株探米国株
英語
エドガーで原本を確認する
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2025
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

citizens_logoonly_cmyk.jpg
CITIZENS, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0755371
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

11815 Alterra Pkwy, Floor 15, Austin, TX 78758
(Current Address)

Registrant's telephone number, including area code: (512) 837-7100
Securities registered pursuant to Section 12(b) of the Act
Class A Common Stock CIA  NYSE
(Title of each class) (Trading symbol(s)) (Name of each exchange on which registered)

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 every Interactive Data File required to be submitted 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 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 definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer ☐ Accelerated filer ☒ 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. o
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, 2025, the Registrant had 50,245,367 shares of Class A 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.


June 30, 2025 | 10-Q 1

Table of Contents                                            
PART I.  FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
(In thousands) June 30, 2025 December 31, 2024
(Unaudited)
 
Assets:
Investments:    
Fixed maturity securities available-for-sale, at fair value (amortized cost: $1,403,782 and $1,401,301 in 2025 and 2024, respectively)
 $ 1,242,271  1,220,961 
Equity securities, at fair value 5,478  5,447 
Policy loans 69,648  71,216 
Other long-term investments (portion measured at fair value $96,142 and $93,337 in 2025 and 2024, respectively)
 96,424  93,604 
Total investments 1,413,821  1,391,228 
Cash and cash equivalents (restricted portion: $1,554 in both 2025 and 2024)
 22,671  29,271 
Accrued investment income 17,523  17,546 
Reinsurance recoverable 9,388  6,941 
Deferred policy acquisition costs 208,944  199,635 
Cost of insurance acquired 9,269  9,446 
Current federal income tax receivable 1,143  148 
Property and equipment, net 9,845  10,574 
Due premiums 10,735  11,721 
Other assets (less allowance for losses of $743 and $516 in 2025 and 2024, respectively)
 9,161  8,815 
Total assets $ 1,712,500  1,685,325 

See accompanying Notes to Consolidated Financial Statements.

June 30, 2025 | 10-Q 2

Table of Contents                                            

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets, Continued
(In thousands, except share amounts) June 30, 2025 December 31, 2024
(Unaudited)
Liabilities and Stockholders' Equity:
Liabilities:    
Policy liabilities:    
Future policy benefit reserves:    
Life insurance $ 1,170,116  1,172,034 
Accident and health insurance 1,240  1,071 
Total future policy benefit reserves 1,171,356  1,173,105 
Policyholders' funds:
Annuities 158,652  149,977 
Dividend accumulations 49,281  47,768 
Premiums paid in advance 31,063  31,182 
Policy claims payable 8,411  8,822 
Other policyholders' funds 8,372  7,271 
Total policyholders' funds 255,779  245,020 
Total policy liabilities 1,427,135  1,418,125 
Commissions payable 4,010  4,546 
Deferred federal income tax liability 4,999  3,442 
Other liabilities 47,330  48,857 
Total liabilities 1,483,474  1,474,970 
Commitments and contingencies (Notes 7 and 8)
Stockholders' Equity:    
Common stock:
Class A, no par value, 100,000,000 shares authorized, 54,565,526 and 54,235,165 shares issued and outstanding in 2025 and 2024, respectively, including shares in treasury of 4,327,810 in 2025 and 2024
 271,324  269,799 
Class B, no par value, 2,000,000 shares authorized, 1,001,714 shares issued and outstanding in 2025 and 2024, including shares in treasury of 1,001,714 in 2025 and 2024
 3,184  3,184 
Retained earnings 61,898  57,062 
Accumulated other comprehensive income (loss) (83,655) (95,965)
Treasury stock, at cost (23,725) (23,725)
Total stockholders' equity 229,026  210,355 
Total liabilities and stockholders' equity $ 1,712,500  1,685,325 

See accompanying Notes to Consolidated Financial Statements.


June 30, 2025 | 10-Q 3

Table of Contents                                            

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per share amounts)
 2025 2024 2025 2024
Revenues:  
Premiums:    
Life insurance $ 42,937  42,101  82,286  80,362 
Accident and health insurance 451  458  899  872 
Property insurance —  —  —  (2)
Net investment income 17,169  17,540  34,546  35,027 
Investment related gains (losses), net 2,408  (253) (486) 710 
Other income 2,121  2,238  3,493  2,827 
Total revenues 65,086  62,084  120,738  119,796 
Benefits and Expenses:    
Insurance benefits paid or provided:    
Claims and surrenders 40,220  34,530  80,318  67,643 
Increase (decrease) in future policy benefit reserves (4,554) (1,052) (8,200) (601)
Policyholder liability remeasurement (gain) loss 1,351  1,360  1,179  1,679 
Policyholders' dividends 1,315  1,191  2,610  2,428 
Total insurance benefits paid or provided 38,332  36,029  75,907  71,149 
Commissions 11,409  12,232  22,684  22,682 
Other general expenses 13,459  16,639  26,152  27,977 
Capitalization of deferred policy acquisition costs (9,720) (10,543) (18,569) (18,874)
Amortization of deferred policy acquisition costs 4,613  4,273  9,260  8,311 
Amortization of cost of insurance acquired 79  152  177  324 
Total benefits and expenses 58,172  58,782  115,611  111,569 
Income (loss) before federal income tax
 6,914  3,302  5,127  8,227 
Federal income tax expense (benefit)
 455  (657) 291  (274)
Net income (loss)
 6,459  3,959  4,836  8,501 
Per Share Amounts:    
Basic and diluted earnings (loss) per share of Class A common stock
 0.13  0.08  0.10  0.17 
Other Comprehensive Income (Loss):    
Unrealized gains (losses) on fixed maturity securities:    
Unrealized holding gains (losses) arising during period 243  (14,258) 18,577  (27,674)
Reclassification adjustment for (gains) losses included in net income (loss)
 168  199  251  647 
Unrealized gains (losses) on fixed maturity securities, net 411  (14,059) 18,828  (27,027)
Change in current discount rate for liability for future policy benefits 4,003  5,522  (4,586) 39,517 
Income tax expense (benefit) on other comprehensive income items 995  (383) 1,932  2,259 
Other comprehensive income (loss) 3,419  (8,154) 12,310  10,231 
Total comprehensive income (loss) $ 9,878  (4,195) 17,146  18,732 


See accompanying Notes to Consolidated Financial Statements.

June 30, 2025 | 10-Q 4

Table of Contents                                            

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(Unaudited)
  Common Stock
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Treasury Stock
Total Stockholders' Equity
(In thousands) Class A Class B
Balance at December 31, 2024 $ 269,799  3,184  57,062  (95,965) (23,725) 210,355 
Comprehensive income (loss):
Net income (loss)
 —  —  (1,623) —  —  (1,623)
Other comprehensive income (loss) —  —  —  8,891  —  8,891 
Total comprehensive income (loss) —  —  (1,623) 8,891  —  7,268 
Stock-based compensation 516  —  —  —  —  516 
Balance at March 31, 2025 270,315  3,184  55,439  (87,074) (23,725) 218,139 
Comprehensive income (loss):            
Net income (loss)
 —  —  6,459  —  —  6,459 
Other comprehensive income (loss) —  —  —  3,419  —  3,419 
Total comprehensive income (loss) —  —  6,459  3,419  —  9,878 
Stock-based compensation 1,009  —  —  —  —  1,009 
Balance at June 30, 2025 $ 271,324  3,184  61,898  (83,655) (23,725) 229,026 
Balance at December 31, 2023 $ 268,675  3,184  42,150  (118,155) (23,725) 172,129 
Comprehensive income (loss):
Net income (loss)
 —  —  4,542  —  —  4,542 
Other comprehensive income (loss) —  —  —  18,385  —  18,385 
Total comprehensive income (loss) —  —  4,542  18,385  —  22,927 
Stock-based compensation 127  —  —  —  —  127 
Balance at March 31, 2024 268,802  3,184  46,692  (99,770) (23,725) 195,183 
Comprehensive income (loss):
Net income (loss)
 —  —  3,959  —  —  3,959 
Other comprehensive income (loss) —  —  —  (8,154) —  (8,154)
Total comprehensive income (loss) —  —  3,959  (8,154) —  (4,195)
Stock-based compensation 481  —  —  —  —  481 
Balance at June 30, 2024 $ 269,283  3,184  50,651  (107,924) (23,725) 191,469 

See accompanying Notes to Consolidated Financial Statements.

June 30, 2025 | 10-Q 5

Table of Contents                                            

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)

Six Months Ended June 30,
(In thousands)
 2025 2024
Cash flows from operating activities:  
Net income (loss)
 $ 4,836  8,501 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
    
Investment related (gains) losses on sale of investments and other assets, net 486  (710)
Net deferred policy acquisition costs (9,309) (10,563)
Amortization of cost of insurance acquired 177  324 
Depreciation 343  291 
Amortization of premiums and discounts on investments 2,379  2,516 
Stock-based compensation 1,797  640 
Deferred federal income tax expense (benefit) (375) (944)
Change in:    
Accrued investment income 23  (229)
Reinsurance recoverable (2,447) (1,226)
Due premiums 986  318 
Future policy benefit reserves (6,335) (36)
Other policyholders' liabilities 14,670  12,942 
Federal income tax payable (995) 543 
Commissions payable and other liabilities (1,417) 1,147 
Other, net (601) (2,138)
Net cash provided by operating activities
 4,218  11,376 
Cash flows from investing activities:    
Purchases of fixed maturity securities, available-for-sale (34,375) (35,650)
Sales of fixed maturity securities, available-for-sale 14,569  4,659 
Maturities and calls of fixed maturity securities, available-for-sale 14,723  27,197 
Principal payments on mortgage loans 4  5 
Change in policy loans 1,568  1,897 
Sales of other long-term investments 2,031  130 
Purchases of other long-term investments (4,872) (8,250)
Purchases of property and equipment (283) (189)
Net cash used in investing activities
 (6,635) (10,201)
See accompanying Notes to Consolidated Financial Statements.

June 30, 2025 | 10-Q 6

Table of Contents                                            
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(Unaudited)
Six Months Ended June 30,
(In thousands)
 2025 2024
Cash flows from financing activities:    
Annuity deposits $ 4,434  3,222 
Annuity withdrawals (8,345) (5,017)
Other share repurchases
 (272) (33)
Net cash used in financing activities
 (4,183) (1,828)
Net increase (decrease) in cash and cash equivalents (6,600) (653)
Cash and cash equivalents at beginning of year 29,271  26,997 
Cash and cash equivalents at end of period $ 22,671  26,344 

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:

During the six months ended June 30, 2025, various fixed maturity issuers exchanged securities with book values of $6.5 million for securities of equal value and $3.7 million during the six months ended June 30, 2024.

The Company had $0.8 million of net unsettled security trades at June 30, 2024 and none at June 30, 2025.


See accompanying Notes to Consolidated Financial Statements.


June 30, 2025 | 10-Q 7

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1) FINANCIAL STATEMENTS

BASIS OF PRESENTATION AND CONSOLIDATION

The consolidated financial statements include the accounts and operations of Citizens, Inc. ("Citizens" or the "Company"), a Colorado corporation, and its wholly-owned subsidiaries, CICA Life Insurance Company of America ("CICA Domestic"), CICA Life Ltd., Security Plan Life Insurance Company ("SPLIC"), Magnolia Guaranty Life Insurance Company ("MGLIC"), Computing Technology, Inc. ("CTI"), Nexo Global Services LLC, a Puerto Rico holding company ("Nexo") and its wholly-owned subsidiaries, CICA Life A.I., a Puerto Rico company ("CICA International") and Nexo Enrollment Services LLC, a Puerto Rico service company ("NES"). All significant inter-company accounts and transactions have been eliminated. Citizens and its wholly-owned subsidiaries are collectively referred to as the "Company," "it," "we," "us" or "our".

The consolidated balance sheet as of June 30, 2025, the consolidated statements of operations and comprehensive income (loss) and stockholders' equity for the three and six months ended June 30, 2025 and June 30, 2024 and the consolidated statements of cash flows for the six months ended June 30, 2025 and June 30, 2024 have been prepared by the Company without audit and are not subject to 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, 2025 and for comparative periods have been made. The consolidated financial statements have been prepared in accordance with U.S. 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 consolidated 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, 2024 ("Form 10-K").  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.

Our Life Insurance segment operates through our subsidiaries CICA Domestic and CICA International.

CICA Domestic. CICA Domestic issues primarily ordinary whole life, final expense and life products with living benefits throughout the U.S.

CICA International. CICA International offers U.S. dollar-denominated products to non-U.S. residents/citizens internationally, including endowment products, which are principally accumulation contracts that incorporate an element of life insurance protection and whole life insurance.  These contracts are designed to provide a fixed amount of insurance coverage over the life of the insured and may utilize rider benefits to provide additional increasing or decreasing coverage and annuity benefits to enhance accumulations.

Our Home Service Insurance segment operates through our subsidiaries SPLIC and MGLIC and focuses on the life insurance needs of the middle- and lower-income markets in Louisiana, Mississippi and Arkansas.  Our products in this segment consist primarily of small face amount whole life, industrial life and pre-need policies, which are designed to fund final expenses for the insured, primarily consisting of funeral and burial costs. SPLIC also issues critical illness policies.

CTI provides data processing systems and services to the Company. NES provides services to policyholders of CICA International.

USE OF ESTIMATES

The preparation of consolidated 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 disclosure of contingent

June 30, 2025 | 10-Q 8

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ materially from these estimates.

Significant estimates include those used in the evaluation of credit losses on fixed maturity securities, valuation allowances on deferred tax assets, actuarially determined assets and liabilities, and assumptions and contingencies related 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.

SIGNIFICANT ACCOUNTING POLICIES

For a description of all significant accounting policies, see Part IV, Item 15, Note 1. Summary of Significant Accounting Policies in the notes to our consolidated financial statements included in our Form 10-K, which should be read in conjunction with these accompanying consolidated financial statements.

(2) ACCOUNTING PRONOUNCEMENTS

ACCOUNTING STANDARDS NOT YET ADOPTED

In November 2024, the FASB issued ASU No. ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which is intended to enhance expense disclosures by requiring additional disaggregation of certain costs and expenses, on an interim and annual basis, within the footnotes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. While this ASU will impact only our disclosures and not our financial condition and results of operations, we are currently evaluating the impact of adopting this pronouncement on the consolidated financial statements.

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

(3) INVESTMENTS

The Company invests primarily in fixed maturity securities as shown below.

Carrying Value
(In thousands, except for %)
 June 30, 2025 December 31, 2024
Amount % Amount %
Cash and invested assets:
Fixed maturity securities $ 1,242,271  86.5  % 1,220,961  86.0  %
Equity securities 5,478  0.4  5,447  0.4 
Policy loans 69,648  4.8  71,216  5.0 
Other long-term investments 96,424  6.7  93,604  6.6 
Cash and cash equivalents 22,671  1.6  29,271  2.0 
Total cash and invested assets $ 1,436,492  100.0  % 1,420,499  100.0  %


June 30, 2025 | 10-Q 9

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables represent the amortized cost, gross unrealized gains and losses and fair value of fixed maturity securities as of the dates indicated.
Amortized
Cost		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Fair
Value
June 30, 2025
(In thousands)
Fixed maturity securities:        
U.S. Treasury securities $ 5,916  91  101  5,906 
U.S. Government-sponsored enterprises 3,137  230  —  3,367 
States and political subdivisions 301,135  1,312  31,098  271,349 
Corporate:
Financial 268,869  2,924  29,506  242,287 
Consumer 260,529  1,394  42,932  218,991 
Utilities 127,904  458  21,479  106,883 
Energy 80,167  156  9,141  71,182 
Communications 66,572  235  8,488  58,319 
All other 130,035  1,032  16,951  114,116 
Commercial mortgage-backed 310  4  3  311 
Residential mortgage-backed 105,617  6  9,787  95,836 
Asset-backed 53,591  889  756  53,724 
Total fixed maturity securities $ 1,403,782  8,731  170,242  1,242,271 

Amortized
Cost		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Fair
Value
December 31, 2024
(In thousands)
Fixed maturity securities:        
U.S. Treasury securities $ 5,939  85  115  5,909 
U.S. Government-sponsored enterprises 3,152  152  —  3,304 
States and political subdivisions 300,757  1,087  33,542  268,302 
Corporate:
Financial 272,925  1,593  33,285  241,233 
Consumer 263,242  899  45,955  218,186 
Utilities 126,361  220  22,770  103,811 
Energy 79,247  40  9,959  69,328 
Communications 70,896  111  9,910  61,097 
All other 117,387  315  16,368  101,334 
Commercial mortgage-backed 315  1  5  311 
Residential mortgage-backed 106,661  7  13,026  93,642 
Asset-backed 54,419  891  806  54,504 
Total fixed maturity securities $ 1,401,301  5,401  185,741  1,220,961 
 

June 30, 2025 | 10-Q 10

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company's investments in equity securities are shown below.

