2020 proved a challenging year for us all. The COVID-19 pandemic, which began in early 2019, plunged the global economy into the worst recession since World War II. Due to travel restrictions, cancelled cruise sailings, a steep decline in oil prices and the worst salmon season in more than 40 years, Alaska’s economy also struggled.
As of mid-March 2021, more than 540,000 Americans had lost their lives to COVID-19. Millions more lost their jobs, and an untold number have suffered poor mental health due to the stress of the pandemic.
Thankfully, as the national vaccine rollout continues and COVID-19-related deaths decline, the light we see at end of the tunnel is getting brighter. CIRI is grateful that while 2020 presented significant challenges, the company delivered overall strong financial performance.
At the end of 2020, CIRI owned nearly $1.1 billion in assets (up from $1.03 billion in 2019) and had generated $50 million of net income (compared to $39.1 in 2019). Shareholders’ equity also increased, totaling $722.9 million at year-end 2020 (compared to $703.2 at year-end 2019).
The dividend policy adopted by the CIRI Board of Directors in 2007 set total CIRI dividend payments to shareholders in any given year at 3.5% of the total shareholders’ equity, calculated as of Dec. 31 of the prior year. After shareholders approved the creation of the CIRI Settlement Trust (CST) in 2019, the Board rescinded that policy in favor of contributing the amounts that CIRI would have issued as dividends to the Distribution Fund of the CST, with the CST trustees agreeing to distribute the contributed amounts to CST beneficiaries who are shareholders of CIRI. Based on this calculation, shareholder distributions will increase this year, and CIRI expects to contribute $25.3 million ($40.32 per CIRI share) into the CST Distribution Fund in 2021—a per-CIRI-share increase of $1.11 from 2020. Since its inception, CIRI and the CST have paid cumulative distributions totaling more than $1.2 billion to CIRI shareholders.
“The COVID-19 pandemic has dramatically changed our lives and impacted our relationships over the past year,” said CIRI President and CEO Sophie Minich. “According to the Pew Research Center, more than two-thirds of Americans have experienced negative impacts and silver linings simultaneously. The same is true for CIRI: While the challenges of 2020 cannot be overstated, our corporation managed to rise above the challenges of last year to increase net income by more than 27% over 2019.”
2020 highlights include the government services and investment securities segments reporting net income of $32.6 million and $20 million, respectively. Government services, led by CIRI subsidiary North Wind Group, achieved record net income, onboarded more than 500 new employees and acquired engineering firm LBYD Inc., bringing added synergies and furthering the market expansion of this segment.
The company’s portfolio of investment securities is designed to maximize risk-adjusted returns while generating reliable earnings, even in periods of public-market volatility, and while public stock markets experienced fluctuations throughout most of last year, they achieved record highs in 2020 and again in January 2021. Additionally, the real estate segment generated $11.8 million of net income, primarily from the gain on the sale of an Arizona multifamily property and the proceeds received from refinancing that property in early 2020.
“I’m proud of all that CIRI accomplished in 2020,” Minich said. “As we move into 2021, CIRI is focused on a can-do business strategy that moves our company forward with resiliency and a positive outlook.”
A more detailed accounting of CIRI’s 2020 financial condition is available in the 2020 CIRI Annual Report, which was distributed to shareholders in April.