Summary of Conference Call for Citizens Inc. (CIA) Company Overview - Citizens Inc. is a diversified financial services company providing life, living benefits, and final expense insurance, along with other financial products to individuals and small businesses in the US, Latin America, and Asia [1][4] - The company is based in Austin, Texas, with a significant presence in Puerto Rico and operations in South America and Taiwan [5] Key Financial Metrics - The company has approximately $1.7 billion in assets [6] - In 2024, two-thirds of sales came from the US, while one-third came from international markets [6][7] - Citizens Inc. was noted as the fastest-growing mature life insurance company in the US in 2024 [7] Growth Strategies - The company is focusing on domestic growth strategies in the US, South Central America, and emerging Asian markets [4] - There has been a dramatic increase in the number of independent agents, growing from a few hundred to over 8,000 agents [6][10] - The company has entered the domestic final expense market, which has been a significant driver of growth [11] Operational Challenges - Despite a 49% growth in first-year premiums, the first-quarter net income was lower compared to the previous year due to initial market entry costs [12] - The company is focused on building operational capacity ("building the factory") to support future growth, which involves upfront expenses that will lead to revenue growth in subsequent years [13] International Expansion - Currently, about 10% of in-force revenue comes from Asia, primarily Taiwan, with plans to expand into other Asian markets such as Hong Kong, Thailand, and Indonesia by 2026 [16][17] - The company aims to solidify its growth plans in South America and the Caribbean, targeting countries with low current exposure [17] Product Development - Citizens Inc. is looking to expand its product offerings beyond life insurance to include investment products and living benefits [11][20] - The company plans to diversify its product categories, which currently include life insurance, investment-focused products, and living benefits [22][23] Client Retention and Revenue Streams - The current business model is primarily transactional, with clients typically purchasing one product [20] - Future strategies include expanding product offerings to existing clients to increase revenue per client [20] Conclusion - Citizens Inc. is positioned for growth with a strong focus on expanding its agent network, entering new markets, and diversifying its product offerings, despite facing initial operational challenges and the need for upfront investments [12][15][20]

Financial Performance - Net income before federal income tax decreased to a loss of $1.8 million in 2025 from income of $4.9 million in 2024[141] - Total revenues decreased to $55,652,000 in Q1 2025 from $57,712,000 in Q1 2024, primarily due to a $3.9 million decrease in investment related gains[167] - Income before federal income tax for the Life Insurance segment dropped to $243,000 in Q1 2025 from $5,800,000 in Q1 2024, mainly due to decreased investment related gains[188] - Home Service Insurance segment income before federal income tax fell to $0.12 million in Q1 2025 from $0.62 million in Q1 2024, a decrease of 80.6%[200] Premium Revenue - Total premium revenues increased by $1.1 million in the three months ended March 31, 2025, but were offset by a $2.5 million increase in total insurance benefits paid or provided[142] - Direct premium revenue increased 8% in the three months ended March 31, 2025, to $42.4 million from $39.1 million in the same period in 2024[147] - Direct first year premiums increased 49%, to $8.8 million in the three months ended March 31, 2025, compared to $5.9 million in the same period in 2024[148] - Total life and A&H premiums increased to $39,797,000 in Q1 2025 from $38,675,000 in Q1 2024, reflecting strong first year sales[168] - Total international premiums increased to $28.79 million in Q1 2025 from $27.80 million in Q1 2024, representing a growth of 3.6%[194] - Domestic premiums surged to $5.79 million in Q1 2025, up from $2.32 million in Q1 2024, marking a significant increase of 149.5%[194] Insurance Benefits and Claims - Total insurance benefits paid increased to $37,575,000 in Q1 2025 from $35,120,000 in Q1 2024, with claims and surrenders rising to $40,098,000[174] - Claims and surrenders benefits increased by 21% from $33,113,000 in Q1 2024 to $40,098,000 in Q1 2025, influenced by matured endowment policies[175] - Total claims and surrenders in the Life Insurance segment rose to $34.14 million in Q1 2025, compared to $27.36 million in Q1 2024, an increase of 24.8%[196] - Death claim benefits decreased to $1.27 million in Q1 2025 from $1.99 million in Q1 2024, a decline of 36.3%[196] Investment Performance - Investment-related losses included a $3.1 million loss in the quarter ended March 31, 2025, related to BlackRock's write-down of its Global Renewable Power Fund III[140] - Net investment income decreased slightly to $17,377,000 in Q1 2025 from $17,487,000 in Q1 2024, with an annualized yield on average invested assets at 4.52%[170] - Investment related losses of $2,894,000 were recorded in Q1 2025, compared to gains of $963,000 in Q1 2024, primarily due to a non-cash write-down of Blackrock ESG investment[171] - Investment-related losses amounted to $2.7 million in Q1 2025, compared