Document
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2018
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
COMMISSION FILE NUMBER:  000-16509
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CITIZENS, INC.
(Exact name of registrant as specified in its charter)
Colorado
84-0755371
(State or other jurisdiction of
(I.R.S. Employer
 incorporation or organization)
Identification No.)
 
 
2900 Esperanza Crossing, 2nd Floor
 
Austin, Texas
78758
(Address of principal executive offices)
(Zip Code)
 
(Registrant's telephone number, including area code:) (512) 837-7100
 
(Former name, former address and former fiscal year, if changed since last report:)    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, a smaller reporting company or an emerging growth company. See the definition of "large accelerated filer", "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated
filer ¨
Accelerated
filer x
Non-accelerated
filer ¨
Smaller reporting
company ¨
Emerging growth
company ¨
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No
As of August 1, 2018, the Registrant had 49,080,114 shares of Class A common stock, no par value, outstanding and 1,001,714 shares of Class B common stock outstanding.
 




























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TABLE OF CONTENTS
 
 
 
Page Number
Part I.
Financial Information
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
Part II.
Other Information
 
 
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
Item 5.
 
 
 
 
 
Item 6.

1
Table of Contents

PART I.  FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Financial Position
(In thousands)
 
 
 
 
 
 
 
 
 
June 30, 2018
 
December 31, 2017
Assets
(Unaudited)
 
 
Investments:
 
 
 
Fixed maturities available-for-sale, at fair value (cost: $967,918 and $935,977 in 2018 and 2017, respectively)
$
976,451

 
974,609

Fixed maturities held-to-maturity, at amortized cost (fair value: $218,774 and $241,377 in 2018 and 2017, respectively)
214,514

 
233,961

Equity securities, at fair value (cost: $15,289 in 2017)
15,372

 
16,164

Mortgage loans on real estate
190

 
195

Policy loans
77,577

 
73,735

Real estate held for investment (less $1,233 and $5,479 accumulated depreciation in 2018 and 2017, respectively)
5,769

 
7,416

Real estate held for sale (less $4,411 accumulated depreciation in 2018)
1,483

 
—

Other long-term investments
34

 
36

Total investments
1,291,390

 
1,306,116

Cash and cash equivalents
63,333

 
46,064

Accrued investment income
19,241

 
19,062

Reinsurance recoverable
3,971

 
3,715

Deferred policy acquisition costs
164,065

 
167,063

Cost of customer relationships acquired
16,499

 
17,499

Goodwill
12,624

 
12,624

Other intangible assets
959

 
961

Deferred tax asset
59,989

 
50,797

Property and equipment, net
6,291

 
6,624

Due premiums, net (less $1,483 and $1,611 allowance for doubtful accounts in 2018 and 2017, respectively)
11,791

 
12,765

Prepaid expenses
1,594

 
251

Other assets
974

 
912

Total assets
$
1,652,721

 
1,644,453


(Continued)

See accompanying notes to consolidated financial statements.

2
Table of Contents

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Financial Position
(In thousands, except share amounts)
 
 
 
 
 
 
 
 
 
June 30, 2018
 
December 31, 2017
Liabilities and Stockholders' Equity
(Unaudited)
 
 
Liabilities:
 
 
 
Policy liabilities:
 
 
 
Future policy benefit reserves:
 
 
 
Life insurance
$
1,164,352

 
1,133,875

Annuities
75,415

 
73,688

Accident and health
905

 
990

Dividend accumulations
25,022

 
23,713

Premiums paid in advance
53,092

 
51,431

Policy claims payable
8,527

 
8,610

Other policyholders' funds
10,016

 
8,483

Total policy liabilities
1,337,329

 
1,300,790

Commissions payable
1,830

 
2,430

Federal income tax payable
97,239

 
93,365

Other liabilities
18,893

 
24,355

Total liabilities
1,455,291

 
1,420,940

Commitments and contingencies (Note 8)


 


Stockholders' equity:
 

 
 

Class A, no par value, 100,000,000 shares authorized, 52,215,852 shares issued and outstanding in 2018 and 2017, including shares in treasury of 3,135,738 in 2018 and 2017
259,596

 
259,383

Class B, no par value, 2,000,000 shares authorized, 1,001,714 shares issued and outstanding in 2018 and 2017
3,184

 
3,184

Accumulated deficit
(61,058
)
 
(54,375
)
Accumulated other comprehensive income:
 

 
 

Unrealized gains on securities, net of tax
6,719

 
26,332

Treasury stock, at cost
(11,011
)
 
(11,011
)
Total stockholders' equity
197,430

 
223,513

Total liabilities and stockholders' equity
$
1,652,721

 
1,644,453



See accompanying notes to consolidated financial statements.









