5,717 | 17,775 | 18,723 | |||||||
Surrender benefits | 8,488 | 8,096 | 25,432 | 23,007 | ||||||||
Endowment benefits | 4,170 | 4,044 | 11,862 | 12,029 | ||||||||
Matured endowments | 1,149 | 472 | 2,178 | 1,057 | ||||||||
Property claims | 593 | 519 | 1,477 | 1,304 | ||||||||
Accident and health benefits | 158 | 58 | 327 | 233 | ||||||||
Other policy benefits | 661 | 622 | 1,937 | 1,818 | ||||||||
Total claims and surrenders | $ | 21,014 | 19,528 | 60,988 | 58,171 |
• | Death claims increased 1.4% and decreased 5.1% for the three and nine months ended September 30, 2016, respectively, compared to the same periods in 2015. We experienced favorable claims development in the nine months ended September 30, 2016 for both the life and home service segments. Mortality experience is closely monitored by the Company and the activity is within expected levels. |
• | Surrenders increased 4.8% and 10.5% in the current three and nine month periods, compared to 2015 primarily due to activity in the life segment. This increased surrender activity is in the earlier durations (years 1-15), which still have surrender charges. We are seeing various reasons for individuals surrendering their policies, including the sustained slow world-wide economy, individuals simply needing their money and ex associates moving business to other insurance carriers. |
• | Matured endowments increased as contracts have begun reaching their maturity dates. |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
Life Insurance | $ | 3,618 | (846 | ) | 4,706 | (1,618 | ) | |||||
Home Service Insurance | 631 | 798 | 1,285 | 1,733 | ||||||||
Other Non-Insurance Enterprises | 23 | (91 | ) | (1,205 | ) | (742 | ) | |||||
Total | $ | 4,272 | (139 | ) | 4,786 | (627 | ) |
• | larger face amount policies typically issued when compared to our U.S. operations, which results in lower underwriting and administrative costs per unit of coverage; |
• | premiums typically paid annually rather than monthly or quarterly, which reduces our administrative expenses, accelerates cash flow and results in lower policy lapse rates than premiums with more frequently scheduled payments; and |
• | persistency experience and mortality rates that are comparable to U.S. policies. |
• | U.S. Dollar-denominated cash values that accumulate, beginning in the first policy year, to a policyholder during his or her lifetime; |
• | premium rates that are competitive with or better than most foreign local companies; |
• | a hedge against local currency inflation; |
• | protection against devaluation of foreign currency; |
• | capital investment in a more secure economic environment (i.e., the United States); and |
• | lifetime income guarantees for an insured or for surviving beneficiaries. |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
Country | ||||||||||||
Venezuela | $ | 7,833 | 8,162 | 22,690 | 23,596 | |||||||
Colombia | 7,276 | 6,353 | 20,643 | 19,627 | ||||||||
Taiwan | 3,868 | 4,303 | 12,682 | 12,799 | ||||||||
Ecuador | 3,925 | 3,931 | 11,170 | 11,598 | ||||||||
Argentina | 2,542 | 2,716 | 6,932 | 7,104 | ||||||||
Other Non-U.S. | 10,990 | 10,650 | 30,183 | 28,471 | ||||||||
Total | $ | 36,434 | 36,115 | 104,300 | 103,195 |
• | cash accumulation/living benefits; |
• | tax-deferred annuity interest earnings; |
• | guaranteed lifetime income options; |
• | monthly income for surviving family members; |
• | accidental death benefit coverage options; and |
• | an option to waive premium payments in the event of disability. |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
State | ||||||||||||
Texas | $ | 538 | 575 | 1,639 | 1,801 | |||||||
Indiana | 300 | 335 | 928 | 1,053 | ||||||||
Florida | 204 | 173 | 440 | 434 | ||||||||
Missouri | 92 | 87 | 319 | 308 | ||||||||
Kentucky | 92 | 103 | 284 | 329 | ||||||||
Other States | 533 | 427 | 1,394 | 1,352 | ||||||||
Total | $ | 1,759 | 1,700 | 5,004 | 5,277 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
Revenue: | ||||||||||||
Premiums | $ | 37,572 | 37,213 | 107,531 | 106,899 | |||||||
Net investment income | 8,473 | 7,512 | 24,534 | 22,130 | ||||||||
Realized investment losses, net | — | (1,901 | ) | (660 | ) | (1,959 | ) | |||||
Other income | 166 | 217 | 537 | 591 | ||||||||
Total revenue | 46,211 | 43,041 | 131,942 | 127,661 | ||||||||
Benefits and expenses: | ||||||||||||
Insurance benefits paid or provided: | ||||||||||||
Claims and surrenders | 14,980 | 13,727 | 43,601 | 40,752 | ||||||||
Increase in future policy benefit reserves | 18,319 | 18,337 | 49,482 | 52,964 | ||||||||
Policyholders' dividends | 1,604 | 2,708 | 4,942 | 7,530 | ||||||||
Total insurance benefits paid or provided | 34,903 | 34,772 | 98,025 | 101,246 | ||||||||
Commissions | 6,973 | 7,609 | 19,544 | 20,450 | ||||||||
Other general expenses | 1,074 | 3,026 | 9,199 | 11,057 | ||||||||
Capitalization of deferred policy acquisition costs | (6,346 | ) | (7,050 | ) | (17,764 | ) | (18,816 | ) | ||||
Amortization of deferred policy acquisition costs | 5,870 | 5,359 | 17,813 | 14,849 | ||||||||
Amortization of cost of customer relationships acquired | 119 | 171 | 419 | 493 | ||||||||
Total benefits and expenses | 42,593 | 43,887 | 127,236 | 129,279 | ||||||||
Income (loss) before income tax expense | $ | 3,618 | (846 | ) | 4,706 | (1,618 | ) |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
Premiums: | ||||||||||||
First year | $ | 4,785 | 6,055 | 13,544 | 15,609 | |||||||
Renewal | 32,787 | 31,158 | 93,987 | 91,290 | ||||||||
Total premiums | $ | 37,572 | 37,213 | 107,531 | 106,899 |
Nine Months Ended | Year Ended | Nine Months Ended | |||||||
September 30, | December 31, | September 30, | |||||||
2016 | 2015 | 2015 | |||||||
(In thousands, except for %) | |||||||||
Net investment income, annualized | $ | 32,712 | 30,206 | 29,507 | |||||
Average invested assets, at amortized cost | 756,730 | 684,590 | 692,469 | ||||||
Annualized yield on average invested assets | 4.32 | % | 4.41 | % | 4.26 | % |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
Death claims | $ | 1,407 | 1,301 | 4,666 | 5,177 | |||||||
Surrender benefits | 7,587 | 7,313 | 23,049 | 20,831 | ||||||||
Endowment benefits | 4,168 | 4,038 | 11,852 | 12,015 | ||||||||
Matured endowments | 1,050 | 384 | 1,821 | 720 | ||||||||
Accident and health benefits | 112 | 73 | 290 | 205 | ||||||||
Other policy benefits | 656 | 618 | 1,923 | 1,804 | ||||||||
Total claims and surrenders | $ | 14,980 | 13,727 | 43,601 | 40,752 |
• | Death claims expense was unfavorable for the three months ended and favorable for the nine months ended September 30, 2016, based upon reported claims. No unusual trends have been noted in the periods presented. Mortality experience is closely monitored by the Company as a key performance indicator and these amounts were within expected levels. |
• | Surrenders increased in the three and nine month periods ended September 30, 2016 by 3.7% and 10.6%, compared to 2015. This increased surrender activity is in the earlier durations (years 1-15), which still have surrender charges. We are seeing various reasons for individuals surrendering their policies, including the sustained slow world-wide economy, individuals simply needing their money and ex associates moving business to other insurance carriers. |
