0001140361-11-047382.txt : 20111202 0001140361-11-047382.hdr.sgml : 20111202 20110930060246 ACCESSION NUMBER: 0001140361-11-047382 CONFORMED SUBMISSION TYPE: CORRESP PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20110930 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS INC CENTRAL INDEX KEY: 0000024090 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 840755371 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: CORRESP BUSINESS ADDRESS: STREET 1: 400 EAST ANDERSON LANE CITY: AUSTIN STATE: TX ZIP: 78752 BUSINESS PHONE: 5128377100 MAIL ADDRESS: STREET 1: 400 EAST ANDERSON LANE CITY: AUSTIN STATE: TX ZIP: 78752 FORMER COMPANY: FORMER CONFORMED NAME: CONTINENTAL INVESTORS LIFE INC DATE OF NAME CHANGE: 19881222 CORRESP 1 filename1.htm corresp.htm

September 30, 2011

VIA EDGAR

Mr. Jim Rosenberg
Senior Assistant Chief Accountant
Division of Corporation Finance
United States Securities and Exchange Commission
Washington, D.C. 20549

Re:
Citizens, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2010
Filed on March 11, 2011
Form 10-Q for the Quarterly Period Ended June 30, 2011
Filed August 8, 2011
File No. 000-16509

Dear Mr. Rosenberg:

This letter is in response to the issues raised in your letter dated September 20, 2011 regarding the above-referenced filings of Citizens, Inc. (the "Company").  In connection to our response, we acknowledge that:

 
·
the Company is responsible for the adequacy and accuracy of the disclosure in the filings;
 
·
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and
 
·
the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Our responses are in bold following the restatement of your questions, which are in italics.

Form 10-K for the Year Ended December 31, 2010
Management's Discussion and Analysis of Financial Condition and Results of Operations

Investments, page 33

1.  Please provide us proposed disclosure to be included in future periodic reports indicating the source of the ratings referred to in the tables on pages 34 and 35 with elaboration as to the meaning of each rating category.

 
 
 

Mr. Jim Rosenberg
September 30, 2011
Page 2

{To be inserted following the last table on page 34}

Credit ratings reported for the periods indicated are assigned by a Nationally Recognized Statistical Rating Organization ("NRSRO") such as Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.  A credit rating assigned by a NRSRO is a quality based rating, with AAA representing the highest quality and D the lowest, with BBB and above being considered investment grade.  In addition, the Company may also use credit ratings of the National Association of Insurance Commissioners ("NAIC") Securities Valuation Office ("SVO") as assigned, if there is no NRSRO rating.  Securities rated by the SVO are grouped in the equivalent NRSRO category as stated by the SVO and securities that are not rated by a NRSRO are included in the "other" category.

2.  With respect to municipal securities, provide us proposed disclosure to be included in future periodic reports showing the fair value and amortized cost by general obligation and special revenue bonds at December 31, 2010.  Within each of those categories, provide further break-down of each state or municipality comprising more than 10% of total municipal securities, showing the fair value and amortized cost credit rating with and without the third party guarantees.  For the special revenue bonds category, also disclose a breakdown by nature of activity supporting these securities for any activity comprising more than 10% of the municipal securities.

{ Inserted to replace the table beginning on page 35}

As noted, the Company held municipal securities with third party guarantees.  Detailed below is a presentation by NRSRO rating of our municipal holdings by funding type at December 31, 2010.

Municipals shown including third party guarantees
                                
     
 
                                  
 
  
     
General Obligation
    
Special Revenue
    
Other
    
Total
  
     
Fair
    
Amortized
    
Fair
    
Amortized
    
Fair
    
Amortized
    
Fair
    
Amortized
  
     
Value
    
Cost
    
Value
    
Cost
    
Value
    
Cost
    
Value
    
Cost
  
     
(In thousands)
  
 
                                                  
AAA
     $ 18,532       18,725       13,442       13,985       -       -       31,974       32,710  
AA
       13,757       14,469       28,845       29,857       -       -       42,602       44,326  
A       2,522       2,486       14,636       15,747       -       -       17,158       18,233  
BBB
       -       -       3,803       4,176       897       1,048       4,700       5,224  
BB and other
       -       -       5,285       6,721       -       -       5,285       6,721  
Total
     $ 34,811       35,680       66,011       70,486       897       1,048       101,719       107,214  


 
 
 

Mr. Jim Rosenberg
September 30, 2011
Page 3

Municipals shown excluding third party guarantees
                      
 
  
                                         
 
  
     
General Obligation
    
Special Revenue
    
Other
    
Total
  
     
Fair
    
Amortized
    
Fair
    
Amortized
    
Fair
    
Amortized
    
Fair
    
Amortized
  
     
Value
    
Cost
    
Value
    
Cost
    
Value
    
Cost
    
Value
    
Cost
  
     
(In thousands)
  
 
                                                
AAA
     $ 14,188       14,443       5,302       5,555       -       -       19,490       19,998  
AA
       16,382       17,018       27,281       28,311       -       -       43,663       45,329  
A       3,742       3,701       22,439       23,360       -       -       26,181       27,061  
BBB
       499       518       5,228       6,038       897       1,048       6,624       7,604  
BB and other
       -       -       5,761       7,222       -       -       5,761       7,222  
Total
     $ 34,811       35,680       66,011       70,486       897       1,048       101,719       107,214  

As of December 31, 2010, the Company held investments in Special Revenue bonds that had a greater than  10% exposure based upon activity as noted in the table below.