3
Table of Contents

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Comprehensive Income
Three Months Ended June 30,
(In thousands, except per share amounts)
(Unaudited)

 
2018
 
2017
Revenues:
 
 
 
 
 
Premiums:
 
 
 
 
 
 
 
Life insurance
 
 
$
44,631

 
 
 
46,155

Accident and health insurance
 
 
301

 
 
 
345

Property insurance
 
 
1,198

 
 
 
1,239

Net investment income
 
 
13,811

 
 
 
13,073

Realized investment losses, net
 
 
(178
)
 
 
 
(117
)
Other income
 
 
79

 
 
 
157

Total revenues
 
 
59,842

 
 
 
60,852

Benefits and expenses:
 
 
 

 
 
 
 

Insurance benefits paid or provided:
 
 
 

 
 
 
 

Claims and surrenders
 
 
20,617

 
 
 
18,952

Increase in future policy benefit reserves
 
 
16,555

 
 
 
17,820

Policyholders' dividends
 
 
1,614

 
 
 
1,501

Total insurance benefits paid or provided
 
 
38,786

 
 
 
38,273

Commissions
 
 
8,669

 
 
 
9,894

Other general expenses
 
 
14,466

 
 
 
9,355

Capitalization of deferred policy acquisition costs
 
 
(5,640
)
 
 
 
(6,883
)
Amortization of deferred policy acquisition costs
 
 
7,200

 
 
 
7,642

Amortization of cost of customer relationships acquired
 
 
472

 
 
 
475

Total benefits and expenses
 
 
63,953

 
 
 
58,756

Income (loss) before federal income tax
 
 
(4,111
)
 
 
 
2,096

Federal income tax expense (benefit)
 
 
(1,553
)
 
 
 
1,524

Net income (loss)
 
 
(2,558
)
 
 
 
572

Per Share Amounts:
 
 
 

 
 

 
 

Basic and diluted earnings (losses) per share of Class A common stock
$
(0.05
)
 
 

 
0.01

 
 

Basic and diluted earnings (losses) per share of Class B common stock
(0.03
)
 
 

 
0.01

 
 

Other comprehensive income (loss):
 

 
 

 
 
 
 

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

 
 

 
 

 
 

Unrealized holding gains (losses) arising during period
 

 
(12,329
)
 
 

 
4,573

Reclassification adjustment for losses included in net income
 

 
87

 
 

 
111

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

 
(12,242
)
 
 

 
4,684

Income tax expense (benefit) on unrealized gains (losses) on available-for-sale debt securities
 

 
(2,571
)
 
 

 
1,639

Other comprehensive income (loss)
 

 
(9,671
)
 
 

 
3,045

Total comprehensive income (loss)
 

 
$
(12,229
)
 
 

 
3,617



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Table of Contents

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Comprehensive Income
Six Months Ended June 30,
(In thousands, except per share amounts)
(Unaudited)

 
2018
 
2017
Revenues:
 
 
 
 
 
Premiums:
 
 
 
 
 
 
 
Life insurance
 
 
$
87,160

 
 
 
89,959

Accident and health insurance
 
 
592

 
 
 
673

Property insurance
 
 
2,407

 
 
 
2,488

Net investment income
 
 
27,582

 
 
 
25,812

Realized investment gains (losses), net
 
 
(753
)
 
 
 
1,146

Other income
 
 
287

 
 
 
355

Total revenues
 
 
117,275

 
 
 
120,433

Benefits and expenses:
 
 
 

 
 
 
 

Insurance benefits paid or provided:
 
 
 

 
 
 
 

Claims and surrenders
 
 
41,768

 
 
 
40,676

Increase in future policy benefit reserves
 
 
31,163

 
 
 
32,356

Policyholders' dividends
 
 
2,921

 
 
 
2,805

Total insurance benefits paid or provided
 
 
75,852

 
 
 
75,837

Commissions
 
 
17,628

 
 
 
19,819

Other general expenses
 
 
20,973

 
 
 
19,511

Capitalization of deferred policy acquisition costs
 
 
(11,603
)
 
 
 