Fair Value
(In thousands)
 June 30, 2025 December 31, 2024
Equity securities:  
Bond mutual funds $ 742  739 
Common stocks
 973  810 
Non-redeemable preferred stock 7  7 
Non-redeemable preferred stock fund 3,756  3,891 
Total equity securities $ 5,478  5,447 

VALUATION OF INVESTMENTS

Available-for-sale ("AFS") fixed maturity securities are reported in the consolidated financial statements at fair value. Equity securities are measured at fair value with the change in fair value recorded through net income (loss). The Company recognized net investment related losses of $16 thousand and gains of $31 thousand for the three and six months ended June 30, 2025, compared to losses of $0.1 million and gains of $0.1 million for the same periods in 2024, respectively, on equity securities held.

The Company considers several factors in its review and evaluation of individual investments, using the process described in Part IV, Item 15, Note 2. Investments in the notes to the consolidated financial statements of our Form 10-K to determine whether a credit valuation loss exists. For the three and six months ended June 30, 2025 and 2024, the Company recorded no credit valuation losses on fixed maturity securities.

For fixed maturity security investments that have unrealized losses as of June 30, 2025 and December 31, 2024, the gross unrealized losses and related fair values that have been in a continuous unrealized loss position by timeframe are as follows.

June 30, 2025 Less than 12 months Greater than 12 months Total
(In thousands, except for # of securities) Fair
Value		 Unrealized
Losses		 # of
Securities		 Fair
Value		 Unrealized
Losses		 # of
Securities		 Fair
Value		 Unrealized
Losses		 # of
Securities
Fixed maturity securities:                
U.S. Treasury securities $ 850  38  3  437  63  5  1,287  101  8 
States and political subdivisions 27,435  959  43  149,245  30,139  178  176,680  31,098  221 
Corporate:
Financial 18,395  376  22  150,166  29,130  188  168,561  29,506  210 
Consumer 34,176  1,626  40  156,503  41,306  213  190,679  42,932  253 
Utilities 12,326  469  35  80,571  21,010  144  92,897  21,479  179 
Energy 11,520  357  27  51,619  8,784  62  63,139  9,141  89 
Communications 2,995  98  6  45,995  8,390  58  48,990  8,488  64 
All Other 19,993  661  34  70,856  16,290  89  90,849  16,951  123 
Commercial mortgage-backed —  —  —  86  3  1  86  3  1 
Residential mortgage-backed 58  1  2  95,514  9,786  83  95,572  9,787  85 
Asset-backed 6,519  270  10  14,338  486  15  20,857  756  25 
Total fixed maturity securities $ 134,267  4,855  222  815,330  165,387  1,036  949,597  170,242  1,258 


June 30, 2025 | 10-Q 11

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 31, 2024 Less than 12 months Greater than 12 months Total
(In thousands, except for # of securities) Fair
Value		 Unrealized
Losses		 # of
Securities		 Fair
Value		 Unrealized
Losses		 # of
Securities		 Fair
Value		 Unrealized
Losses		 # of
Securities
Fixed maturity securities:                
U.S. Treasury securities $ 835  51  3  435  64  5  1,270  115  8 
States and political subdivisions 42,583  1,484  63  147,534  32,058  177  190,117  33,542  240 
Corporate:
Financial 29,258  756  53  154,448  32,529  192  183,706  33,285  245 
Consumer 37,231  2,053  57  161,795  43,902  216  199,026  45,955  273 
Utilities 16,750  687  47  79,488  22,083  142  96,238  22,770  189 
Energy 11,654  438  29  52,537  9,521  65  64,191  9,959  94 
Communications 9,973  250  11  48,462  9,660  60  58,435  9,910  71 
All Other 25,208  1,237  38  68,756  15,131  87  93,964  16,368  125 
Commercial mortgage-backed 100  —  1  89  5  1  189  5  2 
Residential mortgage-backed 160  2  11  93,231  13,024  84  93,391  13,026  95 
Asset-backed 10,330  243  14  14,741  563  16  25,071  806  30 
Total fixed maturity securities $ 184,082  7,201  327  821,516  178,540  1,045  1,005,598  185,741  1,372 

In each category of our fixed maturity securities described above, we do not intend to sell our investments, and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases. As of June 30, 2025 and December 31, 2024, 98.6% and 99.2% of the fair value of our fixed maturity securities portfolio, respectively, were rated investment grade. While the losses are currently unrealized, we continue to monitor all fixed maturity securities on an on-going basis as future information may become available which could result in an allowance being recorded.

These unrealized losses on fixed maturity securities are due to noncredit-related factors, including changes in credit spreads and rising interest rates since purchase, which have little bearing on the recoverability of our investments, hence they are not recognized as credit losses. The fair value is expected to recover as the securities approach maturity or if market yields for such investments decline.

The amortized cost and fair value of fixed maturity securities at June 30, 2025 by contractual maturity are shown in the table below.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date have been reflected based upon final stated maturity.

June 30, 2025 Amortized
Cost		 Fair
Value
(In thousands)
Fixed maturity securities:    
Due in one year or less $ 21,110  21,118 
Due after one year through five years 140,153  140,533 
Due after five years through ten years 268,987  267,875 
Due after ten years 973,532  812,745 
Total fixed maturity securities $ 1,403,782  1,242,271 


June 30, 2025 | 10-Q 12

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company uses the specific identification method of the individual security to determine the cost basis used in the calculation of realized gains and losses related to security sales.  

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Fixed maturity securities, available-for-sale:
Proceeds $ 14,504  2,151  14,569  4,659 
Gross realized gains $ 91  90  92  91 
Gross realized losses $ 438  147  442  196 

During the first quarter of 2025, real estate, formerly utilized as district offices in our Home Service Insurance segment in Baton Rouge and Bogalusa, Louisiana, was reclassified from net property, plant and equipment to real estate held-for-sale and is included in other long-term investments on the consolidated balance sheets. These investments are listed at carrying value and are no longer being depreciated.

During the three months ended June 30, 2025, the Company accepted a tender offer by Discovery Communications, Inc. after considering the outlook of the issuer. As a result, the Company recognized a realized loss of $0.4 million, which is recorded a net realized investment loss for the period.

(4) FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  We hold AFS fixed maturity securities, which are carried at fair value with changes in fair value reported through other comprehensive income (loss). We also report our equity securities and certain other long-term investments at fair value with changes in fair value reported through the consolidated statements of operations and comprehensive income (loss).

Fair value measurements are generally based upon observable and unobservable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.  All assets and liabilities carried at fair value are required to be classified and disclosed in one of the following three categories.

•Level 1 - Quoted prices for identical instruments in active markets.
•Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs or whose significant value drivers are observable.
•Level 3 - Instruments whose significant value drivers are unobservable.

Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as U.S. Treasury securities and actively traded mutual fund and stock investments.

Level 2 includes those financial instruments that are valued by independent pricing services or broker quotes.  These pricing models are primarily industry-standard models that consider various inputs, such as interest rates, credit spreads and foreign exchange rates for the underlying financial instruments.  All significant inputs are observable or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace.  Financial instruments in this category primarily include corporate securities, U.S. Government-sponsored enterprise securities, securities issued by states and political subdivisions and certain mortgage and asset-backed securities.


June 30, 2025 | 10-Q 13

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Level 3 is comprised of financial instruments whose fair value is estimated based on non-binding broker prices utilizing significant inputs not based on or corroborated by readily available market information.  Real estate held-for-sale is included in this category. There were no securities in this category as of or during the periods ended June 30, 2025 and December 31, 2024.

The following tables set forth our assets measured at fair value on a recurring basis as of the dates indicated.

June 30, 2025 Level 1 Level 2 Level 3 Total
Fair Value
(In thousands)
Financial assets:
Fixed maturity securities:
        
U.S. Treasury and U.S. Government-sponsored enterprises $ 5,906  3,367  —  9,273 
States and political subdivisions —  271,349  —  271,349 
Corporate 41  811,737  —  811,778 
Commercial mortgage-backed —  311  —  311 
Residential mortgage-backed —  95,836  —  95,836 
Asset-backed —  53,724  —  53,724 
Total fixed maturity securities
 5,947  1,236,324  —  1,242,271 
Equity securities:        
Bond mutual funds 742  —  —  742 
Common stocks
 973  —  —  973 
Non-redeemable preferred stock 7  —  —  7 
Non-redeemable preferred stock fund 3,756  —  —  3,756 
Total equity securities 5,478  —  —  5,478 
Other long-term investments (1)
 —  —  —  96,142 
Total financial assets $ 11,425  1,236,324  —  1,343,891 
(1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.

June 30, 2025 | 10-Q 14

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 31, 2024 Level 1 Level 2 Level 3 Total
Fair Value
(In thousands)
Financial assets:
Fixed maturity securities:
        
U.S. Treasury and U.S. Government-sponsored enterprises $ 5,909  3,304  —  9,213 
States and political subdivisions —  268,302  —  268,302 
Corporate 42  794,947  —  794,989 
Commercial mortgage-backed —  311  —  311 
Residential mortgage-backed —  93,642  —  93,642 
Asset-backed —  54,504  —  54,504 
Total fixed maturity securities
 5,951  1,215,010  —  1,220,961 
Equity securities:        
Bond mutual funds 739  —  —  739 
Common stocks
 810  —  —  810 
Non-redeemable preferred stock 7  —  —  7 
Non-redeemable preferred stock fund 3,891  —  —  3,891 
Total equity securities 5,447  —  —  5,447 
Other long-term investments (1)
 —  —  —  93,337 
Total financial assets $ 11,398  1,215,010  —  1,319,745 
(1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.
 
FINANCIAL INSTRUMENTS VALUATION

FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE

Fixed maturity securities, available-for-sale.  At June 30, 2025, fixed maturity securities, valued using a third-party pricing source, totaled $1.2 billion for Level 2 assets and comprised 92.0% of total reported fair value of our financial assets.  The Level 1 and Level 2 valuations are reviewed and updated quarterly through testing by comparisons to separate pricing models, other third-party pricing services, and back tested to recent trades.  In addition, we obtain information annually relative to the third-party pricing models and review model parameters for reasonableness.  There were no Level 3 assets at June 30, 2025.  As of June 30, 2025, there were no material changes to the valuation methods or assumptions used to determine fair values, and no broker or third-party prices were changed from the values received.

Equity securities.  Our equity securities are classified as Level 1 assets as their fair values are based upon quoted market prices.

Limited partnerships. The Company considers the net asset value ("NAV") to represent the value of the investment fund and is measured by the total value of assets minus the total value of liabilities. The following table includes information related to our investments in limited partnerships that calculate NAV per share. For these investments, which are measured at fair value on a recurring basis, we use the NAV per share to measure fair value. The Company recognized net investment related gains specific to change in fair value of $2.9 million and $1.4 million for the three and six months ended June 30, 2025, and gains of $4 thousand and $1.3 million on limited partnerships

June 30, 2025 | 10-Q 15

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
held for the three and six months ended June 30, 2024. These investments are included in other long-term investments on the consolidated balance sheets.

June 30, 2025 December 31, 2024
(In thousands, except for years)
 Fair Value
 Using NAV Per Share		 Unfunded Commit-
ments
Range
(In years)
 Fair Value
 Using NAV Per Share		 Unfunded Commit-
ments
Range
(In years)
Description
Limited partnerships:
Middle market Investments in privately-originated, performing senior secured debt primarily in North America-based companies $ 35,562  —  0 $ 35,369  1,660  3
Global equity fund Investments in common stocks of U.S., international developed and emerging markets with a focus on long-term capital growth 12,518  —  0 11,568  —  0
Late-stage growth Investments in private late-stage, established companies seeking capital to accelerate growth prior to an IPO or sale 32,108  5,613 
3 to 5
 27,825  8,134 
3 to 5
Infrastructure Investments in environmental infrastructure and related technology, focusing on renewable power generation and distribution 15,954  4,863 
8 to 10
 18,575  5,637 
9 to 10
Total limited partnerships $ 96,142  10,476  $ 93,337  15,431 

The majority of our limited partnership investments are not redeemable because distributions from the funds will be received when the underlying investments of the funds are liquidated. The life spans indicated above may be shortened or extended at the fund manager's discretion, typically in one or two-year increments. The global equity fund is redeemable monthly.

FINANCIAL INSTRUMENTS NOT CARRIED AT FAIR VALUE

Estimates of fair values are made at a specific point in time, based on relevant market prices and information about the financial instruments.  The estimated fair values of financial instruments presented below are not necessarily indicative of the amounts the Company might realize in actual market transactions.

The carrying amount and fair value for the financial assets and liabilities on the consolidated financial statements not otherwise disclosed for the periods indicated were as follows:

  June 30, 2025 December 31, 2024
(In thousands) Carrying
Value		 Fair
Value		 Carrying
Value		 Fair
Value
Financial assets:
        
Policy loans $ 69,648  69,648  71,216  71,216 
Residential mortgage loan 29  29  33  34 
Cash and cash equivalents 22,671  22,671  29,271  29,271 
Financial liabilities:
        
Annuity - investment contracts 66,592  61,922  68,888  63,629 




June 30, 2025 | 10-Q 16

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Policy loans. Policy loans had a weighted average annual interest rate of 7.7% at both June 30, 2025 and December 31, 2024 and no specified maturity dates. The aggregate fair value of policy loans approximates the carrying value reflected on the consolidated balance sheets. Policy loans are an integral part of the life insurance policies we have in force, cannot be valued separately and are not marketable. Therefore, the fair value of policy loans approximates the carrying value and policy loans are considered Level 3 assets in the fair value hierarchy.

Residential mortgage loan. This mortgage loan is secured by a residential property. The interest rate for this loan was 7.0% at both June 30, 2025 and December 31, 2024. At June 30, 2025, the remaining loan matures in three years.  Management estimated the fair value using an annual interest rate of 6.25% at both June 30, 2025 and December 31, 2024. Our mortgage loan is considered a Level 3 asset in the fair value hierarchy and is included in other long-term investments on the consolidated balance sheets.

Cash and cash equivalents. The fair value of cash and cash equivalents approximates carrying value and these assets are characterized as Level 1 assets in the fair value hierarchy.

Annuity liabilities. The fair value of the Company's liabilities under annuity contracts, which are considered Level 3 liabilities, was estimated at June 30, 2025 and December 31, 2024 using discounted cash flows based upon spot rates adjusted for various risk adjustments ranging from 3.68% to 5.06% and 3.96% to 4.96%, respectively. The fair value of liabilities under all insurance contracts are taken into consideration in the overall management of interest rate risk, which seeks to minimize exposure to changing interest rates through the matching of investment maturities with amounts due under insurance contracts.