   
Fair Value
    
Amortized Cost
    
% of Total Fair Value
  
   
(in thousands)
  
Public improvements
   $ 13,630       13,960       13.4 %
University and college    improvements
     10,644       11,121       10.5 %

 
 
 
 
Mr. Jim Rosenberg
September 30, 2011
Page 4

The tables below represent the Company's exposure of municipal holdings in states that exceed 10% of the total municipal portfolio as of December 31, 2010.

Municipal Exposure by State
                                
   
 
                                  
 
  
   
General Obligation
    
Special Revenue
    
Other
    
Total
  
   
Fair
    
Amortized
    
Fair
    
Amortized
    
Fair
    
Amortized
    
Fair
    
Amortized
  
   
Value
    
Cost
    
Value
    
Cost
    
Value
    
Cost
    
Value
    
Cost
  
   
(In thousands)
  
Louisiana securities with  third party guarantees
                                                
                                                 
AAA
   $ 4,345       4,283       7,197       7,442       -       -       11,542       11,725  
AA
     6,513       6,464       8,099       8,155       -       -       14,612       14,619  
A     1,841       1,809       12,710       13,774       -       -       14,551       15,583  
BBB
     -       -       3,803       4,176       897       1,048       4,700       5,224  
BB and other
     -       -       5,286       6,722       -       -       5,286       6,722  
Total
     12,699       12,556       37,095       40,269       897       1,048       50,691       53,873  
 
                                                                
Louisiana securities without third party guarantees
                                                                
 
                                                                
AAA
     -       -       -       -       -       -       -       -  
AA
     9,138       9,014       6,535       6,609       -       -       15,673       15,623  
A     3,062       3,024       19,571       20,400       -       -       22,633       23,424  
BBB
     499       518       5,229       6,038       897       1,048       6,625       7,604  
BB and other
     -       -       5,760       7,222       -       -       5,760       7,222  
Total
     12,699       12,556       37,095       40,269       897       1,048       50,691       53,873  
 
                                                                
Texas securities with and without third party guarantees
                                                                
                                                                 
AAA
     14,188       14,443       3,782       4,045       -       -       17,970       18,488  
AA
     1,270       1,336       1,717       1,768       -       -       2,987       3,104  
A     680       677       -       -       -       -       680       677  
BBB
     -       -       -       -       -       -       -       -  
BB and other
     -       -       -       -       -       -       -       -  
Total
   $ 16,138       16,456       5,499       5,813       -       -       21,637       22,269  

The Company invests in municipal securities of issuers in the state of Louisiana and receives a credit that reduces our premium tax liability in that state.  At December 31, 2010, total holdings of municipal securities in Louisiana represented 49.8% of all municipal holdings based upon fair value.  The Company also holds 21.3% of its municipal holdings in Texas issuers.  There were no other states or individual issuer holdings that represented or exceeded 10% of the total municipal portfolio as of December 31, 2010.

 
 
 

Mr. Jim Rosenberg
September 30, 2011
Page 5

Form 10-Q for the Quarterly Period Ended June 30, 2011

Note 8:  Commitments and Contingencies

3.  Please provide us proposed disclosure to be included in future periodic reports clarifying whether any case is being pursued individually or is probable of being pursued individually as a result of the December 9, 2009 failed recertification of the Delia Bolanos Andrade, et al. class action lawsuit.  Further, please include a statement that an estimate cannot be made as required by ASC 450-20-50-4.b, as applicable, with respect to individuals pursuing claims relating to the Delia Bolanos Andrade, et al. lawsuit and, as a result of the July 20, 2011 ruling by the Fifth Circuit, the Road Home Litigation

{Additional Disclosure for the Delia Bolanos Andrade lawsuit}

Since the December 9, 2009 failed recertification, no individual cases have been pursued by the plaintiffs or their attorneys.  The probability of the plaintiffs pursuing their cases individually is unknown.  Further, an estimate of any possible loss or range of losses cannot be made at this time in regard to individuals pursuing claims.  However, should the plaintiffs pursue their claims individually, we intend to maintain a vigorous defense in any proceedings.

{Additional Disclosure for the Road Home Litigation}

An estimate of possible loss or range of loss cannot be made at this time as a result of the July 20, 2011 Fifth Circuit ruling.

If you need any additional information, please do not hesitate to contact me.

Sincerely,

/s/ Kay Osbourn
Kay Osbourn
Executive Vice President, Chief Financial Officer,
Principal Accounting Officer and Treasurer