• | Endowment benefit expense primarily results from the election by policyholders of a product feature providing an annual guaranteed benefit. This is a fixed benefit over the life of the contract, thus this expense will increase with new sales and improved persistency. |
• | Matured endowments increased as contracts have begun reaching their maturity dates. |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
State | ||||||||||||
Louisiana | $ | 10,673 | 10,637 | 31,991 | 31,906 | |||||||
Mississippi | 549 | 679 | 1,919 | 1,979 | ||||||||
Arkansas | 399 | 379 | 1,192 | 1,189 | ||||||||
Other States | 193 | 229 | 635 | 657 | ||||||||
Total | $ | 11,814 | 11,924 | 35,737 | 35,731 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
Revenue: | ||||||||||||
Premiums | $ | 11,600 | 11,695 | 35,087 | 35,035 | |||||||
Net investment income | 3,467 | 3,436 | 10,386 | 10,341 | ||||||||
Realized investment gains (losses), net | 46 | (506 | ) | (1,116 | ) | (527 | ) | |||||
Other income | 2 | 8 | 5 | 78 | ||||||||
Total revenue | 15,115 | 14,633 | 44,362 | 44,927 | ||||||||
Benefits and expenses: | ||||||||||||
Insurance benefits paid or provided: | ||||||||||||
Claims and surrenders | 6,034 | 5,801 | 17,387 | 17,419 | ||||||||
Increase in future policy benefit reserves | 948 | 939 | 3,450 | 3,370 | ||||||||
Policyholders' dividends | 16 | 11 | 43 | 38 | ||||||||
Total insurance benefits paid or provided | 6,998 | 6,751 | 20,880 | 20,827 | ||||||||
Commissions | 3,879 | 3,779 | 11,553 | 11,602 | ||||||||
Other general expenses | 3,610 | 3,391 | 11,357 | 11,680 | ||||||||
Capitalization of deferred policy acquisition costs | (1,544 | ) | (1,432 | ) | (4,493 | ) | (4,558 | ) | ||||
Amortization of deferred policy acquisition costs | 1,019 | 912 | 2,611 | 2,368 | ||||||||
Amortization of cost of customer relationships acquired | 522 | 434 | 1,169 | 1,275 | ||||||||
Total benefits and expenses | 14,484 | 13,835 | 43,077 | 43,194 | ||||||||
Income before income tax expense | $ | 631 | 798 | 1,285 | 1,733 |
Nine Months Ended | Year Ended | Nine Months Ended | |||||||
September 30, | December 31, | September 30, | |||||||
2016 | 2015 | 2015 | |||||||
(In thousands, except for %) | |||||||||
Net investment income, annualized | $ | 13,848 | 14,063 | 13,788 | |||||
Average invested assets, at amortized cost | 302,871 | 300,174 | 303,219 | ||||||
Annualized yield on average invested assets | 4.57 | % | 4.68 | % | 4.55 | % |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(In thousands) | ||||||||||||
Death claims | $ | 4,387 | 4,417 | 13,109 | 13,546 | |||||||
Surrender benefits | 902 | 782 | 2,383 | 2,176 | ||||||||
Endowment benefits | 2 | 6 | 10 | 14 | ||||||||
Matured endowments | 99 | 88 | 357 | 337 | ||||||||
Property claims | 593 | 519 | 1,477 | 1,304 | ||||||||
Accident and health benefits | 46 | (15 | ) | 37 | 28 | |||||||
Other policy benefits | 5 | 4 | 14 | 14 | ||||||||
Total claims and surrenders | $ | 6,034 | 5,801 | 17,387 | 17,419 |
• | Death claims expense fluctuates based upon reported claims. We experienced a lower number of reported claims in the nine months ended September 30, 2016. Mortality experience is closely monitored by the Company as a key performance indicator and amounts were within expected levels. |
• | Surrender benefits increased for the three and nine months ended in 2016, compared to the same periods in 2015. Management is not aware of any unusual surrender activity, but will continue to monitor for any developing trends. |
• | Property claims increased 13.3 % for the nine months ended September 30, 2016 as we experienced more weather-related claims in 2016. |
September 30, 2016 | December 31, 2015 | |||||||||||
Carrying Value | % of Total Carrying Value | Carrying Value | % of Total Carrying Value | |||||||||
(In thousands) | (In thousands) | |||||||||||
Marketable debt securities: | ||||||||||||
U.S. Treasury and U.S. Government-sponsored enterprises | $ | 23,891 | 1.9 | $ | 35,382 | 3.0 | ||||||
States and political subdivisions | 783,233 | 62.4 | 719,825 | 61.5 | ||||||||
Corporate | 316,990 | 25.2 | 237,248 | 20.3 | ||||||||
Mortgage-backed (1) | 2,608 | 0.2 | 3,015 | 0.2 | ||||||||
Foreign governments | 132 | — | 131 | — | ||||||||
Short-term investments | 514 | — | 251 | — | ||||||||
Total marketable debt securities | 1,127,368 | 89.7 | 995,852 | 85.0 | ||||||||
Cash and cash equivalents | 32,323 | 2.6 | 82,827 | 7.1 | ||||||||
Other investments: | ||||||||||||
Policy loans | 64,714 | 5.2 | 60,166 | 5.1 | ||||||||
Equity securities | 23,347 | 1.9 | 23,438 | 2.0 | ||||||||
Mortgage loans | 237 | — | 594 | 0.1 | ||||||||
Real estate | 7,862 | 0.6 | 7,956 | 0.7 | ||||||||
Other long-term investments | 39 | — | 75 | — | ||||||||
Total cash, cash equivalents and investments | $ | 1,255,890 | 100.0 | $ | 1,170,908 | 100.0 |
September 30, 2016 | December 31, 2015 | ||||||||||
Carrying Value | % of Total Carrying Value | Carrying Value | % of Total Carrying Value | ||||||||
(In thousands) | (In thousands) | ||||||||||
AAA | $ | 87,709 | 7.8 | $ | 76,026 | 7.6 | |||||
AA | 534,805 | 47.5 | 497,781 | 50.0 | |||||||
A | 262,353 | 23.3 | 247,381 | 24.9 | |||||||
BBB | 207,192 | 18.4 | 148,656 | 14.9 | |||||||
BB and other | 34,795 | 3.0 | 25,757 | 2.6 | |||||||
Totals | $ | 1,126,854 | 100.0 | $ | 995,601 | 100.0 |
September 30, 2016 | ||||||||||||||||||||||||||
General Obligation | Special Revenue | Other | Total | % Based on | ||||||||||||||||||||||
Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Amortized Cost | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
AAA | $ | 61,091 | 57,646 | 24,343 | 23,232 | — | — | 85,434 | 80,878 | 10.7 | ||||||||||||||||
AA | 168,299 | 160,336 | 295,251 | 281,327 | 21,683 | 20,388 | 485,233 | 462,051 | 61.0 | |||||||||||||||||
A | 22,683 | 21,916 | 154,771 | 146,425 | 11,384 | 10,484 | 188,838 | 178,825 | 23.6 | |||||||||||||||||
BBB | 8,121 | 8,313 | 20,104 | 18,524 | 586 | 570 | 28,811 | 27,407 | 3.6 | |||||||||||||||||
BB and other | 3,644 | 4,289 | 3,249 | 3,721 | — | — | 6,893 | 8,010 | 1.1 | |||||||||||||||||
Total | $ | 263,838 | 252,500 | 497,718 | 473,229 | 33,653 | 31,442 | 795,209 | 757,171 | 100.0 |
September 30, 2016 | ||||||||||||||||||||||||||
General Obligation | Special Revenue | Other | Total | % Based on | ||||||||||||||||||||||
Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Amortized Cost | ||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
AAA | $ | 34,432 | 33,727 | 4,452 | 4,393 | — | — | 38,884 | 38,120 | 5.0 | ||||||||||||||||
AA | 128,051 | 121,467 | 248,895 | 236,420 | 21,119 | 19,834 | 398,065 | 377,721 | 49.9 | |||||||||||||||||
A | 36,746 | 34,690 | 156,672 | 148,832 | 10,259 | 9,422 | 203,677 | 192,944 | 25.5 | |||||||||||||||||
BBB | 14,645 | 14,494 | 24,466 | 22,761 | — | — | 39,111 | 37,255 | 4.9 | |||||||||||||||||
BB and other | 49,964 | 48,122 | 63,233 | 60,823 | 2,275 | 2,186 | 115,472 | 111,131 | 14.7 | |||||||||||||||||
Total | $ | 263,838 | 252,500 | 497,718 | 473,229 | 33,653 | 31,442 | 795,209 | 757,171 | 100.0 |
Fair Value | Amortized Cost | % of Total Fair Value | ||||||
(In thousands) | ||||||||
Utilities | $ | 185,728 | 175,493 | 23.4 | ||||