Other long-term investments. Financial instruments included in other long-term investments are classified in various levels of the fair value hierarchy. The following table summarizes the carrying amounts of these investments.

Carrying Value
(In thousands)
 June 30, 2025 December 31, 2024
Other long-term investments:
Limited partnerships $ 96,142  93,337 
FHLB common stock 217  212 
Mortgage loans 29  33 
Real estate held-for-sale
 15  — 
All other investments 21  22 
Total other long-term investments $ 96,424  93,604 

We are a member of the Federal Home Loan Bank ("FHLB") of Dallas and such membership requires members to own stock in the FHLB. Our FHLB stock is carried at amortized cost, which approximates fair value.

(5) DEFERRED POLICY ACQUISITION COSTS AND COST OF INSURANCE ACQUIRED

DAC

The following tables roll forward the DAC and COIA balances for the six months ended June 30, 2025 and 2024 by reporting cohort. Our reporting cohorts are Permanent, which summarizes insurance policies with premiums payable over the lifetime of the policy, and Permanent Limited Pay, which summarizes insurance policies with

June 30, 2025 | 10-Q 17

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
premiums payable for a limited time after which the policy is fully paid up. Both reporting cohorts include whole life and endowment policies.

Six Months Ended June 30, 2025
(In thousands)
 Permanent Permanent Limited Pay Other Business Total
Life Insurance:
Balance, beginning of year $ 124,725  16,388  547  141,660 
Capitalizations 14,196  1,534  144  15,874 
Amortization expense (7,133) (561) (105) (7,799)
Balance, end of period 131,788  17,361  586  149,735 
Home Service Insurance:
Balance, beginning of year 45,656  11,151  1,168  57,975 
Capitalizations 2,142  442  111  2,695 
Amortization expense (1,143) (213) (105) (1,461)
Balance, end of period 46,655  11,380  1,174  59,209 
Consolidated:
Balance, beginning of year 170,381  27,539  1,715  199,635 
Capitalizations 16,338  1,976  255  18,569 
Amortization expense (8,276) (774) (210) (9,260)
Balance, end of period $ 178,443  28,741  1,760  208,944 


Six Months Ended June 30, 2024
(In thousands)
 Permanent Permanent Limited Pay Other Business Total
Life Insurance:
Balance, beginning of year $ 105,552  14,075  1,213  120,840 
Capitalizations 13,658  1,611  138  15,407 
Amortization expense (6,304) (470) (170) (6,944)
Balance, end of period 112,906  15,216  1,181  129,303 
Home Service Insurance:
Balance, beginning of year 43,280  10,564  1,084  54,928 
Capitalizations 2,727  621  119  3,467 
Amortization expense (1,117) (213) (37) (1,367)
Balance, end of period 44,890  10,972  1,166  57,028 
Consolidated:
Balance, beginning of year 148,832  24,639  2,297  175,768 
Capitalizations 16,385  2,232  257  18,874 
Amortization expense (7,421) (683) (207) (8,311)
Balance, end of period $ 157,796  26,188  2,347  186,331 


June 30, 2025 | 10-Q 18

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
DAC capitalization decreased for the six months ended June 30, 2025, compared to the same prior year period mainly from increased ceding commissions and expenses due to a full six months of reinsurance with RGA in 2025 offset by higher first year sales.

COIA

Six Months Ended June 30, 2025
(In thousands)
 Permanent Permanent Limited Pay Other Business Total
Life Insurance:
Balance, beginning of year $ 599  648  —  1,247 
Amortization expense (21) (21) —  (42)
Balance, end of period 578  627  —  1,205 
Home Service Insurance:
Balance, beginning of year 6,825  161  1,213  8,199 
Amortization expense (178) (4) 47  (135)
Balance, end of period 6,647  157  1,260  8,064 
Consolidated:
Balance, beginning of year 7,424  809  1,213  9,446 
Amortization expense (199) (25) 47  (177)
Balance, end of period $ 7,225  784  1,260  9,269 


Six Months Ended June 30, 2024
(In thousands)
 Permanent Permanent Limited Pay Other Business Total
Life Insurance:
Balance, beginning of year $ 249  695  406  1,350 
Amortization expense (8) (25) (22) (55)
Balance, end of period 241  670  384  1,295 
Home Service Insurance:
Balance, beginning of year 7,194  168  1,331  8,693 
Amortization expense (187) (4) (78) (269)
Balance, end of period 7,007  164  1,253  8,424 
Consolidated:
Balance, beginning of year 7,443  863  1,737  10,043 
Amortization expense (195) (29) (100) (324)
Balance, end of period $ 7,248  834  1,637  9,719 

(6) POLICYHOLDERS’ LIABILITIES

LIABILITY FOR FUTURE POLICY BENEFITS

The following tables summarize balances of and changes in the liability for future policy benefits for our reporting cohorts: Permanent, which summarizes insurance policies with premiums payable over the lifetime of the policy,

June 30, 2025 | 10-Q 19

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
and Permanent Limited Pay, which summarizes insurance policies with premiums payable for a limited time after which the policy is fully paid up. Both reporting cohorts include whole life and endowment policies.

June 30, 2025
(In thousands)
Life Insurance
 Home Service Insurance
Permanent Permanent Limited Pay Total Permanent Permanent Limited Pay Total
Present Value of Expected Net Premiums:
Balance, beginning of year $ 299,918  14,962  314,880  94,458  13,878  108,336 
Beginning balance at original discount rate 310,919  15,180  326,099  101,026  14,732  115,758 
Effect of actual variances from expected experience
 (16,659) 910  (15,749) (2,315) (1,191) (3,506)
Adjusted beginning of year balance 294,260  16,090  310,350  98,711  13,541  112,252 
Issuances 55,982  1,840  57,822  7,241  1,140  8,381 
Interest accrual 6,577  298  6,875  2,121  267  2,388 
Net premiums collected (27,005) (2,683) (29,688) (6,037) (108) (6,145)
Derecognition and other (4,405) 149  (4,256) 57  6  63 
Ending balance at original discount rate 325,409  15,694  341,103  102,093  14,846  116,939 
Effect of changes in discount rates (6,052) (36) (6,088) (5,670) (641) (6,311)
Balance, end of period $ 319,357  15,658  335,015  96,423  14,205  110,628 
Present Value of Expected Future Policy Benefits:
Balance, beginning of year $ 996,556  187,066  1,183,622  198,809  111,639  310,448 
Beginning balance at original discount rate 1,051,493  201,797  1,253,290  218,555  123,016  341,571 
Effect of actual variances from expected experience
 (15,805) 2,064  (13,741) (2,147) (371) (2,518)
Adjusted beginning of year balance 1,035,688  203,861  1,239,549  216,408  122,645  339,053 
Issuances 56,302  1,994  58,296  7,240  1,135  8,375 
Interest accrual 23,214  4,101  27,315  4,858  2,879  7,737 
Benefit payments (55,261) (10,447) (65,708) (8,125) (2,952) (11,077)
Derecognition and other (4,771) (2) (4,773) 47  3  50 
Ending balance at original discount rate 1,055,172  199,507  1,254,679  220,428  123,710  344,138 
Effect of changes in discount rates (43,994) (13,276) (57,270) (20,044) (12,490) (32,534)
Balance, end of period $ 1,011,178  186,231  1,197,409  200,384  111,220  311,604 
Net liability for future policy benefits $ 691,821  170,573  862,394  103,961  97,015  200,976 
Less: Reinsurance recoverable 3,986  —  3,986  —  —  — 
Net liability for future policy benefits, after reinsurance recoverable $ 687,835  170,573  858,408  103,961  97,015  200,976 




June 30, 2025 | 10-Q 20

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 2024
(In thousands)
 Life Insurance Home Service Insurance
Permanent Permanent Limited Pay Total Permanent Permanent Limited Pay Total
Present Value of Expected Net Premiums:
Balance, beginning of year $ 244,917  13,260  258,177  98,831  14,926  113,757 
Beginning balance at original discount rate 252,426  13,533  265,959  102,045  15,512  117,557 
Effect of actual variances from expected experience
 (3,880) 456  (3,424) (2,791) (1,813) (4,604)
Adjusted beginning of year balance 248,546  13,989  262,535  99,254  13,699  112,953 
Issuances 39,391  1,566  40,957  8,038  1,278  9,316 
Interest accrual 5,243  245  5,488  2,135  266  2,401 
Net premiums collected (21,932) (1,537) (23,469) (6,056) 159  (5,897)
Derecognition and other (3,417) 97  (3,320) 190  35  225 
Ending balance at original discount rate 267,831  14,360  282,191  103,561  15,437  118,998 
Effect of changes in discount rates (10,055) (333) (10,388) (5,741) (867) (6,608)
Balance, end of period $ 257,776  14,027  271,803  97,820  14,570  112,390 
Present Value of Expected Future Policy Benefits:
Balance, beginning of year $ 973,350  195,122  1,168,472  211,946  122,784  334,730 
Beginning balance at original discount rate 995,962  202,755  1,198,717  217,524  123,941  341,465 
Effect of actual variances from expected experience
 (2,480) 2,137  (343) (2,714) (917) (3,631)
Adjusted beginning of year balance 993,482  204,892  1,198,374  214,810  123,024  337,834 
Issuances 39,803  1,650  41,453  8,037  1,280  9,317 
Interest accrual 22,134  4,127  26,261  4,826  2,878  7,704 
Benefit payments (42,634) (9,283) (51,917) (7,789) (3,037) (10,826)
Derecognition and other (4,154) 16  (4,138) 187  32  219 
Ending balance at original discount rate 1,008,631  201,402  1,210,033  220,071  124,177  344,248 
Effect of changes in discount rates (45,573) (13,063) (58,636) (15,138) (7,865) (23,003)
Balance, end of period $ 963,058  188,339  1,151,397  204,933  116,312  321,245 
Net liability for future policy benefits $ 705,282  174,312  879,594  107,113  101,742  208,855 
Less: Reinsurance recoverable 142  —  142  —  —  — 
Net liability for future policy benefits, after flooring impact $ 705,140  174,312  879,452  107,113  101,742  208,855 


June 30, 2025 | 10-Q 21

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table reconciles the net liability for future policy benefits shown above to the liability for future policy benefits reported in the consolidated balance sheets.

June 30, 2025
June 30, 2024
(In thousands) Life
Insurance		 Home Service
Insurance		 Consolidated Life
Insurance		 Home Service
Insurance		 Consolidated
Life Insurance:
Permanent $ 687,835  103,961  791,796  705,140  107,113  812,253 
Permanent limited pay 170,573  97,015  267,588  174,312  101,742  276,054 
Deferred profit liability 32,288  30,370  62,658  29,749  27,849  57,598 
Other 33,630  14,444  48,074  29,609  14,079  43,688 
Total life insurance 924,326  245,790  1,170,116  938,810  250,783  1,189,593 
Accident & Health Insurance:
Other 737  503  1,240  634  361  995 
Total future policy benefit reserves $ 925,063  246,293  1,171,356  939,444  251,144  1,190,588 

The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefit payments for long-term duration contracts.

June 30, 2025 June 30, 2024
(In thousands) Life
Insurance		 Home Service
Insurance		 Life
Insurance		 Home Service
Insurance
Undiscounted:
Permanent:
Expected future gross premiums $ 824,655  445,487  687,927  455,504 
Expected future benefit payments 1,654,150  494,455  1,538,163  491,992 
Permanent Limited Pay:
Expected future gross premiums 45,791  76,469  46,682  77,217 
Expected future benefit payments 323,376  321,480  325,481  321,190 
Discounted:
Permanent:
Expected future gross premiums $ 612,505  259,470  517,392  267,791 
Expected future benefit payments 1,011,178  200,384  963,058  204,933 
Permanent Limited Pay:
Expected future gross premiums 41,192  49,205  41,444  51,050 
Expected future benefit payments 186,231  111,220  188,339  116,312 


June 30, 2025 | 10-Q 22

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables summarize the amount of revenue and interest related to long-term duration contracts recognized in the consolidated statement of operations and comprehensive income (loss).

Three Months Ended June 30,
Six Months Ended June 30,
2025 2024 2025 2024
(In thousands)
 Gross Premiums Interest Expense Gross Premiums Interest Expense Gross Premiums Interest Expense Gross Premiums Interest Expense
Life Insurance Segment:
Life Insurance:
Permanent $ 27,930  8,270  24,801  8,427  54,982  16,637  48,117  16,891 
Permanent Limited Pay 3,995  2,215  4,026  2,207  8,622  4,429  7,672  4,470 
Other 3,470  —  3,933  —  3,298  —  5,042  — 
Less:
Reinsurance 2,944  —  1,358  —  5,484  —  1,731  — 
Total, net of reinsurance 32,451  10,485  31,402  10,634  61,418  21,066  59,100  21,361 
Accident & Health Insurance:
Other 192  —  204  —  380  —  368  — 
Less:
Reinsurance —  —  1  —  1  —  2  — 
Total, net of reinsurance 192  —  203  —  379  —  366  — 
Total $ 32,643  10,485  31,605  10,634  61,797  21,066  59,466  21,361 
Home Service Insurance Segment:
Life Insurance:
Permanent $ 8,045  1,371  8,225  1,347  16,149  2,737  16,466  2,691 
Permanent Limited Pay 1,936  1,665  2,028  1,632  3,893  3,322  4,068  3,258 
Other 574  —  453  —  907  —  747  — 
Less:
Reinsurance 69  —  7  —  81  —  19  — 
Total, net of reinsurance 10,486  3,036  10,699  2,979  20,868  6,059  21,262  5,949 
Accident & Health Insurance:
Other 259  —  255  —  520  —  506  — 
Total $ 10,745  3,036  10,954  2,979  21,388  6,059  21,768  5,949 


June 30, 2025 | 10-Q 23

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table provides the weighted-average durations of the liability for future policy benefits.

June 30, 2025 June 30, 2024
(In years) Life
Insurance		 Home Service
Insurance		 Life
Insurance		 Home Service
Insurance
Permanent:
Duration at original discount rate 8.5 15.1 8.3 16.1
Duration at current discount rate 8.5 14.2 8.5 15.7
Permanent Limited Pay:
Duration at original discount rate 8.0 13.7 8.1 14.5
Duration at current discount rate 7.6 13.1 7.8 14.4

The following table provides the weighted-average interest rates for the liability for future policy benefits.

June 30, 2025 June 30, 2024
Life
Insurance		 Home Service
Insurance		 Life
Insurance		 Home Service
Insurance
Permanent:
Interest rate at original discount rate 4.86  % 4.84  % 4.88  % 4.96  %
Interest rate at current discount rate 5.12  % 5.62  % 5.18  % 5.37  %
Permanent Limited Pay:
Interest rate at original discount rate 4.26  % 4.89  % 4.28  % 5.03  %
Interest rate at current discount rate 5.12  % 5.58  % 5.18  % 5.37  %

LIABILITY FOR POLICYHOLDERS’ ACCOUNT BALANCES

The following table presents the policyholders' account balances by range of guaranteed minimum crediting rates and the related range of the difference, in basis points, between rates being credited and the respective guaranteed minimums.
At Guaranteed Minimum 1 Basis Point-50 Basis Points Above 51 Basis Points-150 Basis Points Above Greater Than 150 Basis Points Above Total
June 30, 2025
(In thousands)
Range of Guaranteed Minimum Crediting Rates:
0.00% - 1.49%
 $ 851  —  —  33,465  34,316 
1.50% - 2.99%
 3,905  180  6  33,683  37,774 
3.00% - 4.49%
 104,553  381  26,989  —  131,923 
Greater or equal to 4.50%
 31,349  —  —  —  31,349 
Total $ 140,658  561  26,995  67,148  235,362 


June 30, 2025 | 10-Q 24

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
At Guaranteed Minimum 1 Basis Point-50 Basis Points Above 51 Basis Points-150 Basis Points Above Greater Than 150 Basis Points Above Total
June 30, 2024
(In thousands)
Range of Guaranteed Minimum Crediting Rates:
0.00% - 1.49%
 $ 786  —  877  34,729  36,392 
1.50% - 2.99%
 15,451  175  37  19,688  35,351 
3.00% - 4.49%
 100,357  200  13,728  —  114,285 
Greater or equal to 4.50%
 31,367  —  —  —  31,367 
Total $ 147,961  375  14,642  54,417  217,395 

The following tables summarize balances of and changes in policyholders' account balances.