(13,784
)
Amortization of deferred policy acquisition costs
 
 
14,806

 
 
 
15,017

Amortization of cost of customer relationships acquired
 
 
1,151

 
 
 
994

Total benefits and expenses
 
 
118,807

 
 
 
117,394

Income (loss) before federal income tax
 
 
(1,532
)
 
 
 
3,039

Federal income tax expense
 
 
989

 
 
 
411

Net income (loss)
 
 
(2,521
)
 
 
 
2,628

Per Share Amounts:
 
 
 

 
 

 
 

Basic and diluted earnings (losses) per share of Class A common stock
$
(0.05
)
 
 

 
0.05

 
 

Basic and diluted earnings (losses) per share of Class B common stock
(0.03
)
 
 

 
0.03

 
 

Other comprehensive income (loss):
 

 
 

 
 
 
 

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

 
 

 
 

 
 

Unrealized holding gains (losses) arising during period
 

 
(30,427
)
 
 

 
9,710

Reclassification adjustment for losses (gains) included in net income
 

 
346

 


 
(41
)
Unrealized gains (losses) on available-for-sale debt securities, net
 

 
(30,081
)
 
 

 
9,669

Income tax expense (benefit) on unrealized gains (losses) on available-for-sale debt securities
 

 
(6,306
)
 
 

 
3,384

Other comprehensive income (loss)
 

 
(23,775
)
 
 

 
6,285

Total comprehensive income (loss)
 

 
$
(26,296
)
 
 

 
8,913


See accompanying notes to consolidated financial statements.

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Table of Contents

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Six Months Ended June 30, 2018 and 2017
(In thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Accumulated
deficit
 
Accumulated other comprehensive income (loss)
 
Treasury
stock
 
Total
Stockholders'
equity
 
Class A
 
Class B
 
 
 
 
Balance at December 31, 2016
$
259,383

 
3,184

 
(16,248
)
 
13,792

 
(11,011
)
 
249,100

Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

Net income
—

 
—

 
2,628

 
—

 
—

 
2,628

Unrealized investment gains, net
—

 
—

 
—

 
6,285

 
—

 
6,285

Total comprehensive income
—

 
—

 
2,628

 
6,285

 
—

 
8,913

Balance at June 30, 2017
259,383

 
3,184

 
(13,620
)
 
20,077

 
(11,011
)
 
258,013

 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2017
259,383

 
3,184

 
(54,375
)
 
26,332

 
(11,011
)
 
223,513

Accounting standards adopted January 1, 2018
—

 
—

 
(4,162
)
 
4,162

 
—

 
—

Balance at January 1, 2018
259,383

 
3,184

 
(58,537
)
 
30,494

 
(11,011
)
 
223,513

Comprehensive loss:
 

 
 

 
 

 
 

 
 

 
 

Net loss
—

 
—

 
(2,521
)
 
—

 
—

 
(2,521
)
Unrealized investment losses, net
—

 
—

 
—

 
(23,775
)
 
—

 
(23,775
)
Total comprehensive loss
—

 
—

 
(2,521
)
 
(23,775
)
 
—

 
(26,296
)
Stock-based compensation
213

 
—

 
—

 
—

 
—

 
213

Balance at June 30, 2018
$
259,596

 
3,184

 
(61,058
)
 
6,719

 
(11,011
)
 
197,430



See accompanying notes to consolidated financial statements.


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CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended June 30,
(In thousands)
(Unaudited)
 
2018
 
2017
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(2,521
)
 
2,628

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 

 
 

Realized (gains) losses on sale of investments and other assets
753

 
(1,146
)
Net deferred policy acquisition costs
3,203

 
1,233

Amortization of cost of customer relationships acquired
1,151

 
994

Depreciation
708

 
504

Amortization of premiums and discounts on investments
8,332

 
8,283

Stock-based compensation
213

 
—

Deferred federal income tax benefit
(2,869
)
 
(1,977
)
Change in:
 

 
 

Accrued investment income
(179
)
 
(764
)
Reinsurance recoverable
(256
)
 
45

Due premiums
974

 
1,197

Future policy benefit reserves
31,665

 
32,335

Other policyholders' liabilities
4,420

 
4,138

Federal income tax payable
3,858

 
3,700

Commissions payable and other liabilities
(6,062
)
 
(6,686
)
Other, net
(1,404
)
 
(1,061
)
Net cash provided by operating activities
41,986

 
43,423

Cash flows from investing activities:
 