Education | 115,458 | 109,289 | 14.5 |
September 30, 2016 | ||||||||||||||||||||||||
General Obligation | Special Revenue | Other | Total | |||||||||||||||||||||
Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | |||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Louisiana securities including third party guarantees | ||||||||||||||||||||||||
AA | $ | 8,798 | 8,605 | 20,374 | 19,253 | — | — | 29,172 | 27,858 | |||||||||||||||
A | 5,387 | 5,147 | 8,570 | 8,292 | — | — | 13,957 | 13,439 | ||||||||||||||||
BBB | — | — | 383 | 381 | — | — | 383 | 381 | ||||||||||||||||
BB and other | — | — | 363 | 357 | — | — | 363 | 357 | ||||||||||||||||
Total | $ | 14,185 | 13,752 | 29,690 | 28,283 | — | — | 43,875 | 42,035 | |||||||||||||||
Louisiana securities excluding third party guarantees | ||||||||||||||||||||||||
AA | $ | 11,374 | 11,043 | 18,496 | 17,577 | — | — | 29,870 | 28,620 | |||||||||||||||
A | 2,282 | 2,184 | 7,600 | 7,359 | — | — | 9,882 | 9,543 | ||||||||||||||||
BBB | — | — | 1,136 | 1,043 | — | — | 1,136 | 1,043 | ||||||||||||||||
BB and other | 529 | 525 | 2,458 | 2,304 | — | — | 2,987 | 2,829 | ||||||||||||||||
Total | $ | 14,185 | 13,752 | 29,690 | 28,283 | — | — | 43,875 | 42,035 | |||||||||||||||
Texas securities including third party guarantees | ||||||||||||||||||||||||
AAA | $ | 58,942 | 55,615 | 16,194 | 15,322 | — | — | 75,136 | 70,937 | |||||||||||||||
AA | 59,476 | 57,611 | 30,632 | 29,382 | — | — | 90,108 | 86,993 | ||||||||||||||||
A | 1,210 | 1,208 | 17,778 | 16,593 | — | — | 18,988 | 17,801 | ||||||||||||||||
BBB | — | — | 7,459 | 6,792 | — | — | 7,459 | 6,792 | ||||||||||||||||
BB and other | 538 | 535 | 1,841 | 2,346 | — | — | 2,379 | 2,881 | ||||||||||||||||
Total | $ | 120,166 | 114,969 | 73,904 | 70,435 | — | — | 194,070 | 185,404 | |||||||||||||||
Texas securities excluding third party guarantees | ||||||||||||||||||||||||
AAA | $ | 33,420 | 32,732 | 1,538 | 1,537 | — | — | 34,958 | 34,269 | |||||||||||||||
AA | 62,433 | 58,934 | 34,654 | 32,915 | — | — | 97,087 | 91,849 | ||||||||||||||||
A | 6,541 | 6,164 | 21,515 | 20,192 | — | — | 28,056 | 26,356 | ||||||||||||||||
BBB | 2,911 | 2,735 | 8,043 | 7,346 | — | — | 10,954 | 10,081 | ||||||||||||||||
BB and other | 14,861 | 14,404 | 8,154 | 8,445 | — | — | 23,015 | 22,849 | ||||||||||||||||
Total | $ | 120,166 | 114,969 | 73,904 | 70,435 | — | — | 194,070 | 185,404 |
September 30, 2016 | ||||||||||||||||||||||||
General Obligation | Special Revenue | Other | Total | |||||||||||||||||||||
Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | |||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Florida securities including third party guarantees | ||||||||||||||||||||||||
AAA | $ | 548 | 520 | 3,837 | 3,654 | — | — | 4,385 | 4,174 | |||||||||||||||
AA | — | — | 60,266 | 58,003 | 3,981 | 3,951 | 64,247 | 61,954 | ||||||||||||||||
A | — | — | 13,740 | 12,999 | 11,385 | 10,484 | 25,125 | 23,483 | ||||||||||||||||
BB and other | — | — | 504 | 483 | — | 504 | 483 | |||||||||||||||||
Total | $ | 548 | 520 | 78,347 | 75,139 | 15,366 | 14,435 | 94,261 | 90,094 | |||||||||||||||
Florida securities excluding third party guarantees | ||||||||||||||||||||||||
AAA | $ | — | — | 1,092 | 1,049 | — | — | 1,092 | 1,049 | |||||||||||||||
AA | 548 | 520 | 41,734 | 40,121 | 3,418 | 3,397 | 45,700 | 44,038 | ||||||||||||||||
A | — | — | 31,342 | 29,953 | 10,259 | 9,422 | 41,601 | 39,375 | ||||||||||||||||
BB and other | — | — | 4,179 | 4,016 | 1,689 | 1,616 | 5,868 | 5,632 | ||||||||||||||||
Total | $ | 548 | 520 | 78,347 | 75,139 | 15,366 | 14,435 | 94,261 | 90,094 |
September 30, 2016 | December 31, 2015 | |||||||||||||||||
Amortized Cost | Fair Value | Net Unrealized Gains (Losses) | Amortized Cost | Fair Value | Net Unrealized Gains (Losses) | |||||||||||||
(In thousands) | ||||||||||||||||||
Fixed maturities, available-for-sale | $ | 826,271 | 875,217 | 48,946 | 714,137 | 735,648 | 21,511 | |||||||||||
Fixed maturities, held-to-maturity | $ | 251,637 | 264,176 | 12,539 | 259,953 | 264,966 | 5,013 | |||||||||||
Total fixed maturities | $ | 1,077,908 | 1,139,393 | 61,485 | 974,090 | 1,000,614 | 26,524 | |||||||||||
Total equity securities | $ | 22,577 | 23,347 | 770 | 23,727 | 23,438 | (289 | ) |
• | regulatory compliance with U.S. federal securities laws, tax, anti-money laundering, bank secrecy, anti-bribery, anti-corruption and foreign asset control laws, among others; |
• | disputes with our independent marketing firms, independent consultants and employee-agents over compensation, termination of contracts and related claims; |
• | Foreign operated companies with U.S. Dollar policies. We face direct competition from companies that operate in the same manner as we operate in our international markets. |
• | Companies foreign to the countries in which their policies are sold but that issue local currency policies. Another group of our competitors in the international marketplace consists of companies that are foreign to the countries in which their policies are sold but issue life insurance policies denominated in the local currencies of those countries. Local currency policies provide the benefit of assets located in the country of foreign residents, but entail risks of uncertainty due to local currency fluctuations, as well as the perceived instability and weakness of local currencies. |
• | Locally operated companies with local currency policies. We compete with companies formed and operated in the country in which our foreign insureds reside. Generally, these companies are subject to risks of currency fluctuations, and they primarily use mortality tables based on experience of the local population as a whole. These mortality tables are typically based on significantly shorter life spans than those we use. As a result, the cost of insurance from these companies tends to be higher than ours. Although these companies typically market their policies to a broader section of the population than do our independent marketing firms and independent consultants, there can be no assurance that these companies will not endeavor to place a greater emphasis on our target market and compete more directly with us. |
• | holders of shares of our Class B common stock elect a simple majority of our board of directors, and all of these shares are owned by the Harold E. Riley Trust; and |
• | our board of directors may issue one or more series of preferred stock without the approval of our shareholders. |
Exhibit Number | The following exhibits are filed herewith: | |
3.1 | Restated and Amended Articles of Incorporation (a) | |
3.2 | Amended and Restated Bylaws dated June 7, 2016 (b) | |
4.1 | Amendment to State Series A-1 and A-2 Senior Convertible Preferred Stock (c) | |
11 | Statement re: Computation of per share earnings (see financial statements) | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act* | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act* | |
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act* | |
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act* | |
101.INS | XBRL Instance Document* | |
101.SCH | XBRL Taxonomy Extension Schema* | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase* | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase* | |