June 30, 2025
(In thousands, except for %)
 Supplemental Contracts Without Life Contingencies Fixed Annuity
Dividend Accumulations
 Premiums Paid in Advance
Balance, beginning of year $ 60,414  88,080  47,768  29,897 
Issuances 15,737  1,887  348  2,453 
Premiums received 93  2,315  2,855  425 
Interest credited 1,308  1,496  966  421 
Less:
Surrenders and withdrawals —  7,967  2,656  4,281 
Benefit payments 6,197  —  —  — 
Balance, end of period $ 71,355  85,811  49,281  28,915 
Weighted-average crediting rates 4.09  % 3.97  % 3.84  % 3.21  %
Cash surrender value $ 71,355  85,811  49,281  28,915 

June 30, 2024
(In thousands, except for %)
 Supplemental Contracts Without Life Contingencies Fixed Annuity
Dividend Accumulations
 Premiums Paid in Advance
Balance, beginning of year $ 44,569  87,134  44,960  31,039 
Issuances 12,324  1,347  401  2,336 
Premiums received 59  1,823  2,736  585 
Interest credited 988  1,343  917  890 
Less:
Surrenders and withdrawals —  4,855  2,370  4,223 
Benefit payments 4,608  —  —  — 
Balance, end of period $ 53,332  86,792  46,644  30,627 
Weighted-average crediting rates 3.98  % 3.61  % 3.44  % 2.96  %
Cash surrender value $ 53,332  86,792  46,644  30,627 


June 30, 2025 | 10-Q 25

Table of Contents                                            

CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table reconciles policyholders' account balances shown above to the policyholders' account balance liability in the consolidated balance sheets.

As of June 30,
(In thousands)
 2025 2024
Annuities:
Supplemental contracts without life contingencies $ 71,355  53,332 
Fixed annuity 85,811  86,792 
Unearned revenue reserve 1,486  1,479 
Total annuities $ 158,652  141,603 
Premiums paid in advance:
Premiums paid in advance $ 28,915  30,627 
Other 2,148  2,110 
Total premiums paid in advance $ 31,063  32,737 

(7) REINSURANCE

In the normal course of business, the Company reinsures portions of certain policies that we underwrite to mitigate exposure to potential losses and/or to provide additional capacity for growth. In CICA International, prior to April 1, 2025, we retained up to $100,000 on any one individual life insurance policy and reinsured the death benefit amount. For new policies beginning on such date, we increased our retention amount to $250,000 and reinsure amounts above that. We also reinsure 100% of our accidental death benefit rider coverage. In the second quarter of 2024, CICA Domestic entered into a coinsurance agreement with RGA Reinsurance Company ("RGA"). Under this agreement, CICA Domestic has elected for RGA to reinsure 50% of its newly written final expense business. The Company remains contingently liable in the event that any of the reinsurers are unable to meet their obligations under any reinsurance agreement.

Our amounts recoverable from reinsurers represent receivables from and reserves ceded to reinsurers.  We obtain reinsurance from multiple reinsurers and monitor our reinsurance concentration as well as the financial strength ratings of our reinsurers. Their ratings by A.M. Best Company range from A- (Excellent) to A+ (Superior).  

A summary of life insurance in force, along with assumed and ceded reinsurance activity, is summarized below as of the periods indicated.


(In thousands)
 June 30, 2025 December 31, 2024
Life insurance in force:
Direct life insurance in force $ 5,347,041  5,227,506 
Aggregate assumed life insurance in force 3,427  3,427 
Aggregate ceded life insurance in force (850,117) (821,215)
Net life insurance in force $ 4,500,351  4,409,718 


June 30, 2025 | 10-Q 26

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CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company's reinsurance recoverable on ceded reinsurance was $9.4 million and $6.9 million as of June 30, 2025 and December 31, 2024, respectively.  Premiums, claims and surrenders assumed and ceded, and expenses ceded for all lines of business are summarized for the periods indicated below.

  Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Premiums from short duration contracts:
    
Direct $ 451  475  900  927 
Ceded —  (1) (1) (2)
Net premiums earned 451  474  899  925 
Premiums from long duration contracts:
    
Direct 45,950  43,450  87,851  82,056 
Assumed 14  16  25  33 
Ceded (3,027) (1,381) (5,590) (1,782)
Net premiums earned 42,937  42,085  82,286  80,307 
Total premiums earned $ 43,388  42,559  83,185  81,232 
Claims and surrenders assumed $ 45  41  51  75 
Claims and surrenders ceded
$ (275) (697) (952) (1,481)
Commissions assumed and ceded
 $ (3,281) (949) (6,406) (941)
Other general expenses ceded $ (695) (156) (1,283) (156)

(8) COMMITMENTS AND CONTINGENCIES

LITIGATION AND REGULATORY ACTIONS

From time to time, we are subject to legal and regulatory actions relating to our business. We may incur defense costs, including attorneys' fees, and other direct litigation costs associated with defending claims. If we suffer an adverse judgment as a result of litigation claims, it could have a material adverse effect on our business, results of operations and financial condition. Part I. Item 3. Legal Proceedings and Part IV. Item 1. Note 8. Commitments and Contingencies of our 2024 consolidated financial statements and notes thereto included in the Form 10-K includes a discussion of our legal proceedings. There have been no material developments in the six months ended June 30, 2025 from the legal proceedings described in our 2024 consolidated financial statements and notes thereto included in the Form 10-K.

CONTRACTUAL OBLIGATIONS

As of June 30, 2025, CICA International is committed to fund investments up to $10.5 million related to limited partnerships previously described.

CREDIT FACILITY

On May 3, 2024, the Company renewed its $20 million senior secured revolving credit facility (the “Credit Facility”) with Regions Bank ("Regions"). The Credit Facility has a three-year term, maturing on May 5, 2027, and allows the Company to borrow up to $20 million for working capital purposes, capital expenditures and other corporate purposes.

Revolving loans may be requested by the Company in aggregate minimum principal amounts of $0.5 million per loan. At the Company's election, the revolving loans may either bear a rate (a fluctuating rate per annum) equal to

June 30, 2025 | 10-Q 27

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CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
the greatest of (a) Regions' prime rate, (b) the federal funds rate plus 0.50%, (c) the index rate plus 1.00% or (d) 0.75%. The Company is required to pay Regions an annual commitment fee of 0.375% of the unused portion of the Credit Facility in quarterly installments, which the Company expenses as it is incurred.

Obligations under the Credit Facility are secured by substantially all of the assets of the Company other than the equity interests in its subsidiaries, real estate owned by the Company, and other limited exceptions. The Credit Facility contains customary events of default and financial, affirmative and negative covenants including, but not limited to, restrictions on indebtedness, liens, investments, asset dispositions and restricted payments. As of June 30, 2025, the Company had not borrowed any funds against the Credit Facility and was not in violation of any covenants.

(9) STOCKHOLDERS' EQUITY AND RESTRICTIONS

STOCK

Our Restated and Amended Articles of Incorporation authorize the issuance of 127,000,000 shares, of which 100,000,000 shares shall be Class A common stock, 2,000,000 shares shall be Class B common stock, and 25,000,000 shall be preferred stock. Both authorized classes of common stock are equal in all respects, except (a) each share of Class A common stock is entitled to receive twice the cash dividends paid on a per share basis to the Class B common stock, if any; and (b) the holders of the Class B common stock have the exclusive right to elect a simple majority of the Board of Directors of Citizens. Citizens currently has no outstanding preferred stock or Class B common stock other than that held in treasury.

A summary of the change in the number of shares of Class A common stock and treasury stock issued is as follows:

2025 2024
Six Months Ended June 30,
(In thousands)
Common Stock Class A
Treasury Stock
 Common Stock Class A Treasury Stock
Balance at beginning of year 54,235  5,330  53,883  5,330 
Stock issued for compensation 331  —  163  — 
Balance at end of period 54,566  5,330  54,046  5,330 

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share.
Three Months Ended June 30, 2025 2024
(In thousands, except per share amounts)
Basic and diluted earnings per share:
    
Numerator:    
Net income (loss)
 $ 6,459  3,959 
Net income (loss) allocated to Class A common stock
 $ 6,459  3,959 
Denominator:    
Weighted average shares of Class A outstanding - basic 50,112  49,639 
Weighted average shares of Class A outstanding - diluted 50,985  50,809 
Basic and diluted earnings per share of Class A common stock
 $ 0.13  0.08 


June 30, 2025 | 10-Q 28

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CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Six Months Ended June 30, 2025 2024
(In thousands, except per share amounts)
Basic and diluted earnings per share:
Numerator:
Net income (loss)
 $ 4,836  8,501 
Net income (loss) allocated to Class A common stock
 $ 4,836  8,501 
Denominator:
Weighted average shares of Class A outstanding - basic 50,024  49,606 
Weighted average shares of Class A outstanding - diluted
 50,897  50,775 
Basic and diluted earnings per share of Class A common stock
 $ 0.10  0.17 

STATUTORY CAPITAL AND SURPLUS

Each of our domestic regulated insurance subsidiaries is required to meet stipulated regulatory capital requirements imposed by the U.S. National Association of Insurance Commissioners ("NAIC"). All domestic insurance subsidiaries exceeded the minimum capital requirements at June 30, 2025. On March 27, 2024, Citizens and the Colorado Division of Insurance entered into a capital maintenance agreement that specifies that Citizens will infuse capital as needed to ensure that CICA Domestic's RBC remains above 350%. As CICA Domestic's RBC exceeded 350% at June 30, 2025, no capital contribution was necessary.

CICA International is a Puerto Rico domiciled company. The Insurance Code of Puerto Rico does not specifically set forth minimum capital and surplus standards, but rather requires that an insurer submit a business plan for approval to the Office of the Commissioner of Insurance ("OIC") that includes proposed minimum capital and surplus. CICA International is required to maintain a minimum of $750,000 in capital and maintain a premium to surplus ratio of 7 to 1. At June 30, 2025, CICA International's capital exceeds both of the required minimum capital and related ratio.

(10) SEGMENT AND OTHER OPERATING INFORMATION

The Company's segments are defined by management's reporting structure and operating activities. The chief operating decision maker ("CODM"), our President and Chief Executive Officer, reviews and analyzes income statement information by segment to make decisions, assess financial performance and allocate resources across the Company in order to meet the overall strategic objectives of the Company. The Company has two reportable segments:  Life Insurance and Home Service Insurance.  

Our Life Insurance segment issues endowment contracts, which are principally accumulation contracts that incorporate an element of life insurance protection, and whole life insurance to non-U.S. residents through CICA International.  These contracts are designed to provide a fixed amount of insurance coverage over the life of the insured and may utilize rider benefits to provide additional coverage and annuity benefits to enhance accumulations. CICA Domestic issues whole life, final expense and life products with living benefits throughout the U.S.

Our Home Service Insurance segment operates through our subsidiaries SPLIC and MGLIC and focuses on the life insurance needs of the lower-income markets, primarily in Louisiana, Mississippi and Arkansas.  SPLIC also issues critical illness policies. Our policies are sold and serviced through funeral homes and independent agents who sell policies, collect premiums and service policyholders.  

The Life Insurance and Home Service Insurance portions of the Company constitute separate businesses. In addition to the Life Insurance and Home Service Insurance business, the Company also operates other non-insurance portions of the Company ("Other Non-Insurance Enterprises"), which primarily include the Company’s IT and corporate-support functions.

June 30, 2025 | 10-Q 29

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CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The accounting policies of the reportable segments and Other Non-Insurance Enterprises are presented in accordance with U.S. GAAP and are the same as those described in the summary of significant accounting policies in our Form 10-K.  The CODM evaluates profit and loss performance based on U.S. GAAP net income (loss) before federal income taxes for its two reportable segments. The Company's Other Non-Insurance Enterprises represents the only reportable difference between segments and consolidated operations.

Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Three Months Ended June 30, 2025
(In thousands)
Revenues:        
Premiums
Life insurance $ 32,451  10,486  —  42,937 
Accident and health insurance 192  259  —  451 
Net investment income 13,400  3,595  174  17,169 
Investment related gains (losses), net 2,625  (218) 1  2,408 
Other income 2,121  —  —  2,121 
Total revenues 50,789  14,122  175  65,086 
Benefits and expenses:      
Insurance benefits paid or provided:        
Claims and surrenders 35,223  4,997  —  40,220 
Increase (decrease) in future policy benefit reserves (5,571) 1,017  —  (4,554)
Policyholder liability remeasurement (gain) loss 1,081  270  —  1,351 
Policyholders' dividends 1,308  7  —  1,315 
Total insurance benefits paid or provided 32,041  6,291  —  38,332 
Commissions 8,184  3,225  —  11,409 
Other general expenses 6,644  3,799  3,016  13,459 
Capitalization of deferred policy acquisition costs (8,155) (1,565) —  (9,720)
Amortization of deferred policy acquisition costs 3,906  707  —  4,613 
Amortization of cost of insurance acquired 21  58  —  79 
Total benefits and expenses 42,641  12,515  3,016  58,172 
Income (loss) before federal income tax $ 8,148  1,607  (2,841) 6,914 

June 30, 2025 | 10-Q 30

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CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Six Months Ended June 30, 2025
(In thousands)
Revenues:        
Premiums:
Life insurance $ 61,418  20,868  —  82,286 
Accident and health insurance 379  520  —  899 
Net investment income 26,912  7,273  361  34,546 
Investment related gains (losses), net (122) (366) 2  (486)
Other income 3,493  —  —  3,493 
Total revenues 92,080  28,295  363  120,738 
Benefits and expenses:      
Insurance benefits paid or provided:        
Claims and surrenders 69,365  10,953  —  80,318 
Increase (decrease) in future policy benefit reserves (10,897) 2,697  —  (8,200)
Policyholder liability remeasurement (gain) loss 1,094  85  —  1,179 
Policyholders' dividends 2,597  13  —  2,610 
Total insurance benefits paid or provided 62,159  13,748  —  75,907 
Commissions 16,347  6,337  —  22,684 
Other general expenses 13,216  7,582  5,354  26,152 
Capitalization of deferred policy acquisition costs (15,874) (2,695) —  (18,569)
Amortization of deferred policy acquisition costs 7,799  1,461  —  9,260 
Amortization of cost of insurance acquired 42  135  —  177 
Total benefits and expenses 83,689  26,568  5,354  115,611 
Income (loss) before federal income tax $ 8,391  1,727  (4,991) 5,127 


