Citizens Inc (CIA) Q3 2024 Earnings: EPS of $0.05 Misses Estimates, Revenue at $61.7M Below Expectations

Insurance Issuance Hits Record High Despite Revenue Shortfall

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6 hours ago
Summary
  • Revenue: Increased 4% to $61.7 million in Q3 2024, slightly below the analyst estimate of $62.54 million.
  • Net Income: Reported at $2.8 million, or $0.05 per fully diluted Class A share, consistent with the prior year quarter.
  • Insurance Issued: Achieved a record $307.6 million in Q3 2024, marking a 75% increase compared to the same period in 2023.
  • Book Value Per Share: Increased 35% year-over-year to $4.16, with an adjusted book value per share of $6.06, up 8% excluding AOCI.
  • Cash Flow: Positive net cash from operating activities of $9.7 million, maintaining a trend of positive cash flow annually since 2004.
  • Licensing Expansion: Now licensed in 42 U.S. states and Washington, D.C., up from 32 at the end of 2022, supporting growth in domestic markets.
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On November 7, 2024, Citizens Inc (CIA, Financial) released its 8-K filing detailing the financial results for the third quarter ending September 30, 2024. Citizens Inc, an insurance holding company, serves the life insurance needs of individuals across the United States and over seventy countries through its subsidiaries. The company operates primarily in two segments: Life Insurance and Home Service Insurance, with the majority of its revenue generated from the Life Insurance segment.

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Performance Overview and Challenges

Citizens Inc reported a 4% increase in total revenues to $61.7 million for Q3 2024, falling short of the analyst estimate of $62.54 million. The company achieved a net income of $2.8 million, or $0.05 per fully diluted Class A share, aligning with the previous year's performance but below the estimated earnings per share of $0.08. The company's revenue growth was driven by a significant 70% increase in direct first-year life and accident & health (A&H) premiums, marking the eighth consecutive quarter of year-over-year growth in this area.

Financial Achievements and Industry Impact

Citizens Inc achieved a record-setting $307.6 million in insurance issued during Q3 2024, a 75% increase from the same period in 2023. This milestone underscores the company's strategic focus on expanding its product offerings and agent network, which grew by 86% since December 31, 2023. The company is now licensed in 42 U.S. states and Washington, D.C., up from 32 in 2022, enhancing its market reach and potential for future growth.

Key Financial Metrics and Analysis

Despite the revenue growth, Citizens Inc faced challenges with increased total benefits and expenses, which rose by $3.9 million to $58.7 million in Q3 2024. This increase was primarily due to higher policyholder benefit reserves and an uptick in death claims benefits. Consequently, income before federal income tax decreased to $3.0 million from $4.6 million in Q3 2023. Adjusted income before federal income tax, which excludes certain discrete items, was $2.2 million, down from $5.7 million in the prior year.

We are thrilled to report strong sales momentum and exceptional execution in the third quarter and throughout 2024 with several significant developments," said Jon Stenberg, President and Chief Executive Officer.

Balance Sheet and Cash Flow Insights

Citizens Inc maintained a strong balance sheet with total assets of $1.74 billion and no debt as of September 30, 2024. The company reported positive net cash provided by operating activities of $9.7 million for the quarter, continuing its trend of positive cash flow annually since 2004. The book value per Class A share increased by 35% to $4.16, with an adjusted book value per share of $6.06, reflecting a solid financial position.

Financial Metric Q3 2024 Q3 2023
Total Revenues $61.7 million $59.4 million
Net Income $2.8 million $2.7 million
EPS (Diluted) $0.05 $0.05
Book Value per Share $4.16 $3.08

Conclusion

Citizens Inc's Q3 2024 results highlight a robust increase in insurance issuance and strategic expansion, despite facing challenges in revenue growth and increased expenses. The company's focus on expanding its product offerings and agent network positions it well for future growth in the competitive insurance industry. Investors will be keen to see how Citizens Inc leverages its expanded market presence and product innovations to drive long-term shareholder value.

Explore the complete 8-K earnings release (here) from Citizens Inc for further details.