101.LAB | XBRL Taxonomy Extension Label Linkbase* | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase* | |
__________________ |
CITIZENS, INC. | |||
By: | /s/ Kay E. Osbourn | ||
Kay E. Osbourn | |||
Interim CEO & President | |||
(Principal Executive Officer) | |||
By: | /s/ David S. Jorgensen | ||
David S. Jorgensen | |||
Vice President, Chief Financial Officer and Treasurer | |||
(Principal Financial and Accounting Officer) | |||
Date: | November 7, 2016 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Citizens, Inc. ("registrant"); |
2. | Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ Kay E. Osbourn | ||
Kay E. Osbourn | |||
Interim Chief Executive Officer and President | |||
Date: | November 7, 2016 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Citizens, Inc. ("registrant"); |
2. | Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ David S. Jorgensen | ||
David S. Jorgensen | |||
Vice President, Chief Financial Officer and Treasurer | |||
Date: | November 7, 2016 |
1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Kay E. Osbourn | ||
Name: | Kay E. Osbourn | |
Title: | Interim Chief Executive Officer and President | |
Date: | November 7, 2016 |
1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ David S. Jorgensen | ||
Name: | David S. Jorgensen | |
Title: | Vice President, Chief Financial Officer and Treasurer | |
Date: | November 7, 2016 |
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MP-
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 28, 2016 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | CITIZENS INC | |
Entity Central Index Key | 0000024090 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock Class A [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 49,080,114 | |
Common Stock Class B [Member] | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 1,001,714 |
Financial Statements |
9 Months Ended |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Financial Statements Basis of Presentation and Consolidation The accompanying consolidated financial statements of Citizens, Inc. and its wholly-owned subsidiaries have been prepared in conformity with U.S. generally accepted accounting principles ("U.S. GAAP"). 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"), Security Plan Life Insurance Company ("SPLIC"), Security Plan Fire Insurance Company ("SPFIC"), Citizens National Life Insurance Company ("CNLIC"), Magnolia Guaranty Life Insurance Company ("MGLIC"), Computing Technology, Inc. ("CTI") and Insurance Investors, Inc. ("III"). Citizens and its wholly-owned subsidiaries are collectively referred to as "the Company," "we," "us" or "our." The consolidated statement of financial position for September 30, 2016, and the consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2016 and 2015 and cash flows for the nine-month periods ended September 30, 2016 and 2015, have been prepared by the Company without audit. In the opinion of management, all adjustments to present fairly the financial position, results of operations, and changes in cash flows at September 30, 2016 and for comparative periods have been made. The consolidated financial statements have been prepared in accordance with 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 financial statements do not include all of 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, for the year ended December 31, 2015. 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, SPLIC, MGLIC and CNLIC. CICA and CNLIC issue ordinary whole-life policies, credit life and disability, burial insurance, pre-need policies, and accident and health related policies, throughout the Midwest and southern United States. CICA also issues ordinary whole-life and endowment policies to non-U.S. residents. SPLIC offers final expense and home service life insurance in Louisiana, Arkansas and Mississippi, and 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, as well as furniture and equipment, to the Company. III provides aviation transportation to the Company. Use of Estimates The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates include those used in the evaluation of other-than-temporary impairments on debt and equity securities and valuation allowances on investments, actuarially determined assets and liabilities and assumptions, goodwill impairment, valuation allowance on deferred tax assets, 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. Significant Accounting Policies For a description of significant accounting policies, see Note 1 of the notes to consolidated financial statements included in our 2015 Form 10-K Annual Report, which should be read in conjunction with these accompanying consolidated financial statements. |
Accounting Pronouncements |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | Accounting Pronouncements Accounting Standards Recently Adopted None. Accounting Standards Not Yet Adopted In May 2014, the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process to achieve that core principle. ASU 2014-09 requires disclosures enabling users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, using one of two retrospective application methods. Early application is not permitted. The Company is currently evaluating the effect that the adoption of this ASU will have on its financial statements. On May 21, 2015, the FASB issued ASU 2015-09, Disclosures about Short-Duration Contracts, addressing enhanced disclosure requirements for insurers relating to short-duration insurance contract claims and the unpaid claims liability rollforward for long and short-duration contracts. The disclosures are intended to provide users of financial statements with more transparent information about an insurance entity’s initial claim estimates and subsequent adjustments to those estimates, the methodologies and judgments used to estimate claims, and the timing, frequency, and severity of claims. The new disclosures may require the accumulation and reporting of new and different groupings of claims data by insurers from what is currently captured for U.S. statutory and other reporting purposes. For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. The Company is currently assessing the new disclosure requirements related to short-duration contracts. The FASB’s new lease accounting standard, ASU 2016-02, Leases (Topic 842), was issued on February 25, 2016. The ASU will require organizations that lease assets, referred to as “lessees”, to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The ASU also will require 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 financial statements. The accounting by organizations that own the assets leased by the lessee, also known as lessor accounting, will remain largely unchanged from current GAAP. However, the ASU contains some targeted improvements that are intended to align, where necessary, lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. The ASU on leases will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is assessing the impact of this new standard. On June 10, 2016, the National Association of Insurance Commissioners (“NAIC”) Executive