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CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Three Months Ended June 30, 2024
(In thousands)
Revenues:        
Premiums
Life insurance $ 31,402  10,699  —  42,101 
Accident and health insurance 203  255  —  458 
Property insurance —  —  —  — 
Net investment income 13,812  3,529  199  17,540 
Investment related gains (losses), net (279) 23  3  (253)
Other income 2,218  20  —  2,238 
Total revenues 47,356  14,526  202  62,084 
Benefits and expenses:      
Insurance benefits paid or provided:        
Claims and surrenders 29,169  5,361  —  34,530 
Increase (decrease) in future policy benefit reserves (2,269) 1,217  —  (1,052)
Policyholder liability remeasurement (gain) loss 1,306  54  —  1,360 
Policyholders' dividends 1,186  5  —  1,191 
Total insurance benefits paid or provided 29,392  6,637  —  36,029 
Commissions 8,543  3,689  —  12,232 
Other general expenses 6,925  3,931  5,783  16,639 
Capitalization of deferred policy acquisition costs (8,591) (1,952) —  (10,543)
Amortization of deferred policy acquisition costs 3,586  687  —  4,273 
Amortization of cost of insurance acquired 29  123  —  152 
Total benefits and expenses 39,884  13,115  5,783  58,782 
Income (loss) before federal income tax $ 7,472  1,411  (5,581) 3,302 

June 30, 2025 | 10-Q 32

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CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Six Months Ended June 30, 2024
(In thousands)
Revenues:        
Premiums:
Life insurance $ 59,100  21,262  —  80,362 
Accident and health insurance 366  506  —  872 
Property insurance —  (2) —  (2)
Net investment income 27,498  7,066  463  35,027 
Investment related gains (losses), net 807  (68) (29) 710 
Other income 2,724  20  83  2,827 
Total revenues 90,495  28,784  517  119,796 
Benefits and expenses:        
Insurance benefits paid or provided:        
Claims and surrenders 56,533  11,110  —  67,643 
Increase (decrease) in future policy benefit reserves (3,462) 2,861  —  (601)
Policyholder liability remeasurement (gain) loss 1,679  —  —  1,679 
Policyholders' dividends 2,417  11  —  2,428 
Total insurance benefits paid or provided 57,167  13,982  —  71,149 
Commissions 15,503  7,179  —  22,682 
Other general expenses 12,961  7,420  7,596  27,977 
Capitalization of deferred policy acquisition costs (15,407) (3,467) —  (18,874)
Amortization of deferred policy acquisition costs 6,944  1,367  —  8,311 
Amortization of cost of insurance acquired 55  269  —  324 
Total benefits and expenses 77,223  26,750  7,596  111,569 
Income (loss) before federal income tax $ 13,272  2,034  (7,079) 8,227 

The Company categorizes premiums in two categories - first year premiums are premiums received within the first 12 months of a policy's issuance and any premiums received thereafter are renewal premiums. A summary of the premiums for the Life Insurance segment is detailed below.


(In thousands)
 Three Months Ended
June 30,		 Six Months Ended
June 30,
2025 2024 2025 2024
Life Insurance Segment:
Premiums:        
Direct premiums:
First year $ 8,107 6,496 15,711 11,080
Renewal 27,480 26,468 51,571 50,118
Total direct premiums 35,587 32,964 67,282 61,198
Reinsurance
 (2,944) (1,359) (5,485) (1,732)
Total premiums $ 32,643 31,605 61,797 59,466

June 30, 2025 | 10-Q 33

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CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

A summary of the Home Service Insurance segment life and A&H premium breakout is detailed below.


(In thousands)
 Three Months Ended
June 30,		 Six Months Ended
June 30,
2025 2024 2025 2024
Home Service Insurance Segment:
Direct life and A&H premiums:    
First year $ 1,328  1,397  2,541  2,744 
Renewal 9,486  9,564  18,928  19,043 
Total direct life and A&H premiums 10,814  10,961  21,469  21,787 
Reinsurance (69) (7) (81) (19)
Total life and A&H premiums
 $ 10,745  10,954  21,388  21,768 

The table below summarizes assets by segment.

As of June 30,
(In thousands)
 2025 2024
Assets:    
Segments:
Life Insurance $ 1,311,093  1,263,544 
Home Service Insurance 365,405  357,731 
Total Segments
 1,676,498  1,621,275 
Other Non-Insurance Enterprises 36,002  41,198 
Total assets $ 1,712,500  1,662,473 
GEOGRAPHIC INFORMATION

The following table sets forth the Company's annual total of earned premiums by country of policyholder residence for the periods indicated.

Three Months Ended
June 30,		 Six Months Ended
June 30,
(In thousands)
 2025 2024 2025 2024
Area:    
United States $ 16,983  14,248  33,483  27,399 
Colombia 6,461  6,043  13,015  12,026 
Taiwan 3,167  3,617  7,053  8,159 
Venezuela 3,322  3,663  6,672  6,978 
Ecuador 3,366  3,145  6,566  6,189 
Argentina 2,923  2,673  5,019  4,771 
Other foreign countries 8,995  9,533  18,697  18,348 
Reinsurance and change in premium accruals (1,829) (363) (7,320) (2,638)
Total premiums $ 43,388  42,559  83,185  81,232 


June 30, 2025 | 10-Q 34

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CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(11) INCOME TAXES

The effective tax rate is the ratio of tax expense or tax benefit over pre-tax income. The tax benefit effective rates were 6.6% and 5.7% for the three and six months ended June 30, 2025, compared to effective tax rate of (19.9)% and (3.3)% for the same periods in 2024. CICA International is considered a controlled foreign corporation for federal income tax purposes. As a result, the insurance activity of CICA International is subject to Subpart F of the Internal Revenue Code and is included in Citizens’ taxable income. The Government of Puerto Rico approved a tax exemption decree for CICA International which freezes the income tax rate at 0% on taxable earnings up to $1.2 million and 4% on taxable earnings in excess of $1.2 million for a minimum of 15 years. The effective tax rate varies from the prevailing corporate federal income tax rate of 21% mainly due to the impact of Subpart F and the reduced Puerto Rico income tax rate.

At June 30, 2025 and 2024, we determined it was more likely than not that a portion of our capital deferred tax assets would not be realized in their entirety. The Company recorded valuation allowances of $4.8 million and $5.0 million at June 30, 2025 and 2024, respectively, in Accumulated Other Comprehensive Income (Loss).

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements.

(12) OTHER COMPREHENSIVE INCOME (LOSS)

The changes in the components of other comprehensive income (loss) are reported net of the effects of income taxes of 21% for domestic entities and 4% for Puerto Rican entities for the three and six months ended June 30, 2025 and 2024. The following table provides a rollforward of accumulated other comprehensive income (loss) for the periods indicated below.
(In thousands) Unrealized Gains and Losses on Available for Sale Securities Discount Rate for Liability for Future Policy Benefits Other Comprehensive Income (Loss)
Balance at December 31, 2024, net of tax
 $ (169,599) 73,634  (95,965)
Other comprehensive income (loss) before reclassification, before tax 18,334  (8,589) 9,745 
Amounts reclassified from other comprehensive income (loss), before tax
 83  —  83 
Income tax benefit (expense)
 (1,379) 442  (937)
Balance at March 31, 2025, net of tax
 (152,561) 65,487  (87,074)
Other comprehensive income (loss) before reclassification, before tax 243  4,003  4,246 
Amounts reclassified from other comprehensive income (loss), before tax 168  —  168 
Income tax benefit (expense) (213) (782) (995)
Balance at June 30, 2025, net of tax
 $ (152,363) 68,708  (83,655)


June 30, 2025 | 10-Q 35

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CITIZENS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands) Unrealized Gains and Losses on Available for Sale Securities Discount Rate for Liability for Future Policy Benefits Other Comprehensive Income (Loss)
Balance at December 31, 2023, net of tax
 $ (141,741) 23,586  (118,155)
Other comprehensive income (loss) before reclassification, before tax (13,416) 33,995  20,579 
Amounts reclassified from other comprehensive income (loss), before tax
 448  —  448 
Income tax benefit (expense)
 1,104  (3,746) (2,642)
Balance at March 31, 2024, net of tax
 (153,605) 53,835  (99,770)
Other comprehensive income (loss) before reclassification, before tax (14,258) 5,522  (8,736)
Amounts reclassified from other comprehensive income (loss), before tax 199  —  199 
Income tax benefit (expense) 951  (568) 383 
Balance at June 30, 2024, net of tax
 $ (166,713) 58,789  (107,924)

(13) RELATED PARTY TRANSACTIONS

The Company has various routine related party transactions in conjunction with our holding company structure, such as management service agreements related to costs incurred, a tax sharing agreement between entities, and inter-company dividends and capital contributions. There were no changes related to these relationships during the six months ended June 30, 2025.  See our Form 10-K for a comprehensive discussion of related party transactions.

(14) SUBSEQUENT EVENTS

The Company has evaluated the impact of subsequent events as defined by the accounting guidance through the date this report was issued and determined that no other significant subsequent events need to be recognized or disclosed at this time.



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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This section and other parts of this Quarterly Report on Form 10-Q ("Form 10-Q") contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions including those factors discussed in the "Risk Factors" contained in our Annual Report on Form 10-K for the year ended December 31, 2024, which is incorporated herein by reference.

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q, as well as in conjunction with MD&A and the consolidated financial statements and notes thereto that are included in our Form 10-K. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

The U.S. Securities and Exchange Commission ("SEC") maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC. The public can obtain any documents that the Company files with the SEC at http://www.sec.gov. We also make available, free of charge, through our website (http://www.citizensinc.com), our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Section 16 Reports filed by officers and directors, news releases, and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the SEC.  We are not including any of the information contained on our website as part of, or incorporating it by reference into, this Form 10-Q.

OBJECTIVE OF OUR MANAGEMENT'S DISCUSSION AND ANALYSIS

We refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations as our “MD&A”. The objective of our MD&A is to provide investors with information in order to assess the material changes in our financial condition from December 31, 2024 to June 30, 2025 and the material changes in our results of operations for the three and six months ended June 30, 2025 as compared to the same periods in 2024. We also discuss in the MD&A any trends that we believe may materially affect our future operations or financial condition.

OVERVIEW

For over 55 years, Citizens has been fulfilling the needs of our policyholders and their families by providing insurance products that offer both living and death benefits. We conduct insurance related operations through our insurance subsidiaries, which provide benefits to policyholders and their beneficiaries globally. We specialize in offering primarily individual whole life insurance, endowment products and final expense insurance in niche markets where we believe we can optimize our competitive position.

As an insurance provider, we collect premiums on an ongoing basis from our policyholders and invest the majority of the premiums to pay future benefits, including claims, surrenders and policyholder dividends. Accordingly, the Company derives its revenues principally from: (1) life insurance premiums earned for insurance coverages provided to insureds in our two operating segments – Life Insurance and Home Service Insurance; and (2) net investment income. In addition to paying and reserving for insurance benefits that we pay to our policyholders, our expenses consist primarily of the costs of selling our insurance products (e.g., commissions, underwriting, marketing expenses), operating expenses and income taxes.


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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
We operate in two segments - Life Insurance and Home Services Insurance. Our Life Insurance segment operates through our subsidiaries CICA Life Insurance Company of America, referred to as "CICA Domestic" and CICA Life, A.I., a Puerto Rican insurer, referred to as "CICA International". Our Home Services Insurance operates primarily through Security Plan Life Insurance Company in Louisiana.

EVENTS THAT IMPACTED OUR BUSINESS

From time-to-time, certain events may affect our business in ways that cause current or future results to differ from past results. See (1) the factors described in Part 1. Item 1A. Risk Factors in our Annual Report on Form 10-K for the period ended December 31, 2024 ("2024 Form 10-K"); and (2) the events described in Part 1. Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Events that Impacted Our Business" in the 2024 Form 10-K; and (3) the discussion of the BlackRock write-down in Part 1. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Events that Impacted Our Business" in our Form 10-Q for the quarter ended March 31, 2025.

FINANCIAL HIGHLIGHTS

Summary

Q2: Net income before federal income tax in the three months ended June 30, 2025 increased to $6.9 million from $3.3 million in the three months ended June 30, 2024. The factors that drove this increase were:
•$0.8 million increase in total premium revenue;
•$2.7 million increase in investment related gains and losses; and
•$3.2 million decrease in general expenses due to a $3.5 million legal fee expense incurred in the second quarter of 2024;
partially offset by:
•$2.3 million increase in insurance benefits paid or provided due to increased matured endowments in our international business; and
•$0.7 million increase in expenses related to restricted stock unit grants.

YTD: Net income before federal income tax in the six months ended June 30, 2025 decreased to $5.1 million from $8.2 million in the same period in 2024. The factors that drove this decrease were:
•$1.2 million decrease in investment related gains and losses primarily related to the BlackRock write-down;
•$4.8 million increase in insurance benefits paid or provided due to increased matured endowments in our international business;
partially offset by:
•$2.0 million increase in total premium revenue; and
•$1.8 million decline in other general expenses.

At June 30, 2025

•Total assets of $1.7 billion
•Total direct insurance in force of $5.35 billion
•Total investments of $1.4 billion; fixed maturity securities comprised 88% of total investments
•No debt
•Book value per share of Class A common stock of $4.56
•Adjusted book value per share of Class A common stock of $6.221
•Diluted earnings per share of Class A common stock for the six months ended of $0.10

1 Adjusted book value per of Class A common share is a non-GAAP measure that is calculated by dividing actual Class A common stockholders’ equity, excluding AOCI, by the number of Class A common shares outstanding at the end of the period.

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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
The Factors that Drive our Operating Results

We see the following as the primary factors that drive our operating results.

•Sales of our products and the premiums we receive from these sales
•Investments
•Claims and surrenders
•Operating expenses
•Actuarial assumptions

Sales of Our Products. We believe sales statistics are meaningful to gain an understanding of, among other things, the attractiveness of our products, how expansion of our distribution channels affects our revenue, customer retention and the performance of our business from period-to-period. Throughout the MD&A, we describe the actions and initiatives we are taking to increase sales and improve retention, sales performance in each period and as compared to prior year periods, and how we view trends with respect to sales and retention.

One sales factor that is key to our profitability is product mix. We offer a competitive product mix designed to meet the needs of our specific customer segments and actively manage new product margins and in-force profitability. Product mix can have an impact on profitability - selling a higher volume of lower-margin products, we may receive more premiums but may not be as profitable as in periods when we sell a greater percentage of higher-margin products. Our product mix has been trending towards sales of our newer whole life products, both internationally and domestically, which have a smaller margin than sales of endowment products. We expect this trend to continue due to the anticipated volumes of endowment maturities being replaced by higher volumes of whole life products.

Premium Revenues. Premium revenues consist of all money deposited by customers into new and existing insurance policies. We view these premiums in two categories - first year premiums are premiums received within the first 12 months of a policy's issuance and thereafter any premiums received are renewal premiums.

Throughout the MD&A, we refer to "direct" premiums as all premiums received and "net" or "total" premiums as all premiums received less premiums ceded to RGA Reinsurance Company ("RGA") and our other reinsurers. Direct premium revenue increased 6% in the three months ended June 30, 2025, to $46.4 million from $43.9 million in the three months ended June 30, 2024 and increased 7% in the six months ended June 30, 2025, to $88.8 million from $83.0 million in the six months ended June 30, 2024. This increase was driven by sales of CICA Domestic products.

First Year Premiums. Direct first year premiums increased 20% in the three months ended June 30, 2025, to $9.4 million from $7.9 million in the three months ended June 30, 2024 and increased 32%, to $18.3 million in the six months ended June 30, 2025, compared to $13.8 million in the six months ended June 30, 2024, including 42% growth in our Life Insurance segment, driven by sales of our newer products and an increased number of producing agents. First year premium growth was primarily in our new CICA Domestic final expense business.

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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
Renewal Premiums. Our direct renewal premium revenues in the three and six months ended June 30, 2025 increased primarily due to strong sales in 2024 leading to higher number of policies paying renewal premiums in the current periods.

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Investment Income. Our net investment income decreased slightly for the three and six months ended June 30, 2025 compared to the same prior year periods, due primarily to lower investment income from our limited partnership investments.

