Stockholders' Equity and Restrictions

6 Months Ended

Jun. 30, 2020

STOCKHOLDERS' EQUITY AND RESTRICTIONS

EARNINGS PER SHARE

The following tables set forth the computation of basic and diluted earnings per share.


Three Months Ended June 30,	2020		2019
(In thousands, except per share amounts)

Basic and diluted earnings per share:
Numerator:
Net loss	$	(1,027)	(4,565)
Net loss allocated to Class A common stock	$	(1,017)	(4,519)
Net loss allocated to Class B common stock	(10)		(46)
Net loss	$	(1,027)	(4,565)

Denominator:
Weighted average shares of Class A outstanding - basic	49,345		49,229
Weighted average shares of Class A outstanding - diluted	49,528		49,280
Weighted average shares of Class B outstanding - basic and diluted	1,002		1,002
Basic and diluted loss per share of Class A common stock	$	(0.02)	(0.09)
Basic and diluted loss per share of Class B common stock	(0.01)		(0.04)


Six Months Ended June 30,	2020		2019
(In thousands, except per share amounts)
Basic and diluted earnings per share:
Numerator:
Net loss	$	(4,611)	(8,367)
Net loss allocated to Class A common stock	$	(4,565)	(8,283)
Net loss allocated to Class B common stock	(46)		(84)
Net loss	$	(4,611)	(8,367)

Denominator:
Weighted average shares of Class A outstanding - basic	49,322		49,229
Weighted average shares of Class A outstanding - diluted	49,506		49,280
Weighted average shares of Class B outstanding - basic and diluted	1,002		1,002
Basic and diluted loss per share of Class A common stock	$	(0.09)	(0.17)
Basic and diluted loss per share of Class B common stock	(0.05)		(0.08)

CAPITAL AND SURPLUS

Each of our regulated insurance subsidiaries is required to meet stipulated regulatory capital requirements. These include capital requirements imposed by the U.S. National Association of Insurance Commissioners ("NAIC") and the Bermuda Monetary Authority ("BMA"). All insurance subsidiaries exceeded the minimum capital requirements at June 30, 2020.

CICA Ltd. is a wholly-owned subsidiary of Citizens and is domiciled in Bermuda. The BMA requires insurers domiciled in Bermuda to maintain available statutory economic capital and surplus at a level equal to or in excess of its enhanced capital requirement (“ECR”), which the Company calculates by using the Bermuda Solvency Capital Requirement (“BSCR”). The BMA has established a target capital level (“TCL”) that requires insurers to maintain available statutory economic capital and surplus equal to 120% of its ECR. We normally experience fluctuations in the fair values of our assets and liabilities, which impact our ECR ratio. As of March 31, 2020, CICA Ltd.’s available statutory economic capital and surplus was below the TCL by $8.9 million.

Two key components of available statutory economic capital and surplus were adversely affected at March 31, 2020 due to the disruption that the COVID-19 pandemic has had on the worldwide economy: 1) the fair value of our assets decreased, and 2) interest rates prescribed by the BMA decreased resulting in an increase of our statutory economic insurance liabilities. Since CICA Ltd. failed to meet the TCL at March 31, 2020, we complied with applicable regulations by notifying the BMA in writing and filing a report with the BMA within the required timeframe to provide details of the circumstances leading to the failure. We have had several detailed discussions with the BMA during the second quarter of 2020 and continue to provide details on CICA Ltd.’s financial performance, interest rate sensitivities and corporate strategies. At June 30, 2020, CICA Ltd. was above the TCL threshold and although we continue to hold discussions with the BMA, there has been no capital or management action required.