Committee and Plenary voted to adopt a recommendation for January 1, 2017 as the operative date for the implementation of Principles-Based Reserves (“PBR”) as a national standard for life insurance products. Although this NAIC standard does not change the reserving requirements under U.S. GAAP, it can be significant for many life insurers. PBR replaces the current formulaic approach to determining policy reserves with an approach that more closely reflects the risks of highly complex products. Companies will be expected to develop “right-sized” reserves that better align with their specific product features, their observed actuarial experience, and their overall risk management procedures. There is a three-year transition period where PBR is optional until PBR becomes required on January 1, 2020. The Company is assessing the impact that this standard will have on its statutory reserving. In June 2016, the FASB issued ASU 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 amendments in this ASU require 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 expected 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 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 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 GAAP prohibits reflecting those improvements in current-period earnings. For public business entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is evaluating the impact this guidance will have on our consolidated financial statements. |
Segment Information |
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Segment Reporting Information, Operating Income (Loss) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company has three reportable segments: Life Insurance, Home Service Insurance, and Other Non-Insurance Enterprises. The accounting policies of the segments are 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 three reportable segments. The Company has no reportable differences between segments and consolidated operations.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following tables set forth the computation of basic and diluted earnings per share.
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Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | Investments The Company invests primarily in fixed maturity securities, which totaled 89.7% and 85.0% of total cash, cash equivalents and investments at September 30, 2016 and December 31, 2015, respectively.
The following tables represent the cost, gross unrealized gains and losses and fair value for fixed maturities and equity securities as of the periods indicated.
The majority of the Company's equity securities are diversified stock and bond mutual funds. Valuation of Investments in Fixed Maturity and Equity Securities Held-to-maturity securities are reported in the financial statements at amortized cost and available-for-sale securities are reported at fair value. The Company monitors all debt and equity securities on an on-going basis relative to changes in credit ratings, market prices, earnings trends and financial performance, in addition to specific region or industry reviews. The assessment of whether other-than-temporary impairments have occurred is based on a case-by-case evaluation of underlying reasons for the decline in fair value. The Company determines other-than-temporary impairment by reviewing relevant evidence related to the specific security issuer as well as the Company's intent to sell the security, or if it is more likely than not that the Company would be required to sell a security before recovery of its amortized cost. When an other-than-temporary impairment has occurred, the amount of the other-than-temporary impairment recognized in earnings depends on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis, the other-than-temporary impairment is recognized in earnings equal to the entire difference between the investment's cost and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is more likely than not that the Company will not be required to sell the security before recovery of its amortized cost basis, the other-than-temporary impairment is separated into the following: (a) the amount representing the credit loss; and (b) the amount related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the other-than-temporary impairment recognized in earnings becomes the new amortized cost basis of the investment. The new amortized cost basis is not adjusted for subsequent recoveries in fair value. The Company evaluates whether a credit impairment exists for debt securities by considering primarily the following factors: (a) changes in the financial condition of the security's underlying collateral; (b) whether the issuer is current on contractually obligated interest and principal payments; (c) changes in the financial condition, credit rating and near-term prospects of the issuer; (d) the length of time to which the fair value has been less than the amortized cost of the security; and (e) the payment structure of the security. The Company's best estimate of expected future cash flows used to determine the credit loss amount is a quantitative and qualitative process. Quantitative review includes information received from third party sources such as financial statements, pricing and rating changes, liquidity and other statistical information. Qualitative factors include judgments related to business strategies, economic impacts on the issuer and overall judgment related to estimates and industry factors. The Company's best estimate of future cash flows involves assumptions including, but not limited to, various performance indicators, such as historical and projected default and recovery rates, credit ratings, and current delinquency rates. These assumptions require the use of significant management judgment and include the probability of issuer default and estimates regarding timing and amount of expected recoveries, which may include estimating the underlying collateral value. In addition, projections of expected future debt security cash flows may change based upon new information regarding the performance of the issuer. The primary factors considered in evaluating whether an impairment exists for an equity security include, but are not limited to: (a) the length of time and the extent to which the fair value has been less than the cost of the security; (b) changes in the financial condition, credit rating and near-term prospects of the issuer; (c) whether the issuer is current on contractually obligated payments; and (d) the intent and ability of the Company to retain the investment for a period of time sufficient to allow for recovery. Other-than-temporary impairments ("OTTI") were recognized on investment securities during the nine months ended September 30, 2016 totaling $2.3 million. No OTTIs were recognized during the three months ended September 30, 2016. OTTIs were recognized during the three and nine months ended September 30, 2015 totaling $2.4 million. The following tables present the fair values and gross unrealized losses of fixed maturities and equity securities that have remained in a continuous unrealized loss position for the periods indicated.