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Claims and Surrenders. Payment of policyholder benefits for claims and surrenders is our largest expense and thus key to our profitability. The three largest components of this expense are reflected in the graphs below. In the three and six months ended June 30, 2025 compared to the prior year periods,

•death claim benefits decreased in our Life Insurance segment due to a combination of lower volume of claims and our coinsurance agreement with RGA alleviating some of our liability to pay these claims than in the prior year periods,
•surrenders decreased slightly, and
•matured endowments increased as expected as many of our endowment policies reach their contractual maturity dates.


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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
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Operating Expenses. Operating expenses are our second largest expense and thus also drive our operating results. Operating expenses are meaningful to gain an understanding of how we manage our business, including among other things, salaries, benefits and spending on growth initiatives. Our operating expenses decreased in the three and six months ended June 30, 2025 as compared to the prior year periods. Despite continued investment in the growth of our business and higher costs associated with our equity compensation program as a result of increased stock price and additional participants, this expense was lower due to the accrual of $3.5 million in legal fees in the prior year. These were fees awarded to certain defendants in the trade secret lawsuit. We have not paid any of these fees and have appealed the judgment against us. Additionally, we receive expense allowances in CICA Domestic from RGA under our coinsurance agreement that was not in effect during the first part of 2024.

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Actuarial Assumptions. The actuarial assumptions that underlie our reserves are based upon our best estimates of certain factors such as mortality, lapses, morbidity and discount rates. Our results will be affected to the extent there is a variance between our actuarial assumptions and actual experience.

We expect to see a rebalancing in our mix of business arising due to the anticipated volume of maturities in our international endowment business, as well as continued domestic growth in the Life Insurance segment, which has

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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
been discussed previously. Our current profitability is affected by how closely actual experience matches our actuarial assumptions for these shifts, and by the amount of reserves we must hold.

Actuarial assumptions are continually monitored and updated at least annually to reflect overall experience as well as emerging trends.

OUR OPERATING SEGMENTS

Our insurance operations are the primary focus of the Company, as these operations generate most of our income. See the discussion under Segment Operations below for a detailed analysis.  The amount of direct insurance, number of policies, and average face amounts for life policies issued during the periods indicated are shown below.

Six Months Ended June 30, 2025 2024
  Amount of
Insurance
Issued		 Number of
Policies
Issued		 Average Policy
Face Amount
Issued		 Amount of
Insurance
Issued		 Number of
Policies
Issued		 Average Policy
Face Amount
Issued
Life Insurance:
International $ 229,176,095  1,970  $ 116,333  $ 212,720,099  2,029  $ 104,840 
Domestic 164,682,973  20,898  7,880  233,468,132  20,070  11,633 
Total Life Insurance 393,859,068  22,868  17,223  446,188,231  22,099  20,190 
Home Service Insurance 123,403,197  9,379  13,157  123,431,074  9,749  12,661 
Total $ 517,262,265  32,247  $ 569,619,305  31,848 

In the first six months of 2025, we issued $517.3 million in new insurance as we continued to grow our inforce business with our newer products tailored to our specific markets.

In our Life Insurance segment, implementation of new initiatives in CICA Domestic, including use of information to enhance underwriting decisions with additional medical and lab data from third parties, resulted in higher sales of products with lower policy face amounts in the first six months of 2025 as compared to the prior year, which led to a lower amount of insurance issued. CICA International benefited from increased sales of our whole life product, which accounted for 67% of total insurance issued in CICA International for the six months ended June 30, 2025. This product tends to have higher policy face amounts than our older endowment products, leading to an increase in insurance issued internationally.

Insurance issued in our Home Service Insurance segment decreased slightly for the six months ended June 30, 2025 compared to the prior year period. We continue our strategic actions intended to improve sales quality and persistency. These improvements did result in higher insurance issued in the second quarter of 2025 when compared to the second quarter of 2024. We also believe growth is being impacted by inflation on the cost of living, which has affected new sales since the customer demographic is primarily lower-income individuals.


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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
The amount of direct insurance inforce for the periods indicated is shown below.
2146
Overall insurance inforce growth has been and will be impacted by persistency rates, policy maturities and surrenders.

CONSOLIDATED RESULTS OF OPERATIONS

REVENUES

Our revenues are generated primarily by life insurance premiums and investment income from invested assets.

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Revenues:        
Premiums:        
Life insurance $ 42,937  42,101  82,286  80,362 
Accident and health insurance 451  458  899  872 
Property insurance —  —  —  (2)
Net investment income 17,169  17,540  34,546  35,027 
Investment related gains (losses), net 2,408  (253) (486) 710 
Other income 2,121  2,238  3,493  2,827 
Total revenues $ 65,086  62,084  120,738  119,796 


Three Months Ended Six Months Ended
June 30, June 30,
(In thousands)
 2025 2024 2025 2024
Life and A&H premiums:
    
Direct premiums:
First year $ 9,435  7,893  18,252  13,824 
Renewal 36,966  36,032  70,499  69,161 
Total direct life and A&H premiums
 46,401  43,925  88,751  82,985 
Reinsurance
 (3,013) (1,366) (5,566) (1,751)
Total life and A&H premiums
 $ 43,388  42,559  83,185  81,234 


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Our first year direct premiums increased 20% and 32% in the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024, due to sales of our newer products in our Life Insurance segment and expanded domestic distribution. Renewal premiums increased from strong first year sales in 2024 in our Life Insurance segment leading to higher number of policies paying renewal premiums in the first half of 2025, which more than offset the impacts from the high level of surrenders during the last few years and increasing matured endowment benefits paid in the international portion of our Life Insurance segment.

Reinsurance premiums ceded increased in the three and six months ended June 30, 2025 compared to the same periods in 2024 due to a coinsurance agreement we entered into with RGA in the second quarter of 2024.

Net Investment Income. A summary of our net investment income and annualized net investment income performance is as follows:

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except for %) 2025 2024 2025 2024
Gross investment income:        
Fixed maturity securities $ 15,538  15,343  30,966  30,480 
Equity securities 72  73  147  148 
Policy loans 1,297  1,382  2,666  2,838 
Long-term investments 927  1,268  1,897  2,492 
Other investment income 114  185  308  421 
Total investment income 17,948  18,251  35,984  36,379 
Investment expenses (779) (711) (1,438) (1,352)
Net investment income $ 17,169  17,540  34,546  35,027 
Net investment income, annualized $ 69,093  70,054 
Average invested assets, at amortized cost $ 1,534,610  1,522,573 
Annualized yield on average invested assets 4.50  % 4.60  %

Fixed maturity securities constitute the vast majority, or 88% of our investment portfolio based on fair value and thus provide the majority of our net investment income. Our net fixed maturity investment portfolio, primarily invested in callable securities, has faced challenges as many securities were called between 2019 and 2021, necessitating reinvestment in low interest rate fixed maturity assets, which impact net investment income and yields. In order to enhance yields, we are investing in new opportunities, including investment grade private placement fixed income securities and other asset classes, while maintaining a prudent risk profile.

Investment Related Gains (Losses), Net.  We recorded investment related gains of $2.4 million and losses of $0.5 million during the three and six months ended June 30, 2025, respectively, compared to investment related losses of $0.3 million and gains of $0.7 million during the same prior year periods. The losses are primarily related to the non-cash write-down of our BlackRock ESG investment that occurred in first quarter 2025. We did not sell this investment; however, the changes in fair values of our equity securities are reflected as investment related gains or losses in our income statement, in addition to executed transactions that result in a gain or loss.

Other Income. Other income consists primarily of supplemental contracts issued to international policyholders in our Life Insurance segment upon the surrender or maturity of their original policies. Supplemental contracts offer our policyholders the opportunity to leave their cash with us and be paid interest at a guaranteed rate or receive an annuity, at their option.


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BENEFITS AND EXPENSES
  Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
 
Benefits and expenses:        
Insurance benefits paid or provided:        
Claims and surrenders $ 40,220  34,530  80,318  67,643 
Increase (decrease) in future policy benefit reserves (4,554) (1,052) (8,200) (601)
Policyholder liability remeasurement (gain) loss 1,351  1,360  1,179  1,679 
Policyholders' dividends 1,315  1,191  2,610  2,428 
Total insurance benefits paid or provided 38,332  36,029  75,907  71,149 
Commissions 11,409  12,232  22,684  22,682 
Other general expenses 13,459  16,639  26,152  27,977 
Capitalization of deferred policy acquisition costs (9,720) (10,543) (18,569) (18,874)
Amortization of deferred policy acquisition costs 4,613  4,273  9,260  8,311 
Amortization of cost of insurance acquired 79  152  177  324 
Total benefits and expenses $ 58,172  58,782  115,611  111,569 
 
Payments of claims and surrenders benefits constitute the vast majority of our expenses.

Claims and Surrenders.  

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
 
Claims and surrenders:
Death claim benefits $ 4,861  5,298  10,928  12,156 
Surrender benefits 13,076  14,330  25,977  26,461 
Endowment benefits 1,542  1,945  3,221  3,699 
Matured endowment benefits 18,528  11,047  35,879  21,808 
A&H and other policy benefits 2,213  1,910  4,313  3,519 
Total claims and surrenders $ 40,220  34,530  80,318  67,643 

Death claim benefits decreased in the three and six months ended June 30, 2025 compared to the same periods in 2024 due to both lower volume and our coinsurance agreement with RGA, which alleviates some of our liability to pay death claims. We did not have this agreement during the first quarter of 2024.

Many of our endowment policies are reaching their contractual maturity dates and thus matured endowment benefits increased in the three and six months ended June 30, 2025 compared to the prior year periods. We anticipated these increases in 2025 based upon the scheduled maturity of the contracts. We expect continued year-over-year increases in matured endowment benefits throughout 2025, then expect the matured endowment benefits to remain at elevated, but slightly lower levels over the next few years, as more of these contracts expire.


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Increase (Decrease) in Future Policy Benefit Reserves. Future policy benefit reserves reflect the liability established to provide for the payment of policy benefits that we expect to pay in the future and thus generally increase when we have a larger in force block of business due to higher sales and better persistency (i.e., more policies on which we expect to pay future benefits) and decrease when we have lower sales and persistency. In the three and six months ended June 30, 2025, the change in future policy benefit reserves decreased as compared to the prior year periods despite the increase in our inforce business, due to the amount of reserves released in connection with matured endowments.

Policyholder Liability Remeasurement (Gain) Loss. Most of our products are long-duration contracts that provide a specified, fixed amount of insurance benefit in exchange for a fixed premium. When a policy is initially issued, we establish a "net premium ratio" ("NPR") using assumptions regarding expected premiums and policyholder benefit liabilities. On a quarterly basis, we review actual versus expected experience in such quarter, which is reported as a policyholder liability remeasurement gain (if better performance than assumptions) or loss (if lower performance than assumptions).

Commissions. Commission expenses are a cost of acquiring business, as commissions are the primary compensation paid to our independent consultants and independent agents for selling our products. First year commission rates are higher than renewal commission rates and thus commissions fluctuate directly in relation to first year sales. Although first year sales increased in the three and six months ended June 30, 2025 as compared to the same periods in 2024, commissions decreased in the second quarter of 2025 and were flat in the six month ended June 30, 2025 due to our coinsurance agreement with RGA where they share in commission expenses.

Other General Expenses.  Total general expenses decreased $3.2 million and $1.8 million, respectively, in 2025 compared to the same periods in 2024. Although we continue to incur costs related to our strategic growth initiatives and costs incurred associated with our equity compensation program due to higher stock price and additional participants, we incurred a $3.5 million legal fee in the prior year periods due to the trade secret lawsuit. We continue to work on managing controllable operating expenses while investing in growth initiatives.

Capitalization of Deferred Policy Acquisition Costs ("DAC"). We capitalize costs related to successful sales of our insurance products, which include certain commissions, policy issuance costs, and underwriting and agency expenses. These costs vary based upon amounts of premiums received related to new and renewal business. Capitalized DAC decreased in the three and six months ended June 30, 2025, which is in line with the increases in new sales activity. Significantly lower amounts are capitalized related to renewal business in correlation with the lower commissions paid on that business compared to first year business, which has higher commission rates.

Amortization of Deferred Policy Acquisition Costs. Amortization of DAC increased in the three and six months ended June 30, 2025, compared to the same periods in 2024. DAC is amortized on a constant level basis over the expected term of the related contracts to approximate straight-line amortization.

SEGMENT OPERATIONS

We operate in two business segments: Life Insurance and Home Service Insurance.

These segments are reported in accordance with U.S. GAAP.  The Company evaluates profit and loss performance based on U.S. GAAP net income (loss) before federal income taxes for these segments. The Company's Other Non-Insurance Enterprises include non-insurance operations such as IT and corporate-support functions, which are included in the table presented below to properly reconcile the segment information with the consolidated financial statements of the Company.


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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
The following table sets forth income (loss) before federal income tax by segment during the periods indicated.

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Income (loss) before federal income tax:
Segments:
  Life Insurance $ 8,148  7,472  8,391  13,272 
  Home Service Insurance 1,607  1,411  1,727  2,034 
Total segments 9,755  8,883  10,118  15,306 
Other Non-Insurance Enterprises (2,841) (5,581) (4,991) (7,079)
Total income (loss) before federal income tax
 $ 6,914  3,302  5,127  8,227 

LIFE INSURANCE

Detailed results of operations in the Life Insurance segment for the periods indicated are as follows:

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Revenues:        
Premiums:
Life insurance $ 32,451  31,402  61,418  59,100 
Accident and health insurance 192  203  379  366 
Net investment income 13,400  13,812  26,912  27,498 
Investment related gains (losses), net 2,625  (279) (122) 807 
Other income 2,121  2,218  3,493  2,724 
Total revenues 50,789  47,356  92,080  90,495 
Benefits and expenses:
Insurance benefits paid or provided:
Claims and surrenders 35,223  29,169  69,365  56,533 
Increase (decrease) in future policy benefit reserves (5,571) (2,269) (10,897) (3,462)
Policyholder liability remeasurement (gain) loss 1,081  1,306  1,094  1,679 
Policyholders' dividends 1,308  1,186  2,597  2,417 
Total insurance benefits paid or provided 32,041  29,392  62,159  57,167 
Commissions 8,184  8,543  16,347  15,503 
Other general expenses 6,644  6,925  13,216  12,961 
Capitalization of deferred policy acquisition costs (8,155) (8,591) (15,874) (15,407)
Amortization of deferred policy acquisition costs 3,906  3,586  7,799  6,944 
Amortization of cost of insurance acquired 21  29  42  55 
Total benefits and expenses 42,641  39,884  83,689  77,223 
Income before federal income tax
 $ 8,148  7,472  8,391  13,272 


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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
In the three months ended June 30, 2025, the $0.7 million increase in income before federal income tax was driven by higher first year and renewal premiums and an increase in investment related gains (losses) partially offset by higher claims and surrenders due to the matured endowments in CICA International. Commissions were lower despite higher first year sales due to our CICA Domestic coinsurance agreement with RGA.

In the six months ended June 30, 2025, income before federal income tax decreased despite a $2.3 million increase in premiums driven by a $0.9 million decrease in investment related gains and losses primarily related to the BlackRock write-down; and a $5.0 million increase in insurance benefits paid or provided due to increased matured endowments in CICA International.

Life Insurance segment premium breakout is detailed below.

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Premiums:        
Direct premiums:
First year $ 8,107 6,496  15,711 11,080 
Renewal 27,480 26,468  51,571 50,118 
Total direct premiums 35,587 32,964  67,282 61,198 
Reinsurance
 (2,944) (1,359) (5,485) (1,732)
Total premiums $ 32,643 31,605  61,797 59,466 

Premiums.  Direct premiums increased by $2.6 million and $6.1 million in the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024. The increase was driven by sales of our newer products and an increased number of producing agents, primarily in CICA Domestic. Ceded reinsurance premiums increased due to the CICA Domestic coinsurance agreement with RGA entered into in the second quarter of 2024.