 
 

Sale of fixed maturities, available-for-sale
—

 
508

Maturities and calls of fixed maturities, available-for-sale
37,646

 
43,755

Maturities and calls of fixed maturities, held-to-maturity
17,549

 
3,390

Purchase of fixed maturities, available-for-sale
(76,003
)
 
(96,279
)
Sale of equity securities, available-for-sale
—

 
1,940

Calls of equity securities, available-for-sale
—

 
300

Purchase of equity securities, available-for-sale
(9
)
 
—

Principal payments on mortgage loans
5

 
34

Increase in policy loans, net
(3,842
)
 
(2,710
)
Sale of other long-term investments and real estate
1

 
3,040

Purchase of property and equipment
(211
)
 
(952
)
Maturity of short-term investments
—

 
500

Net cash used in investing activities
(24,864
)
 
(46,474
)
 
 
 
 
 
 
 
 

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Table of Contents

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
Six Months Ended June 30,
(In thousands)
(Unaudited)
 
2018
 
2017
Cash flows from financing activities:
 
 
 
Annuity deposits
$
3,605

 
4,365

Annuity withdrawals
(3,458
)
 
(3,075
)
Net cash provided by financing activities
147

 
1,290

Net increase (decrease) in cash and cash equivalents
17,269

 
(1,761
)
Cash and cash equivalents at beginning of year
46,064

 
35,510

Cash and cash equivalents at end of period
$
63,333

 
33,749

Supplemental disclosures of operating activities:
 

 
 

Cash paid (received) during the period for income taxes, net
$
—

 
(1,312
)


Supplemental disclosures of noncash investing and financing activities:

During 2018 and 2017, various fixed maturity issuers exchanged securities with book values of $2.5 million and $4.8 million, respectively, for securities of equal value.



See accompanying notes to consolidated financial statements.


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CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2018
(Unaudited)


(1) Financial Statements

Basis of Presentation and Consolidation

The consolidated financial statements include the accounts and operations of Citizens, Inc. ("Citizens"), a Colorado corporation, and its wholly-owned subsidiaries, CICA Life Insurance Company of America ("CICA"), 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"), Insurance Investors, Inc. ("III") and CICA Life Ltd. ("CICA Ltd.").  Citizens and its wholly-owned subsidiaries are collectively referred to as "the Company," "we," "us" or "our."

The consolidated statements of financial position as of June 30, 2018, the consolidated statements of comprehensive income for the three and six-months ended June 30, 2018 and June 30, 2017 and the consolidated statements of cash flows for the six-month periods ended June 30, 2018 and June 30, 2017, have been prepared by the Company without audit.  In the opinion of management, all normal and recurring adjustments to present fairly the financial position, results of operations, and changes in cash flows at June 30, 2018 and for comparative periods have been made.  The consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”).  Accordingly, the financial statements do not include all the information and footnotes required for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements, and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017.  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, CICA Life Ltd, SPLIC, MGLIC and CNLIC.  Until the end of 2016, CICA and CNLIC issued 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.  Beginning January 1, 2017, CICA and CNLIC ceased selling life products domestically. The Company is developing a new product strategy domestically and plans to re-enter the life market in 2019. Prior to July 1, 2018, CICA primarily issued ordinary whole-life and endowment policies to non-U.S. residents.  From and after July 1, 2018, CICA Ltd. will issue such policies. Effective on July 1, 2018, the Company effected a novation of all of the international policies issued by CICA to CICA Life Ltd. The Company is currently assessing the impact of the novation on the consolidated financial statements. 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 is currently not active. We plan to dissolve III and merge it into Citizens. CICA Ltd. is a newly established Bermuda entity that began operations in July 2018.

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

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CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)


Significant Accounting Policies

For a description of significant accounting policies, see Note 1 of the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017, which should be read in conjunction with these accompanying consolidated financial statements.

(2) Accounting Pronouncements

Accounting Standards Recently Adopted

On February 14, 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  It allows a reclassification from accumulated other comprehensive income ("AOCI") to retained earnings of the stranded tax effects that occurred due to the enactment of the Tax Cuts and Jobs Act of 2017 (the "New Tax Act"). The updated guidance is effective for reporting periods beginning after December 15, 2018 and is to be applied retrospectively to each period in which there are items impacted by the New Tax Act remaining in AOCI or at the beginning of the period of adoption. Early adoption is permitted. The Company adopted the updated guidance effective January 1, 2018 and elected to reclassify the income tax effects of the New Tax Act from AOCI to accumulated deficit as of January 1, 2018. This reclassification resulted in an increase in accumulated deficit of $4.7 million as of January 1, 2018 and an increase in AOCI by the same amount.