As of September 30, 2016, the Company had 22 available-for-sale fixed maturity securities and 6 held-to-maturity fixed maturity securities that were in an unrealized loss position for greater than 12 months. We reported 1 equity security holding in an unrealized loss position for greater than 12 months as of September 30, 2016.
We have reviewed these securities for the periods ended September 30, 2016 and December 31, 2015 and determined that no other-than-temporary impairment exists that have not been recognized based on our evaluation of the credit worthiness of the issuers and the fact that we do not intend to sell the investments nor is it likely that we will be required to sell the securities before recovery of their amortized cost bases, which may be maturity. We continue to monitor all securities on an on-going basis, and future information may become available which could result in other-than-temporary impairments being recorded. The amortized cost and fair value of fixed maturity securities at September 30, 2016 by contractual maturity are shown in the table below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date have been reflected based upon final stated maturity.
The Company uses the specific identification method of the individual security to determine the cost basis used in the calculation of realized gains and losses related to security sales.
There were a small number of sales of equity securities in the second quarter of 2016, namely one equity security and three mutual funds. There were no sales of available-for-sale securities during the three months ended September 30, 2016. There were no sales of available-for-sale securities for the three and nine month periods ended September 30, 2015. There were no securities sold from the held-to-maturity portfolio for the three and nine months ended September 30, 2016 or 2015. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We hold available-for-sale fixed maturity securities and equity securities, which are carried at fair value. Fair value measurements are generally based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. All assets and liabilities carried at fair value are required to be classified and disclosed in one of the following three categories:
Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as U.S. Treasury securities and actively traded mutual fund and stock investments. Level 2 includes those financial instruments that are valued by independent pricing services or broker quotes. These models are primarily industry-standard models that consider various inputs, such as interest rates, credit spreads and foreign exchange rates for the underlying financial instruments. All significant inputs are observable, or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace. Financial instruments in this category primarily include corporate securities, U.S. Government-sponsored enterprise securities, municipal securities and certain mortgage and asset-backed securities. Level 3 is comprised of financial instruments whose fair value is estimated based on non-binding broker prices utilizing significant inputs not based on or corroborated by readily available market information. This category consists of two private placement mortgage-backed securities. The following tables set forth our assets and liabilities that are measured at fair value on a recurring basis as of the dates indicated.
Financial Instruments Valuation Fixed maturity securities, available-for-sale. At September 30, 2016, our fixed maturity securities, valued using a third-party pricing source, totaled $862.2 million for Level 2 assets and comprised 96.0% of total reported fair value of our financial assets. The Level 1 and Level 2 valuations are reviewed and updated quarterly through random testing by comparisons to separate pricing models, other third-party pricing services, and back tested to recent trades. In addition, we obtain information relative to the third-party pricing models and review model parameters for reasonableness. Fair values for Level 3 assets are based upon unadjusted broker quotes that are non-binding, and consist of two private placement mortgage-backed securities with a total value of $0.1 million. Our Level 3 assets are current relative to principal and interest payments and are considered immaterial to our financial statements. For the nine months ended September 30, 2016, there were no material changes to the valuation methods or assumptions used to determine fair values, and no broker or third party prices were changed from the values received. Equity securities, available-for-sale. Our available-for-sale equity securities are classified as Level 1 assets as their fair values are based upon quoted market prices. The following table presents additional information about fixed maturity securities measured at fair value on a recurring basis that are classified as Level 3 assets and for which we have utilized significant unobservable inputs to determine fair value.
We review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets. Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. There were no transfers in or out of Level 1 or 2. Financial Instruments not Carried at Fair Value Estimates of fair values are made at a specific point in time, based on relevant market prices and information about the financial instruments. The estimated fair values of financial instruments presented below are not necessarily indicative of the amounts the Company might realize in actual market transactions. The carrying amount and fair value for the financial assets and liabilities on the consolidated balance sheets not otherwise disclosed for the periods indicated are as follows:
Fair values for fixed income securities, which are characterized as Level 2 assets in the fair value hierarchy, are based on quoted market prices for the same or similar securities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other assumptions, including a discount rate and estimates of future cash flows. Mortgage loans are secured principally by residential and commercial properties. Weighted average interest rates for these loans were approximately 6.8% as of September 30, 2016 and 6.2% at December 31, 2015, with maturities ranging from 1 to 26 years. Management estimated the fair value using an annual interest rate of 6.3% at September 30, 2016. Our mortgage loans are considered Level 3 assets in the fair value hierarchy. Policy loans had a weighted average annual interest rate of 7.7% as of September 30, 2016 and December 31, 2015, and no specified maturity dates. The aggregate fair value of policy loans approximates the carrying value reflected on the consolidated balance sheets. These loans typically carry an interest rate that is tied to the crediting rate applied to the related policy and contract reserves. Policy loans are an integral part of the life insurance policies we have in force, cannot be valued separately and are not marketable. Therefore, the fair value of policy loans approximates the carrying value and policy loans are considered Level 3 assets in the fair value hierarchy. The fair value of short-term investments approximate carrying value due to their short-term nature. Our short-term investments are considered Level 2 assets in the fair value hierarchy. The fair value of cash and cash equivalents approximate carrying value and are characterized as Level 1 assets in the fair value hierarchy. The fair value of the Company's liabilities under annuity contract policies, which are considered Level 3 assets, was estimated at September 30, 2016 using discounted cash flows based upon a swap rate curve with interest rates ranging from 1.02% to 3.21% based upon swap rates adjusted for various risk adjustments. The fair value of liabilities under all insurance contracts are taken into consideration in the overall management of interest rate risk, which seeks to minimize exposure to changing interest rates through the matching of investment maturities with amounts due under insurance contracts. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Qualification of Life Products As of December 31, 2014, we determined that a portion of the life insurance policies issued by our subsidiary insurance companies failed to qualify for the favorable U.S. federal income tax treatment afforded by Sections 7702 of the Internal Revenue Code ("IRC") of 1986. This tax code section allows for qualifying products sold to clients to have favorable tax treatment such as the product's inside build up is not taxable. Because these policies were sold with the intention that they would qualify for this favorable tax treatment, holders of these policies and CICA may now be subject to additional tax liabilities. The policies at issue were sold most substantially to non-U.S. citizens residing abroad and to a lesser extent domestically. Based upon a review of the options available to the Company, we have determined we will not remediate our endowments and endowment-like products under IRC 7702 we have sold to non-U.S. citizens. We do intend to remediate the domestic products we have sold to U.S. citizens. In addition, as part of our continuing review, we determined in July 2015 that certain annuity contracts do not contain qualifying language under IRC 72(s) as intended that would have provided for favorable tax treatment of the annuities. This issue affects both our domestic and international contract holders. The Company has continued to refine the understanding of the tax failures as previously reported by preparing an individual policy calculation and has reflected the related exposure for the current reporting period as noted below. Failure of these policies to qualify under IRC Sections 7702 and 72(s) has resulted in additional liabilities and expenses as described below. The products have been and continue to be appropriately reported under U.S. GAAP for financial reporting. The failure of these policies to qualify under Sections 7702 and 72(s) results in an estimated liability as of September 30, 2016 of $12.8 million, after tax, related to projected IRS toll charges and fees of $12.6 million as well as $0.3 million of reserve increases to bring policies into compliance. The estimated liability at September 30, 2016 is down $2.1 million from