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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
While CICA Domestic drove the significant increase in first year premiums, life insurance premiums are generated largely from our international policyholders living in almost 80 different countries across the globe. The following table sets forth our premiums by location for the three and six months ended June 30, 2025 and 2024.

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Premiums:
International premiums:    
Colombia $ 6,461  6,043  13,015  12,026 
Taiwan 3,167  3,617  7,053  8,159 
Venezuela 3,322  3,663  6,672  6,978 
Ecuador 3,366  3,145  6,566  6,189 
Argentina 2,923  2,673  5,019  4,771 
Other non-United States 8,995  9,532  18,697  18,347 
Total international premiums 28,234  28,673  57,022  56,470 
United States premiums
 6,341  3,382  12,132  5,704 
Reinsurance and change in premium accruals
 (1,932) (450) (7,357) (2,708)
Total premiums
 $ 32,643  31,605  61,797  59,466 

Sales in Taiwan have been declining recently due to succession related difficulties within our primary distribution agency in Taiwan, regulatory challenges and geopolitical shift. We are also starting to face some headwinds in Venezuela that may affect premiums revenues, due to the strength of the US dollar compared to the local currency and their difficulties to obtain dollars.

Investment Related Gains (Losses), Net.  We recorded investment related gains of $2.6 million and losses of $0.1 million during the three and six months ended June 30, 2025, respectively, compared to investment related losses of $0.3 million and gains of $0.8 million during the same prior year periods. These fluctuations in investment-related gains and losses were primarily influenced by changes in the estimated fair market value of our limited partnership investments. Notably, the loss for the six months ending June 30, 2025, was largely attributed to a write-down in the estimated fair market value of our ESG BlackRock investment. This decline was significant enough to outweigh the gains from other investments.

Claims and Surrenders. The following table sets forth our primary claims and surrender benefits paid within our Life Insurance segment for the three and six months ended June 30, 2025 compared to the same periods in 2024.

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Claims and surrenders:
Death claim benefits $ 907  1,186  2,177  3,184 
Surrender benefits 12,282  13,373  24,273  24,810 
Endowment benefits 1,541  1,943  3,219  3,696 
Matured endowment benefits 18,328  10,861  35,531  21,476 
A&H and other policy benefits 2,165  1,806  4,165  3,367 
Total claims and surrenders $ 35,223  29,169  69,365  56,533 


June 30, 2025 | 10-Q 49

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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
The majority of our claims and surrender benefits in our Life Insurance segment were related to payment of surrender benefits and matured endowment benefits in CICA International. Many of our endowment policies are reaching their contractual maturity dates and thus matured endowment benefits are expected to be higher in each quarter of 2025 as compared to 2024. We expect elevated trends to continue over the next few years but at a reduced level when compared to 2025. Death claim benefits decreased for the three and six months ended June 30, 2025, compared to the prior year periods due to a combination of lower volume and our coinsurance agreement with RGA alleviating some of our liability to pay these claims. Mortality experience is closely monitored and these amounts were within expected levels.

Increase (Decrease) in Future Policy Benefit Reserves. The change in future policy benefit reserves for the three and six months ended June 30, 2025 and 2024 was the result of reserves released due to surrenders and higher matured endowment benefits. These releases were partially offset by increases in reserves due to new insurance issued and the reserves that increase on our in force block of business nearing maturity.

HOME SERVICE INSURANCE

Detailed results of operations for the Home Service Insurance segment for the periods indicated are as follows:

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Revenues:        
Premiums:
Life insurance $ 10,486  10,699  20,868  21,262 
Accident and health insurance 259  255  520  506 
Property insurance —  —  —  (2)
Net investment income 3,595  3,529  7,273  7,066 
Investment related gains (losses), net (218) 23  (366) (68)
Other income —  20  —  20 
Total revenues 14,122  14,526  28,295  28,784 
Benefits and expenses:
Insurance benefits paid or provided:
Claims and surrenders 4,997  5,361  10,953  11,110 
Increase (decrease) in future policy benefit reserves 1,017  1,217  2,697  2,861 
Policyholder liability remeasurement (gain) loss 270  54  85  — 
Policyholders' dividends 7  5  13  11 
Total insurance benefits paid or provided 6,291  6,637  13,748  13,982 
Commissions 3,225  3,689  6,337  7,179 
Other general expenses 3,799  3,931  7,582  7,420 
Capitalization of deferred policy acquisition costs (1,565) (1,952) (2,695) (3,467)
Amortization of deferred policy acquisition costs 707  687  1,461  1,367 
Amortization of cost of insurance acquired 58  123  135  269 
Total benefits and expenses 12,515  13,115  26,568  26,750 
Income before federal income tax
 $ 1,607  1,411  1,727  2,034 


June 30, 2025 | 10-Q 50

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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
Income before federal income tax in the three months ended June 30, 2025 increased to $1.6 million from $1.4 million in the three months ended June 30, 2024. The factors that drove this increase were lower insurance benefits paid and provided and commissions, partially offset by investment related losses.

Income before federal income tax in the six months ended June 30, 2025 decreased to $1.7 million from $2.0 million in the same period in 2024. The factors that drove this decrease were investment related losses partially offset by lower insurance benefits paid and provided.

Premiums. Home Service Insurance segment life and A&H premium breakout is detailed below.

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Premiums:
Direct life and A&H premiums:        
First year $ 1,328  1,397  2,541  2,744 
Renewal 9,486  9,564  18,928  19,043 
Total direct life and A&H premiums 10,814  10,961  21,469  21,787 
Reinsurance
 (69) (7) (81) (19)
Total life and A&H premiums
 $ 10,745  10,954  21,388  21,768 

Our life and A&H premiums in the Home Service segment slightly declined in the three and six months ended June 30, 2025 compared to the same prior year periods. The decrease is largely due to strategic actions intended to improve sales quality and persistency, which actions led to a decrease in our agent sales force as we focus on long term improvements. Our first year sales in the second quarter of 2025 did increase over the first quarter of 2025, we believe from our strategy beginning to show positive results. Additionally, we believe external economic pressures, such as inflation, have impacted revenue in this segment disproportionately.

Claims and Surrenders.  Payments of claims and surrender benefits, which are the largest portion of our expenses, are summarized as follows:

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Claims and surrenders:
Death claim benefits $ 3,954  4,112  8,751  8,972 
Surrender benefits 794  957  1,704  1,651 
Endowment benefits 1  2  2  3 
Matured endowment benefits 200  186  348  332 
A&H and other policy benefits 48  104  148  152 
Total claims and surrenders $ 4,997  5,361  10,953  11,110 

The majority of claims and surrender benefits in our Home Service Insurance segment are death claim benefits. Death claim benefits decreased slightly in the three and six months ended June 30, 2025 compared to the same prior year periods due primarily to lower volume of reported claims. Mortality experience is closely monitored by the Company as a key performance indicator and fluctuates from quarter-to-quarter based on reported claims.


June 30, 2025 | 10-Q 51

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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
OTHER NON-INSURANCE ENTERPRISES

Three Months Ended Six Months Ended
June 30, June 30,
(In thousands)
 2025 2024 2025 2024
Loss before federal income tax
$ (2,841) (5,581) (4,991) (7,079)

This operating unit represents the administrative support functions for the insurance operations. Its revenues are primarily intercompany and have been eliminated in consolidation under U.S. GAAP, which typically results in a loss. Revenue in this operating unit consists primarily of net investment income and investment related gains or losses, while expenses consist of other general expenses related to corporate functions. The primary reason for the decreased loss before federal income tax in the three and six months ended June 30, 2025 compared to the same period in 2024 is lower other general expenses due to a $3.5 million legal fee expense incurred in the second quarter of 2024, partially offset by increase in costs incurred related to our equity incentive compensation program due to additional participants as well as an increased stock price, which increases our expense taken upon vesting of prior year grants.

INVESTMENTS

Our investments are an integral part of our business success, as we invest the majority of premiums collected to pay for future benefits and rely on net investment income of our ongoing operations. Our cash and invested assets at June 30, 2025 were $1.4 billion, of which 87% was invested in fixed maturity securities, all of which are classified as available-for-sale. We closely monitor the duration of our fixed maturity investments, and investment purchases and sales are executed with the objective of having adequate funds available to satisfy our insurance obligations.

The following table sets forth the carrying value of our investments by investment category and cash, cash equivalents and the percentage of each to total cash, cash equivalents and invested assets.

Carrying Value June 30, 2025 December 31, 2024
(In thousands, except for %) Amount % Amount %
Cash, cash equivalents and invested assets:
Fixed maturity securities:        
U.S. Treasury and U.S. Government-sponsored enterprises $ 9,273  0.6  % $ 9,213  0.6  %
Corporate 811,778  56.5  794,989  56.0 
States and political subdivisions (1)
 271,349  18.9  268,302  18.9 
Mortgage-backed (2)
 96,147  6.7  93,953  6.6 
Asset-backed 53,724  3.8  54,504  3.9 
Total fixed maturity securities 1,242,271  86.5  1,220,961  86.0 
Cash and cash equivalents 22,671  1.6  29,271  2.0 
Other investments:        
Policy loans 69,648  4.8  71,216  5.0 
Equity securities 5,478  0.4  5,447  0.4 
Other long-term investments 96,424  6.7  93,604  6.6 
Total cash, cash equivalents and invested assets $ 1,436,492  100.0  % $ 1,420,499  100.0  %
(1) Includes $112.8 million and $113.4 million of securities guaranteed by third parties at June 30, 2025 and December 31, 2024, respectively.
(2) Includes $95.0 million and $92.8 million of U.S. Government-sponsored enterprises at June 30, 2025 and December 31, 2024, respectively.

June 30, 2025 | 10-Q 52

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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS

The carrying value of the Company’s fixed maturity securities investment portfolio at June 30, 2025 was $1.24 billion compared to $1.22 billion at December 31, 2024. This increase primarily reflects the impact of interest rate sensitivity on the fair value of our fixed maturity securities. The distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value as of June 30, 2025 did not materially change from December 31, 2024 – the weighted average was “A” at both dates.

Cash and cash equivalents decreased as of June 30, 2025 from December 31, 2024 and fluctuates from period-to-period primarily due to the timing of operating and investing activities.

Other long-term investments increased by $2.8 million as of June 30, 2025 from December 31, 2024 due to additional funding and changes in the fair market value of our limited partnership investments.

Obligations of States and Political Subdivisions

The Company’s fixed maturity securities investment portfolio at June 30, 2025 and December 31, 2024 included $271.3 million and $268.3 million, respectively, of securities that are obligations of states and political subdivisions, including municipalities (collectively referred to as the municipal fixed maturity security portfolio).

The Company's municipal fixed maturity security portfolio includes third-party guarantees.  Detailed below is a presentation by the Nationally Recognized Statistical Rating Organization ("NRSRO") rating of these holdings by funding type as of June 30, 2025.

General Obligation Special Revenue Other Total % Based on Amortized
Cost
(In thousands, except for %) Fair
Value		 Amortized
Cost		 Fair
Value		 Amortized
Cost		 Fair
Value		 Amortized
Cost		 Fair
Value		 Amortized
Cost
State and political subdivision fixed maturity securities including third-party guarantees:
AAA $ 12,449  12,380  11,999  12,234  3,289  3,235  27,737  27,849  9.2  %
AA 45,045  45,287  110,616  128,753  6,342  6,547  162,003  180,587  60.0 
A 2,818  3,147  66,006  75,857  2,136  2,122  70,960  81,126  26.9 
BBB 442  454  7,189  7,934  —  —  7,631  8,388  2.8 
BB and other 2,968  3,135  50  50  —  —  3,018  3,185  1.1 
Total $ 63,722  64,403  195,860  224,828  11,767  11,904  271,349  301,135  100.0  %
State and political subdivision fixed maturity securities excluding third-party guarantees:
AAA $ —  —  3,114  3,300  3,289  3,235  6,403  6,535  2.2  %
AA 31,681  31,781  35,397  40,543  4,555  4,572  71,633  76,896  25.5 
A 14,443  14,760  104,688  122,268  3,923  4,097  123,054  141,125  46.9 
BBB 2,865  3,068  23,515  26,122  —  —  26,380  29,190  9.7 
BB and other 14,733  14,794  29,146  32,595  —  —  43,879  47,389  15.7 
Total $ 63,722  64,403  195,860  224,828  11,767  11,904  271,349  301,135  100.0  %


June 30, 2025 | 10-Q 53

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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
The table below shows the categories in which the Company held investments in special revenue fixed maturity securities that were greater than 10% of fair value based upon the Company's total municipal fixed maturity security portfolio at June 30, 2025.

(In thousands, except for %) Fair
Value		 Amortized
Cost		 % of Total
Fair Value
   
Education $ 42,456  48,996  15.7  %
Utilities 42,287  46,389  15.6 
Transportation 32,310  40,080  11.9 

The Company's municipal fixed maturity security portfolio is spread across many states, however, municipal fixed maturity securities from Texas and California comprise the most significant concentration of the total municipal fixed maturity security portfolio as of June 30, 2025. The Company holds 21% and 16% of its municipal fixed maturity security portfolio in Texas and California issuers, respectively, as of June 30, 2025. There were no other states or individual issuer holdings that represented or exceeded 10% of the total municipal fixed maturity security portfolio as of June 30, 2025.

The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in Texas at June 30, 2025.

General Obligation Special Revenue Other Total
(In thousands) Fair
Value		 Amortized
Cost		 Fair
Value		 Amortized
Cost		 Fair
Value		 Amortized
Cost		 Fair
Value		 Amortized
Cost
Texas state and political subdivision fixed maturity securities including third-party guarantees:
AAA $ 11,942  11,878  2,580  2,631  —  —  14,522  14,509 
AA 14,664  14,650  14,811  17,559  —  —  29,475  32,209 
A —  —  10,735  14,885  —  —  10,735  14,885 
BBB —  —  3,202  3,170  —  —  3,202  3,170 
Total $ 26,606  26,528  31,328  38,245  —  —  57,934  64,773 
Texas state and political subdivision fixed maturity securities excluding third-party guarantees:
AA $ 22,013  21,938  3,092  3,697  —  —  25,105  25,635 
A 3,092  3,090  20,192  26,117  —  —  23,284  29,207 
BBB —  —  6,457  6,586  —  —  6,457  6,586 
BB and other 1,501  1,500  1,587  1,845  —  —  3,088  3,345 
Total $ 26,606  26,528  31,328  38,245  —  —  57,934  64,773 


June 30, 2025 | 10-Q 54

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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in California at June 30, 2025.

General Obligation Special Revenue Other Total
(In thousands) Fair
Value		 Amortized
Cost		 Fair
Value		 Amortized
Cost		 Fair
Value		 Amortized
Cost		 Fair
Value		 Amortized
Cost
California state and political subdivision fixed maturity securities including third-party guarantees:
AA $ 2,080  2,094  32,138  39,403  2,503  2,734  36,721  44,231 
A 1,286  1,650  5,545  6,457  —  —  6,831  8,107 
Total $ 3,366  3,744  37,683  45,860  2,503  2,734  43,552  52,338 
California state and political subdivision fixed maturity securities excluding third-party guarantees:
AA $ 439  445  3,960  4,846  716  760  5,115  6,051 
A 2,927  3,299  19,618  23,974  1,787  1,974  24,332  29,247 
BB and other —  —  14,105  17,040  —  —  14,105  17,040 
Total $ 3,366  3,744  37,683  45,860  2,503  2,734  43,552  52,338 

IMPAIRMENT CONSIDERATIONS RELATED TO INVESTMENTS IN FIXED MATURITY AND EQUITY SECURITIES

The Company assesses available-for-sale ("AFS") fixed maturity securities in an unrealized loss position for expected credit losses. The Company did not record any credit valuation allowances on fixed maturity securities in either of the three and six months ended June 30, 2025 or 2024.