In January 2016, the FASB released ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The updated guidance requires equity investments, except those accounted for under the equity method of accounting, that have readily determinable fair values to be measured at fair value with any changes in fair value recognized in net income. Equity securities that do not have readily determinable fair values may be measured at estimated fair value or cost less impairment, if any, adjusted for subsequent observable price changes, with changes in the carrying value recognized in net income. A qualitative assessment for impairment is required for equity investments without readily determinable fair values. The updated guidance also eliminates the requirement to disclose the method and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost on the balance sheet. The updated guidance was effective for the first quarter ended March 31, 2018. The adoption of this guidance resulted in the recognition of $560,000 of net after-tax unrealized gains on equity investments as a cumulative effect adjustment that decreased retained deficit as of January 1, 2018 and decreased AOCI by the same amount. The Company elected to report changes in the fair value of equity investments in realized investment gains (losses), net. At December 31, 2017, equity investments were classified as available-for-sale on the Company's balance sheet. However, upon adoption, the updated guidance eliminated the available-for-sale balance sheet classification for equity investments.

Accounting Standards Not Yet Adopted

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 U.S. 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.

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

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CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)

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 U.S. GAAP; however, the credit losses are recorded through an allowance for credit losses rather than as a write-down. This approach is an improvement to current U.S. GAAP because an entity will be able to record reversals of credit losses (in situations in which the estimate of credit losses declines) in current period net income, which in turn should align the income statement recognition of credit losses with the reporting period in which changes occur. Current U.S. GAAP prohibits reflecting those improvements in current-period earnings. For public business entities, the amendments in this ASU 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, but it is not expected to have a significant impact on the Company's consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20). The amendments in this ASU shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The Company has a large portfolio of callable debt securities purchased at a premium. As such, the Company had already been amortizing the premium to the earliest call date to reduce volatility in earnings by eliminating reporting large realized losses when debt securities are called. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

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

(3) Segment Information

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

The accounting policies of the segments and other non-insurance enterprises 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 two reportable segments.

11
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)


The Company's Other Non-Insurance enterprises are the only reportable difference between segments and consolidated operations.
 
Three Months Ended
 
June 30, 2018
 
Life
Insurance
 
Home
Service
Insurance
 
Other
Non-Insurance
Enterprises
 
Consolidated
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
Premiums
$
34,393

 
11,737

 
—

 
46,130

Net investment income
10,139

 
3,316

 
356

 
13,811

Realized investment losses, net
(24
)
 
(151
)
 
(3
)
 
(178
)
Other income
79

 
—

 
—

 
79

Total revenue
44,587

 
14,902

 
353

 
59,842

Benefits and expenses:
 
 
 

 
 

 
 

Insurance benefits paid or provided:
 

 
 

 
 

 
 

Claims and surrenders
15,019

 
5,598

 
—

 
20,617

Increase in future policy benefit reserves
15,383

 
1,172

 
—

 
16,555

Policyholders' dividends
1,605

 
9

 
—

 
1,614

Total insurance benefits paid or provided
32,007

 
6,779

 
—

 
38,786

Commissions
4,777

 
3,892

 
—

 
8,669

Other general expenses
6,908

 
5,392

 
2,166

 
14,466

Capitalization of deferred policy acquisition costs
(4,150
)
 
(1,490
)
 
—

 
(5,640
)
Amortization of deferred policy acquisition costs
6,240

 
960

 
—

 
7,200

Amortization of cost of customer relationships acquired
132

 
340

 
—

 
472

Total benefits and expenses
45,914

 
15,873

 
2,166

 
63,953

Loss before income tax expense
$
(1,327
)
 
(971
)
 
(1,813
)
 
(4,111
)

12
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)

 
Six Months Ended
 
June 30, 2018
 
Life
Insurance
 
Home
Service
Insurance
 
Other
Non-Insurance
Enterprises
 
Consolidated
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
Premiums
$
66,753

 
23,406

 
—

 
90,159

Net investment income
20,269

 
6,618

 
695

 
27,582

Realized investment losses, net
(209
)
 
(503
)
 
(41
)
 
