Citizens, Inc.

Management did not state revenue or EPS in the prepared remarks, but said net income increased by double digits for both the three-month period and year to date. In the life segment, insurance premiums increased 7.8% for the quarter and 6.2% year to date versus 2013; first-year premium increased 9.1% year over year; death claims were down 13.2% for the quarter; surrender expense increased 19.8% for the quarter and 9% year to date; and other general expenses decreased 3.4% in the segment. In the Home Service segment, premiums were up over 4% year to date, largely from Magnolia, and property claims were lower due to the lack of weather events. Investment yields rose to 4.22%, and the company recorded $300,000 of other-than-temporary impairment charges this quarter. For the balance sheet, net unrealized gains on fixed-maturity bonds increased from $5.1 million at December 31, 2013 to $40.2 million at September 30, 2014. Management said it expects continued yield improvement into late 2014 and early 2015, but no formal next-quarter or full-year guidance was given.

Rick Riley struck an optimistic, execution-focused tone, emphasizing growth in premium revenue, strong persistency, and better investment yields. He said Magnolia had been fully transitioned into back-office operations and that retention of acquired business has been better than typical, while also noting the company still has capacity and interest for acquisitions. He framed Citizens as a healthy company operating in niche markets and said management was pleased with third-quarter results.

Kay Osbourn focused on the underlying drivers of the quarter: life premium growth of 7.8% for the quarter and 6.2% year to date, with renewals accounting for over 85% of premiums. She highlighted death claims down 13.2% in the quarter, surrender expense up 19.8% in the quarter, commissions rising with first-year business, and other general expenses down 3.4% in the life segment. On investments, she noted $300,000 of impairment charges, more than 96% of holdings rated BBB or better, AA-rated holdings declining to 45.7% from 46.9% at year-end 2013, and that RBC ratios remained well above minimums.

There was no real Q&A because no analysts asked questions before the call ended. Management did, however, address a few likely concerns preemptively, including Magnolia integration, with Riley saying the transition was complete and business retention was strong. They also addressed acquisitions, saying there were ongoing discussions but nothing formal to report.