the estimated liability at June 30, 2016 of $14.9 million and down $1.8 million from the estimated liability at December 31, 2015 of $14.6 million, after tax, due to a continued refinement of our estimate. The probability weighted range of financial estimates relative to this issue is $6.1 million to $40.5 million, after tax. This estimated range includes projected toll charges and fees payable to the IRS, as well as estimated increased payout obligations to current and former holders of non-compliant domestic life insurance policies expected to result from remediation of those policies. The estimated liability and the estimated range will be updated as we continue to refine our estimates. The amount of our liabilities and expenses depends on a number of uncertainties, including the number of prior tax years for which we may be liable to the IRS, the number of domestic life insurance policies we will be required to remediate, and the methodology applicable to the calculation of taxable benefits under non-compliant policies. Given the range of potential outcomes and the significant variables assumed in establishing our estimates, actual amounts incurred may exceed our reserve and also could exceed the high end of our estimated range of liabilities and expenses. To the extent the amount reserved by the Company is insufficient to meet the actual amount of our liability and expenses, or if our estimates of those liabilities and expenses change in the future, our financial condition and results of operation may be materially adversely affected. Management believes that based upon current information we have recorded the best estimate liability to date. Accruals for loss contingencies are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. The process of determining our best estimate and the estimated range is a complex undertaking, which includes insight from external consultants and involves management’s judgment based upon a variety of factors known at the time. We recorded additional general expenses of $1.4 million for the nine months ended September 30, 2016 and $2.0 million for the twelve months ended December 31, 2015 related to our 7702 and 72(s) issues. Additional costs will be incurred in the remainder of 2016 associated with these issues and we believe these costs will range from $0.5 million to $1.0 million, however, actual amounts incurred may differ from this estimate and changes will be recorded as they become probable and can be reasonably estimated. Compliance As part of our periodic review of our compliance controls, we completed an internal risk assessment of our compliance with the Bank Secrecy Act ("BSA") anti-money laundering requirements. As a result of this risk assessment, we have enhanced our BSA compliance program with additional controls, such as list screening software beyond OFAC sanctions screening, enhanced payment due diligence and transaction controls to better deter, detect, prevent and report money laundering and other illegal activity. Unclaimed Property Contingencies The Company has been informed by the Louisiana Department of Treasury, Arkansas Auditor of State and the Texas State Comptroller, that they authorized an audit of Citizens, Inc. and its affiliates for compliance with unclaimed property laws. This audit is being conducted by Verus Financial LLC on behalf of the states. The external audit may result in additional payments to beneficiaries, additional escheatment of funds deemed abandoned under state laws, administrative penalties, interest, and changes to the Company's procedures for the identification and escheatment of abandoned property. At this time, the Company is not able to estimate any of these possible amounts. Litigation From time to time we are subject to legal and regulatory actions relating to our business. We defend all claims vigorously. As a result, we incur defense costs, including attorneys' fees, other direct litigation costs and the expenditure of management time that otherwise would be devoted to our business. |
Income Taxes |
9 Months Ended |
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Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rate was 40.4% and 174.1% for the three months and 60.0% and (121.1)% for the nine months ended September 30, 2016 and 2015, respectively. Additionally there is $1.8 million and $0.6 million of tax expense recorded related to an uncertain tax position in the nine months ended September 30, 2016 and September 30, 2015, respectively. In most periods where our effective tax rate is lower than the statutory tax rate of 35%, the difference, absent tax consequences of our 7702/72(s) issues, is primarily due to tax-exempt state and local bond income. |
Benefit Plans (Notes) |
9 Months Ended |
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Sep. 30, 2016 | |
Benefit Plans [Abstract] | |
Pension and Other Postretirement Benefits Disclosure [Text Block] | Benefit Plans The Company introduced a new employer-sponsored 401(k) plan to all eligible employees, effective March 1, 2016. This is an additional benefit offered to employees, which supplements the defined contribution profit-sharing plan which was already in existence. Employees with one year of service can participate in the new plan. Contributions are made by employees and the Company provides a matching contribution based upon the employee's level of contribution. The Company's expense related to the new 401(k) plan was not material to the Company's results of operations. |
Related Party Transactions |
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Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company has various routine related party transactions in conjunction with our holding company structure, such as a management service agreement related to costs incurred, a tax sharing agreement between entities, and inter-company dividends and capital contributions. There were no changes related to these relationships during the nine months ended September 30, 2016. In September 2016, CICA made a $150,000 cash capital contribution to III. In June 2015, CICA made a $1 million cash capital contribution to CNLIC. See our Annual Report on Form 10-K as of December 31, 2015 for a comprehensive discussion of related party transactions. |
Subsequent Events (Notes) |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events On November 1, 2016, SPLIC paid a $20.0 million extraordinary dividend to its parent, CICA. The dividend had no impact on the consolidated financial statements of the Company and will be used by CICA for general corporate purposes. The dividend was approved by the Louisiana Department of Insurance, SPLIC’s state of domicile. SPLIC’s risk-based capital after the dividend remains is in excess of minimum capital requirements. As disclosed in Note (8), Income Taxes, the Company has recorded a $1.8 million tax expense in 2016 related to uncertain tax positions (“UTP”). The Company's tax liability for UTP's totaled $82.9 million at September 30, 2016. The Company has now received notice that the Internal Revenue Service (“IRS”) has completed its examination related to the Company’s 2011 and 2012 amended tax returns. The amended returns have been accepted by the IRS and the Company will release $0.6 million of tax liability related to this UTP in the fourth quarter of 2016. |
Financial Statements (Policies) |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation [Policy Text Block] | Basis of Presentation and Consolidation The accompanying consolidated financial statements of Citizens, Inc. and its wholly-owned subsidiaries have been prepared in conformity with U.S. generally accepted accounting principles ("U.S. GAAP"). 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"), Security Plan Life Insurance Company ("SPLIC"), Security Plan Fire Insurance Company ("SPFIC"), Citizens National Life Insurance Company ("CNLIC"), Magnolia Guaranty Life Insurance Company ("MGLIC"), Computing Technology, Inc. ("CTI") and Insurance Investors, Inc. ("III"). Citizens and its wholly-owned subsidiaries are collectively referred to as "the Company," "we," "us" or "our." The consolidated statement of financial position for September 30, 2016, and the consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2016 and 2015 and cash flows for the nine-month periods ended September 30, 2016 and 2015, have been prepared by the Company without audit. In the opinion of management, all adjustments to present fairly the financial position, results of operations, and changes in cash flows at September 30, 2016 and for comparative periods have been made. The consolidated financial statements have been prepared in accordance with 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 financial statements do not include all of 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, for the year ended December 31, 2015. 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, SPLIC, MGLIC and CNLIC. CICA and CNLIC issue ordinary whole-life policies, credit life and disability, burial insurance, pre-need policies, and accident and health related policies, throughout the Midwest and southern United States. CICA also issues ordinary whole-life and endowment policies to non-U.S. residents. SPLIC offers final expense and home service life insurance in Louisiana, Arkansas and Mississippi, and 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, as well as furniture and equipment, to the Company. III provides aviation transportation to the Company. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates include those used in the evaluation of other-than-temporary impairments on debt and equity securities and valuation allowances on investments, actuarially determined assets and liabilities and assumptions, goodwill impairment, valuation allowance on deferred tax assets, 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. |
Segment Information (Tables) |
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Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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Earnings Per Share (Tables) |
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Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following tables set forth the computation of basic and diluted earnings per share.