(753
)
Other income (loss)
288

 
(1
)
 
—

 
287

Total revenue
87,101

 
29,520

 
654

 
117,275

Benefits and expenses:
 
 
 

 
 

 
 

Insurance benefits paid or provided:
 

 
 

 
 

 
 

Claims and surrenders
30,310

 
11,458

 
—

 
41,768

Increase in future policy benefit reserves
28,965

 
2,198

 
—

 
31,163

Policyholders' dividends
2,902

 
19

 
—

 
2,921

Total insurance benefits paid or provided
62,177

 
13,675

 
—

 
75,852

Commissions
10,005

 
7,623

 
—

 
17,628

Other general expenses
6,024

 
10,936

 
4,013

 
20,973

Capitalization of deferred policy acquisition costs
(8,790
)
 
(2,813
)
 
—

 
(11,603
)
Amortization of deferred policy acquisition costs
12,780

 
2,026

 
—

 
14,806

Amortization of cost of customer relationships acquired
284

 
867

 
—

 
1,151

Total benefits and expenses
82,480

 
32,314

 
4,013

 
118,807

Income (loss) before income tax expense
$
4,621

 
(2,794
)
 
(3,359
)
 
(1,532
)




13
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)

 
Three Months Ended
 
June 30, 2017
 
Life
Insurance
 
Home
Service
Insurance
 
Other
Non-Insurance
Enterprises
 
Consolidated
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
Premiums
$
35,960

 
11,779

 
—

 
47,739

Net investment income
9,496

 
3,250

 
327

 
13,073

Realized investment gains (losses), net
(141
)
 
24

 
—

 
(117
)
Other income (loss)
177

 
3

 
(23
)
 
157

Total revenue
45,492

 
15,056

 
304

 
60,852

Benefits and expenses:
 

 
 

 
 

 
 

Insurance benefits paid or provided:
 

 
 

 
 

 
 

Claims and surrenders
13,842

 
5,110

 
—

 
18,952

Increase in future policy benefit reserves
16,513

 
1,307

 
—

 
17,820

Policyholders' dividends
1,490

 
11

 
—

 
1,501

Total insurance benefits paid or provided
31,845

 
6,428

 
—

 
38,273

Commissions
5,866

 
4,028

 
—

 
9,894

Other general expenses
4,327

 
4,299

 
729

 
9,355

Capitalization of deferred policy acquisition costs
(5,223
)
 
(1,660
)
 
—

 
(6,883
)
Amortization of deferred policy acquisition costs
6,613

 
1,029

 
—

 
7,642

Amortization of cost of customer relationships acquired
144

 
331

 
—

 
475

Total benefits and expenses
43,572

 
14,455

 
729

 
58,756

Income (loss) before income tax expense
$
1,920

 
601

 
(425
)
 
2,096


14
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)

 
Six Months Ended
 
June 30, 2017
 
Life
Insurance
 
Home
Service
Insurance
 
Other
Non-Insurance
Enterprises
 
Consolidated
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
Premiums
$
69,523

 
23,597

 
—

 
93,120

Net investment income
18,627

 
6,509

 
676

 
25,812

Realized investment gains (losses), net
(64
)
 
1,210

 
—

 
1,146

Other income
295

 
2

 
58

 
355

Total revenue
88,381

 
31,318

 
734

 
120,433

Benefits and expenses:
 

 
 

 
 

 
 

Insurance benefits paid or provided:
 

 
 

 
 

 
 

Claims and surrenders
29,518

 
11,158

 
—

 
40,676

Increase in future policy benefit reserves
29,773

 
2,583

 
—

 
32,356

Policyholders' dividends
2,785

 
20

 
—

 
2,805

Total insurance benefits paid or provided
62,076

 
13,761

 
—

 
75,837

Commissions
11,873

 
7,946

 
—

 
19,819

Other general expenses
8,199

 
9,157

 
2,155

 
19,511

Capitalization of deferred policy acquisition costs
(10,601
)
 
(3,183
)
 
—

 
(13,784
)
Amortization of deferred policy acquisition costs
12,919

 
2,098

 
—

 
15,017

Amortization of cost of customer relationships acquired
316

 
678

 
—

 
994

Total benefits and expenses
84,782

 
30,457

 
2,155

 
117,394

Income (loss) before income tax expense
$
3,599

 
861

 
(1,421
)
 
3,039



15
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)

(4) Earnings Per Share

The following tables set forth the computation of basic and diluted earnings per share.
 