Gross unrealized losses on AFS fixed maturity securities amounted to $170.2 million as of June 30, 2025 and $185.7 million as of December 31, 2024.  This decrease in gross unrealized losses during 2025 was a result of the decrease in average market interest rates at the end of 2025 as compared to 2024.

Information on both unrealized and realized gains and losses by category is set forth in Part I, Item 1, Note 3. Investments of the notes to our consolidated financial statements herein.

LIQUIDITY AND CAPITAL RESOURCES

Below are our primary capital resources (based on carrying value of each) as of the periods indicated.

(In thousands)
 June 30, 2025
December 31, 2024
Fixed maturity securities $ 1,242,271  1,220,961 
Cash and cash equivalents 22,671  29,271 

Liquidity refers to a company's ability to generate sufficient cash flows to meet the needs of its operations. We manage our insurance operations in order to ensure that we have stable and reliable sources of cash flows to meet our obligations. We currently anticipate meeting our short-term and long-term cash needs with cash generated by our insurance operations and from our invested assets. From time to time, we may raise capital by selling shares in our SIP (as defined below) and we may also access our Credit Facility if needed (also as described below). Citizens had no debt as of June 30, 2025.

Cash from Operating Activities. Cash provided by or used in operating activities is an important liquidity metric because it reflects, during a given period, the amount of cash generated that is available to pay our operating

June 30, 2025 | 10-Q 55

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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
expenses, invest in our business or make strategic acquisitions. Cash provided by operating activities was $4.2 million in the six months ended June 30, 2025.

Cash used in Investing Activities. These cash flows, for the most part, are reinvested in new investments. The investing activities fluctuate from period to period due to timing of securities activities such as calls, maturities and reinvestment of those funds. Net cash outflows from investing activities totaled $6.6 million in the six months ended June 30, 2025. 88% of total investments consist of marketable fixed maturity securities classified as available-for-sale that could be readily converted to cash for liquidity needs.

PARENT COMPANY LIQUIDITY AND CAPITAL RESOURCES

Citizens is a holding company and has minimal operations of its own. Our assets consist of the capital stock of our subsidiaries, cash and investments. Our liquidity requirements are met primarily from two sources: cash generated from our operating subsidiaries and our invested assets. Our ability to obtain cash from our insurance subsidiaries depends primarily upon the availability of statutorily permissible payments, including payments we receive from service agreements with our insurance subsidiaries and dividends from the subsidiaries. The ability to make payments to the holding company is limited by applicable laws of the U.S. states of domicile and by the Puerto Rico Office of Commissioner of Insurance, which subject insurance operations to significant regulatory restrictions. These laws and regulations require, among other things, that our insurance subsidiaries maintain minimum solvency or premium to surplus ratio requirements, which limit the amount of dividends that can be paid to the holding company. The regulations also require approval of our service agreements with the applicable regulatory authority in order to prevent insurance subsidiaries from moving large amounts of cash to the less regulated holding company.

In addition to the above-mentioned sources of cash, we offer a Stock Investment Plan ("SIP"), which allows investors, policyholders, independent contractors and agents, employees and directors to directly purchase our stock. At our option, purchases of stock under the SIP can be made from newly issued or treasury stock, rather than in the open market, in which case, we can raise capital by selling our shares.

We renewed our Credit Facility with Regions Bank on May 3, 2024 for an additional three years. See Part I, Item 1, Note 8. Commitments and Contingencies in the notes to our consolidated financial statements, herein, for a description of the Credit Facility. The Credit Facility provides additional liquidity to the Company for short-term or longer-term needs. We have not borrowed any money under the Credit Facility.

INSURANCE COMPANY SUBSIDIARY LIQUIDITY AND CAPITAL RESOURCES

The liquidity requirements of our insurance operations are primarily met by premium revenues, investment income and proceeds from investment maturities, calls or sales. Primary cash needs are for payments of policyholder benefits, investment purchases, and operating expenses. We manage our insurance operations in order to ensure that we have stable and reliable sources of cash flow to meet our obligations. As we have discussed, we have been growing our domestic business by developing new products and expanding our distribution channels, which has led to an increase in first year direct premiums (i.e., new sales) of 71% from the year ended December 31, 2023 to the year ended December 31, 2024, and 32% from the six months ended June 30, 2024 to the six months ended June 30, 2025. When selling new policies, we incur upfront policy acquisition costs, such as agent commission payments. While historically, cash flows from our operations have been sufficient to meet our cash needs, in the second quarter of 2024 we entered into a coinsurance reinsurance agreement with RGA to help with some of the costs, and the insurance subsidiaries also have the available-for-sale fixed maturity investment portfolio available to create additional cash flows if needed. Two of our insurance subsidiaries are members of the Federal Home Loan Bank ("FHLB") of Dallas. FHLB membership provides the insurance subsidiaries with access to various low-cost collateralized borrowings and funding agreements. While not the only source of additional liquidity, the FHLB could provide the insurance subsidiaries with an additional source of liquidity, if needed.

We believe that we have adequate capital resources and ability to obtain additional capital, if needed, to support the short-term and longer-term liquidity requirements of our insurance operations. See Contractual Obligations and Off-

June 30, 2025 | 10-Q 56

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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
balance Sheet Arrangements in our 2024 Form 10-K and below for a discussion of known and estimated cash needs. Cash flow projections and cash flow tests under various market interest rate scenarios are performed annually to assist in evaluating liquidity needs and adequacy.

Trends, Demands and Restrictions on our Uses of Cash

Payments of benefits for claims and surrenders are our largest use of cash. There are three primary components of these payments: death claims, surrenders and matured endowments.

Matured Endowments. Our endowment products have contractual maturity dates and provide the policyholder with alternatives once the policy matures - they can choose to take a lump sum payout, leave the money on deposit at interest with the Company or purchase another insurance policy. Approximately 19% of the endowments in force will mature in the next five years, totaling approximately 6% of our in force business as of June 30, 2025. The highest level of maturities will occur this year. Policyholder election behavior is unknown, but if too many policyholders elect lump sum distributions, the Company could be exposed to liquidity risk in years of high maturities. Meeting these distributions could require the Company to sell its investments at inopportune times to pay policyholder withdrawals. Alternatively, if the policyholders were to leave the money on deposit with the Company at interest, our profitability could be impacted if the product guaranteed rate is higher than the market rate we are earning on our investments. We currently anticipate that our available operating cash flow and capital resources will be adequate to meet our needs for funds, but we are closely monitoring our policyholder behavior patterns, and in 2024, introduced a new product designed to allow policyholders with maturing endowments to purchase a new life insurance policy.

Surrenders. In order to mitigate the risk of early policyholder surrenders, we include provisions in our insurance policies, such as surrender charges, that help limit and discourage early withdrawals, but as many of our older policies have reached the age where surrender charges have expired or significantly decreased, we have experienced high levels of surrenders in the past several years. We believe that surrenders have been high due to other reasons, including the loss of one of our biggest distributors in Venezuela in 2018, increasing interest rates, which may encourage policyholders to seek higher rates of return in different investment products, post-pandemic beliefs that life insurance may not be as important as it was during the pandemic, and inflationary and tariff pressures, which may cause policyholders to want the cash values of their policies due to decreased purchasing power elsewhere. To the extent that early surrenders are higher than expected, our use of cash could be higher than expected. We continue to monitor surrenders and early withdrawals and focus on our retention initiatives and efforts to retain cash when policyholders surrender their policies.

Our cash flow from operations is also negatively impacted with high matured endowments and surrenders, as they lead to lower renewal premiums.

Death Claims. Our product pricing assumes a certain mortality rate and thus a primary liquidity concern is the risk of higher than expected mortality experience. Our death benefit payments decreased in the six ended June 30, 2025.

Another significant use of cash is payment of commissions. In our CICA Domestic business, we pay advance commissions on some of our insurance products, meaning we pay an agent a portion of their first year commission immediately upon sale of a policy, rather than "as earned", or when premiums are received by us. Because of this, another liquidity concern is that rapid growth in first year sales of these products creates a significant increase in commission payments. CICA Domestic sales have increased significantly since the third quarter of 2023. To offset some of this strain on our capital, we entered into the coinsurance agreement with RGA in the second quarter of 2024 and elected to cede 50% of our final expense business to RGA, which alleviates some of the expense strain. We may also seek other options, such as loans at the holding company level (from the Credit Facility or otherwise) that would allow us to reduce the liquidity risk should CICA Domestic's required commission payments exceed current resources.


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See Part I, Item 1, Note 8. Commitments and Contingencies, as well as Legal Proceedings - Trade Secret Lawsuit in our 2024 Form 10-K for a discussion of the trade secret lawsuit, which could negatively impact our cash if we do not succeed in our appeal.

Regulatory Restrictions on our Use of Cash

As discussed above, we are subject to regulatory capital requirements that could affect the Company’s ability to access capital from our insurance operations or cause the Company to have to put additional cash in our wholly-owned subsidiaries.

Our domestic companies are subject to minimum capital requirements set by the NAIC in the form of risk-based capital ("RBC"). RBC considers the type of business written by an insurance company, the quality of its assets, and various other aspects of an insurance company's business to develop a minimum level of capital called the "Authorized Control Level Risk-Based Capital". This level of capital is then compared to an adjusted statutory capital that includes capital and surplus as reported under statutory accounting principles, plus certain investment reserves. Should the ratio of adjusted statutory capital to control level RBC fall below 200% for our domestic companies, a series of remedial actions by the affected company would be required. Additionally, we have a Capital Maintenance Agreement between Citizens and CICA Domestic, Citizens' wholly-owned subsidiary domiciled in Colorado, which would require Citizens to contribute capital to CICA Domestic in order to maintain a RBC level above 350%. At June 30, 2025, our domestic insurance subsidiaries were above the required minimum RBC levels and CICA Domestic was above 350%.

For CICA Domestic, commission advances are non-admitted assets, which means we need capital to "replace" these assets in order to maintain required regulatory capital levels. As discussed above, management is investigating various options in order to reduce both regulatory capital and liquidity risk should the capital required to support this pace of growth exceed current resources. Citizens may have to contribute capital to CICA Domestic to maintain the required RBC ratio.

CICA International is a Puerto Rico domiciled company. The Insurance Code of Puerto Rico does not specifically set forth minimum capital and surplus standards, but rather requires that an insurer submit a business plan for approval to the OIC that includes proposed minimum capital and surplus. CICA International is required to maintain a minimum of $750,000 in capital and maintain a premium to surplus ratio of 7 to 1. At June 30, 2025, CICA International exceeded the required minimum capital and related ratio.

Any capital that Citizens is required to contribute to its insurance subsidiaries would negatively impact the holding Company's capital resources and liquidity.

CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

As of June 30, 2025, we have no additional contractual obligations or off-balance sheet arrangements other than those described in Part I, Item 1, Note 8. Commitments and Contingencies in the notes to our consolidated financial statements herein and in Part II, Item 7, Contractual Obligations and Off-Balance Sheet Arrangements in our 2024 Form 10-K.  We do not utilize special purpose entities as investment vehicles, nor are there any such entities in which we have an investment that engage in speculative activities of any nature, and we do not use such investments to hedge our investment positions.

CRITICAL ACCOUNTING POLICIES

We believe that the accounting policies set forth in Part I, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - "Critical Accounting Policies" and Part IV, Item 15, Note 1. Summary of Significant Accounting Policies of our consolidated financial statements in our 2024 Form 10-K continue to describe the significant judgments and estimates used in the preparation of our consolidated financial statements.


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CITIZENS, INC.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

Item 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures.

Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of June 30, 2025.  Based on such evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2025 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and such information is accumulated and reported to management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the three months ended June 30, 2025, there were no changes in the Company's internal control over financial reporting (as defined in rules 13a-15(f) and 15d-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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CITIZENS, INC.
PART II.  OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Part I, Item 3. Legal Proceedings of our 2024 Form 10-K includes a discussion of our legal proceedings. There have been no material developments in the three months ended June 30, 2025 from the legal proceedings described in our 2024 Form 10-K.

Item 1A. RISK FACTORS

Part I, Item 1A. Risk Factors of our 2024 Form 10-K includes a discussion of our risk factors. There have been no material changes in the three months ended June 30, 2025 from the risk factors included in our 2024 Form 10-K.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

Item 5(a)

None.

Item 5(b)

None.

Item 5(c)

During the three months ended June 30, 2025, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Citizens, Inc. securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.” Additionally, Citizens did not adopt or terminate any Rule 10b5-1 trading arrangement during the three months ended June 30, 2025.


June 30, 2025 | 10-Q 60

Table of Contents                                            

CITIZENS, INC.
Item 6. EXHIBITS

Exhibit
Number
 The following exhibits are filed herewith:
101* Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q*
104* Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set*
* Filed herewith.


June 30, 2025 | 10-Q 61

Table of Contents                                        
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
  CITIZENS, INC.
   
     
  By:
/s/ Jon Stenberg
   
Jon Stenberg
   
President & Chief Executive Officer
By: /s/ Jeffery P. Conklin
  Jeffery P. Conklin
Chief Financial Officer, Chief Investment Officer & Treasurer
   
   
     
Date: August 7, 2025    


June 30, 2025 | 10-Q 62

EX-31.1 2 cia-2025630x10qex311.htm EX-31.1 Document

EXHIBIT 31.1

Certification of Chief Executive Officer Under
Section 302 of the Sarbanes-Oxley Act of 2002

I, Jon Stenberg, Chief Executive Officer and President of Citizens, Inc., certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Citizens, Inc. ("registrant");

2.Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
  By:
/s/ Jon Stenberg
    Jon Stenberg
    Chief Executive Officer and President
Date: August 7, 2025


EX-31.2 3 cia-2025630x10qex312.htm EX-31.2 Document

EXHIBIT 31.2

Certification of Chief Financial Officer Under
Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeffery P. Conklin, Vice President, Chief Financial Officer, Chief Investment Officer and Treasurer, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Citizens, Inc. ("registrant");

2.Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
By: /s/ Jeffery P. Conklin
  Jeffery P. Conklin
Vice President, Chief Financial Officer,
Chief Investment Officer and Treasurer
Date: August 7, 2025
EX-32.1 4 cia-2025630x10qex321.htm EX-32.1 Document

 EXHIBIT 32.1
 
Certification of Chief Executive Officer of Citizens, Inc. Pursuant to 18 U.S.C. §1350

I, Jon Stenberg, certify that:

In connection with the Quarterly Report on Form 10-Q of Citizens, Inc. (the "Company") for the period ended June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jon Stenberg, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 
  By:
/s/ Jon Stenberg
  Name:  Jon Stenberg
  Title: Chief Executive Officer and President
  Date: August 7, 2025
 
EX-32.2 5 cia-2025630x10qex322.htm EX-32.2 Document

EXHIBIT 32.2
 
Certification of Chief Financial Officer of Citizens, Inc. Pursuant to 18 U.S.C. §1350

I, Jeffery P. Conklin certify that:

In connection with the Quarterly Report on Form 10-Q of Citizens, Inc. (the "Company") for the period ended June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeffery P. Conklin, Vice President, Chief Financial Officer, Chief Investment Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
By: /s/ Jeffery P. Conklin
Name:  Jeffery P. Conklin
Title: Vice President, Chief Financial Officer,
Chief Investment Officer and Treasurer
  Date: August 7, 2025