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Investments (Tables) |
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Investments Including Short Term And Cash And Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments Including Short Term And Cash And Cash Equivalents [Table Text Block] | The Company invests primarily in fixed maturity securities, which totaled 89.7% and 85.0% of total cash, cash equivalents and investments at September 30, 2016 and December 31, 2015, respectively.
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Unrealized Gain (Loss) on Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Gain (Loss) on Investments [Table Text Block] | The following tables represent the cost, gross unrealized gains and losses and fair value for fixed maturities and equity securities as of the periods indicated.
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Unrealized Continuous Losses on Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unrealized Loss on Investments [Table Text Block] | The following tables present the fair values and gross unrealized losses of fixed maturities and equity securities that have remained in a continuous unrealized loss position for the periods indicated.
As of September 30, 2016, the Company had 22 available-for-sale fixed maturity securities and 6 held-to-maturity fixed maturity securities that were in an unrealized loss position for greater than 12 months. We reported 1 equity security holding in an unrealized loss position for greater than 12 months as of September 30, 2016.
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Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Realized Gain (Loss) [Table Text Block] | The Company uses the specific identification method of the individual security to determine the cost basis used in the calculation of realized gains and losses related to security sales.
The Company uses the specific identification method of the individual security to determine the cost basis used in the calculation of realized gains and losses related to security sales.
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Schedule of Fixed Maturities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments Classified by Contractual Maturity Date [Table Text Block] | The amortized cost and fair value of fixed maturity securities at September 30, 2016 by contractual maturity are shown in the table below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date have been reflected based upon final stated maturity.
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The following tables set forth our assets and liabilities that are measured at fair value on a recurring basis as of the dates indicated.
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | The following table presents additional information about fixed maturity securities measured at fair value on a recurring basis that are classified as Level 3 assets and for which we have utilized significant unobservable inputs to determine fair value.
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Fair Value, by Balance Sheet Grouping [Table Text Block] | The carrying amount and fair value for the financial assets and liabilities on the consolidated balance sheets not otherwise disclosed for the periods indicated are as follows:
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Investments Realized Gains (Losses) on Investments (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
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Jun. 30, 2016 |
Sep. 30, 2015
USD ($)
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Sep. 30, 2016
USD ($)
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Sep. 30, 2015
USD ($)
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Gain (Loss) on Investments [Line Items] | |||||
Proceeds from Sale of Available-for-sale Securities, Debt | $ 0 | $ 0 | $ 0 | $ 0 | |
Proceeds from Sale of Available-for-sale Securities, Equity | $ 0 | 0 | $ 403 | $ 0 | |
Sale of bonds, number of securities sold at a loss | 0 | 0 | 0 | ||
Number of Equity Securities Sold | 1 | ||||
Number of mutual funds sold | 3 | ||||
Sale of bonds, number of held-to-maturity bonds sold | 0 | 0 | 0 | ||
Debt Securities [Member] | |||||
Gain (Loss) on Investments [Line Items] | |||||
Available-for-sale Securities, Gross Realized Gains | $ 0 | $ 0 | $ 0 | ||
Available-for-sale Securities, Gross Realized Losses | 0 | 0 | |||
Equity Securities [Member] | |||||
Gain (Loss) on Investments [Line Items] | |||||
Available-for-sale Securities, Gross Realized Gains | 0 | 0 | 40 | 0 | |
Available-for-sale Securities, Gross Realized Losses | $ 0 | $ 0 | $ 36 | $ 0 |
Fair Value Measurements Schedule of Fair Value Unobservable Input Reconciliation (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
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Sep. 30, 2016 |
Dec. 31, 2015 |
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Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract] | ||
Balance at beginning of period | $ 145 | $ 231 |
Total realized and unrealized gains (losses) | ||
Included in net income | 0 | 0 |
Included in other comprehensive income | (3) | (2) |
Principal paydowns | (67) | (84) |
Transfers in and (out) of Level 3 | 0 | 0 |
Balance at end of period | $ 75 | $ 145 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Income Tax Disclosure [Abstract] | ||||
Effective Income Tax Rate | 40.44944% | 174.10072% | 60.00836% | (121.05263%) |
Unrecognized Tax Benefits, Income Tax Penalties Expense | $ 1.8 | $ 0.6 | ||
Federal Statutory Income Tax Rate | 35.00% | 35.00% |
Related Party Transactions Capital Contribution to Subsidiary (Details) |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
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Capital Contribution to Insurance Investors, Inc. [Member] | |
Related Party Transaction [Line Items] | |
Related Party Transaction, Amounts of Transaction | $ 150,000 |
Capital Contribution to Citizens National Life Ins. Co. [Member] | |
Related Party Transaction [Line Items] | |
Related Party Transaction, Amounts of Transaction | $ 1,000,000 |
Subsequent Events (Details) - USD ($) $ in Millions |
9 Months Ended | 10 Months Ended | |
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Sep. 30, 2016 |
Sep. 30, 2015 |
Nov. 07, 2016 |
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Subsequent Event [Line Items] | |||
Cash Dividends Paid to Parent Company by Consolidated Subsidiaries | $ 20.0 | ||
Unrecognized Tax Benefits, Decrease Resulting from Settlements with Taxing Authorities | $ 0.6 | ||
Unrecognized Tax Benefits, Income Tax Penalties Expense | $ 1.8 | $ 0.6 | |
Liability for Uncertainty in Income Taxes, Current | $ 82.9 |
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