Three Months Ended
 
June 30, 2018
 
June 30, 2017
 
(In thousands,
except per share amounts)
Basic and diluted earnings per share:
 
 
 
Numerator:
 
 
 
Net income (loss)
$
(2,558
)
 
572

Net income (loss) allocated to Class A common stock
$
(2,532
)
 
566

Net income (loss) allocated to Class B common stock
(26
)
 
6

Net income (loss)
$
(2,558
)
 
572

Denominator:
 
 
 
Weighted average shares of Class A outstanding - basic
49,080

 
49,080

Weighted average shares of Class A outstanding - diluted
49,109

 
49,080

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

 
1,002

Basic and diluted earnings (loss) per share of Class A common stock
$
(0.05
)
 
0.01

Basic and diluted earnings (loss) per share of Class B common stock
(0.03
)
 
0.01


 
Six Months Ended

June 30, 2018
 
June 30, 2017
 
(In thousands,
except per share amounts)
Basic and diluted earnings per share:
 
 
 
Numerator:
 
 
 
Net income (loss)
$
(2,521
)
 
2,628

Net income (loss) allocated to Class A common stock
$
(2,496
)
 
2,601

Net income (loss) allocated to Class B common stock
(25
)
 
27

Net income (loss)
$
(2,521
)
 
2,628

Denominator:
 
 
 
Weighted average shares of Class A outstanding - basic
49,080

 
49,080

Weighted average shares of Class A outstanding - diluted
49,109

 
49,080

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

 
1,002

Basic and diluted earnings (loss) per share of Class A common stock
$
(0.05
)
 
0.05

Basic and diluted earnings (loss) per share of Class B common stock
(0.03
)
 
0.03



16
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)

(5) Investments

The Company invests primarily in fixed maturity securities, which totaled 88.0% of total cash, cash equivalents and investments at June 30, 2018. The Company's cash, cash equivalents and investments are listed below.
 
June 30, 2018
 
December 31, 2017
 
Carrying
Value
 
% of Total
Carrying Value
 
Carrying
Value
 
% of Total
Carrying Value
 
(In thousands)
 
 
 
(In thousands)
 
 
Fixed maturity securities
$
1,190,965

 
88.0

 
$
1,208,570

 
89.3

Equity securities
15,372

 
1.1

 
16,164

 
1.2

Mortgage loans
190

 
—

 
195

 
—

Policy loans
77,577

 
5.7

 
73,735

 
5.5

Real estate and other long-term investments
7,286

 
0.5

 
7,452

 
0.6

Cash and cash equivalents
63,333

 
4.7

 
46,064

 
3.4

Total cash, cash equivalents and investments
$
1,354,723

 
100.0

 
$
1,352,180

 
100.0


The following tables represent the cost, gross unrealized gains and losses and fair value for fixed maturities as of the periods indicated.
 
June 30, 2018
 
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
(In thousands)
Fixed maturities:
 
 
 
 
 
 
 
Available-for-sale:
 
 
 
 
 
 
 
U.S. Treasury securities
$
9,824

 
1,500

 
—

 
11,324

U.S. Government-sponsored enterprises
3,558

 
741

 
—

 
4,299

States and political subdivisions
550,700

 
12,009

 
3,170

 
559,539

Foreign governments
103

 
16

 
—

 
119

Corporate
402,213

 
9,353

 
11,994

 
399,572

Residential mortgage-backed
1,520

 
81

 
3

 
1,598

Total available-for-sale securities
967,918

 
23,700

 
15,167

 
976,451

Held-to-maturity securities:
 

 
 

 
 

 
 

States and political subdivisions
198,439

 
5,112

 
772

 
202,779

Corporate
16,075

 
531

 
611

 
15,995

Total held-to-maturity securities
214,514

 
5,643

 
1,383

 
218,774

Total fixed maturities
$
1,182,432

 
29,343

 
16,550

 
1,195,225



17
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)

 
December 31, 2017
 
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
(In thousands)
Fixed maturities:
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
U.S. Treasury securities
$
9,860

 
1,948

 
—

 
11,808

U.S. Government-sponsored enterprises
3,570

 
926

 
—

 
4,496

States and political subdivisions
550,536

 
18,507

 
1,540

 
567,503

Foreign governments
103

 
18

 
—

 
121

Corporate
370,043

 
20,212

 
1,552

 
388,703

Residential mortgage-backed
1,865

 
118

 
5

 
1,978

Total available-for-sale securities
935,977

 
41,729

 
3,097

 
974,609

Held-to-maturity securities:
 

 
 

 
 

 
 

States and political subdivisions
213,054

 
7,585

 
629

 
220,010

Corporate
20,907

 
1,118

 
658

 
21,367

Total held-to-maturity securities
233,961

 
8,703

 
1,287

 
241,377

Total fixed maturity securities
$
1,169,938

 
50,432

 
4,384

 
1,215,986

 
The majority of the Company's equity securities are diversified stock and bond mutual funds.
 
 
June 30, 2018
 
December 31, 2017
 
Fair Value
 
Fair Value
 
(In thousands)
Equity securities:
 
 
 
Stock mutual funds
$
3,112

 
3,217

Bond mutual funds
12,094

 
12,367

Common stock
23

 
24

Preferred stock
143

 
556

Total equity securities
$
15,372

 
16,164


The Company recognized $86,009 and $388,061 of net realized losses on equity securities still held for the three and six months ended June 30, 2018, respectively.

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. Equity securities are measured at fair value with the change in fair value recorded through net income pursuant to the adoption of ASU 2016-01 as described in Note 2.

The Company monitors all debt 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 ("OTTI") 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.

18
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)


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 it is more likely that the Company 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 fixed maturity 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.

There were no other-than-temporary impairments recorded for the three months ended June 30, 2018 or 2017. An other-than-temporary impairment of $225,000 was recognized on one bond issuer during the six months ended June 30, 2018 and on one equity security totaling $17,000 during the six months ended June 30, 2017.


19
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)

The following tables present the fair values and gross unrealized losses of fixed maturity securities that have remained in a continuous unrealized loss position for the periods indicated.
 
June 30, 2018
 
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
$
174,912

 
1,683

 
164

 
53,199

 
1,487

 
44

 
228,111

 
3,170

 
208

Corporate
258,469

 
10,359

 
174

 
13,178

 
1,635

 
10

 
271,647

 
11,994

 
184

Residential mortgage-backed
20

 
1

 
4

 
152

 
2

 
4

 
172

 
3

 
8

Total available-for-sale securities
433,401

 
12,043

 
342

 
66,529

 
3,124

 
58

 
499,930

 
15,167

 
400

Held-to-maturity securities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

States and political subdivisions
34,296

 
203

 
34

 
7,107

 
569

 
11

 
41,403

 
772

 
45

Corporate
568

 
3

 
1

 
2,206

 
608

 
2

 
2,774

 
611

 
3

Total held-to-maturity securities
34,864

 
206

 
35

 
9,313

 
1,177

 
13

 
44,177

 
1,383

 
48

Total fixed maturities
$
468,265

 
12,249

 
377

 
75,842

 
4,301

 
71

 
544,107

 
16,550

 
448


As of June 30, 2018, the Company had 58 available-for-sale fixed maturity securities and 13 held-to-maturity fixed maturity securities that were in an unrealized loss position for greater than 12 months.


20
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
June 30, 2018
(Unaudited)

 
December 31, 2017
 
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
$
49,408

 
312

 
46

 
47,233

 
1,228

 
46

 
96,641

 
1,540

 
92

Corporate
61,071

 
732

 
39

 
7,651

 
820

 
10

 
68,722

 
1,552

 
49

Residential mortgage-backed
132

 
3

 
4

 
157

 
2

 
4

 
289

 
5

 
8

Total available-for-sale securities
110,611

 
1,047

 
89

 
55,041

 
2,050

 
60

 
165,652

 
3,097

 
149

Held-to-maturity securities:
 

 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

States and political subdivisions
14,178

 
45

 
15

 
7,460

 
584

 
14

 
21,638

 
629

 
29

Corporate
—

 
—

 
—

 
2,169

 
658

 
2

 
2,169

 
658

 
2

Total held-to-maturity securities
14,178

 
45

 
15

 
9,629

 
1,242

 
16

 
23,807

 
1,287

 
31

Total fixed maturities
$
124,789

 
1,092

 
104

 
64,670

 
3,292

 
76

 
189,459

 
4,384

 
180

Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable preferred stock
95

 
6

 
1

 
—

 
—

 
—

 
95

 
6

 
1

Total equity securities
$
95

 
6

 
1

 
—

 
—

 
—

 
95

 
6

 
1