to gains of $1.1 million in Q1 2024, indicating a negative shift in investment performance[194] Operating Expenses - Operating expenses increased due to continued investment in business growth and higher costs associated with the equity compensation program[154] - Other general expenses rose by 12% to $12,693,000 in Q1 2025 from $11,338,000 in Q1 2024, driven by strategic growth initiatives[181] - Other general expenses increased due to costs associated with continued investment in the growth of CICA domestic, impacting overall profitability[198] Assets and Capital - Total assets amounted to $1.7 billion, with total direct insurance in force of $5.28 billion and total investments of $1.4 billion[142] - The carrying value of fixed maturity securities increased to $1.25 billion as of March 31, 2025, from $1.22 billion at December 31, 2024, reflecting a growth of 2.0%[211] - Cash and cash equivalents decreased to $18.36 million as of March 31, 2025, down from $29.27 million at December 31, 2024, a decline of 37.4%[210] - The company had no debt as of March 31, 2025, and anticipates meeting its cash needs through cash generated by insurance operations and invested assets[225] - The company has adequate capital resources and the ability to obtain additional capital to support liquidity requirements[234] Regulatory and Strategic Actions - The company is investigating options to reduce regulatory capital and liquidity risk due to rapid growth in first-year sales exceeding current resources[244] - Regulatory capital requirements may affect the company's ability to access capital from insurance operations, necessitating potential cash contributions to subsidiaries[242] - A coinsurance agreement with RGA was entered into in Q2 2024, ceding 50% of final expense business to alleviate expense strain[240] - As of March 31, 2025, domestic insurance subsidiaries were above the required minimum risk-based capital (RBC) levels, with CICA Domestic above 350%[243] - CICA International exceeded the required minimum capital of $750,000 and maintained a premium to surplus ratio of 7 to 1 as of March 31, 2025[245] Cash Flow - Cash provided by operating activities was $0.7 million for the three months ended March 31, 2025, indicating a positive cash flow from operations[227] - Net cash outflows from investing activities totaled $11.4 million for the three months ended March 31, 2025, with $17.5 million spent on fixed maturity securities[228] Future Outlook - The company anticipates continued increases in matured endowment benefits throughout 2025, following a $6.6 million rise in Q1 2025[176] - Approximately 18% of the endowments in force will mature in the next five years, totaling about 6% of the in-force business as of March 31, 2025[236] - Surrender benefits slightly increased in the first three months of 2025, continuing a trend of higher-than-usual surrenders over the last several years[237] - Death benefit payments decreased in the three months ended March 31, 2025, indicating a potential liquidity concern due to higher than expected mortality rates[238] - CICA Domestic sales have significantly increased since Q3 2023, leading to higher commission payments and liquidity concerns[239]

Financial Performance - Total revenues for Q1 2025 were $55.7 million, down from $57.7 million in Q1 2024, while adjusted total revenues increased to $58.5 million from $56.7 million[6]. - The company reported a loss before federal income tax of $1.8 million in Q1 2025, a decline from a profit of $4.9 million in Q1 2024, primarily due to a $3.9 million decrease in investment-related gains[10]. - Adjusted after-tax operating income was $1.0 million, or $0.02 per fully diluted Class A share, down from $3.6 million, or $0.07 per share, in the prior year[11]. - For the three months ended March 31, 2025, the company reported an adjusted income before federal income tax of $1,107,000, a decrease of 72% compared to $3,957,000 in the same period of 2024[34]. - The net loss for the three months ended March 31, 2025, was $1,623,000, compared to a net income of $4,542,000 in the same period of 2024[36]. - The adjusted after-tax operating income for the three months ended March 31, 2025, was $1,005,000, down 72% from $3,649,000 in 2024[37]. - The basic and diluted adjusted earnings per share of Class A common stock were $0.02 for the three months ended March 31, 2025, compared to $0.07 in 2024[37]. Revenue and Premium Growth - Direct first year life and accident & health (A&H) premiums rose by 49% in Q1 2025 compared to the same quarter last year, driven by new product sales and an expanded agent network[7]. - Total direct insurance in force reached a record $5.28 billion, representing a 5% increase from the previous year[7]. - The number of producing agents increased by 50% since March 31, 2024, contributing to premium growth[7]. Expenses and Cash Flow - Total benefits and expenses rose to $57.4 million in Q1 2025, up from $52.8 million in the prior year, mainly due to higher insurance benefits paid[9]. - The company maintained positive net cash from operating activities of $0.7 million in Q1 2025, continuing a trend of positive cash flow since 2004[14]. - Net investment income for Q1 2025 was $17.4 million, slightly down from $17.5 million in the same quarter last year[13]. Shareholder Equity and Book Value - Book value per Class A share increased to $4.37 at March 31, 2025, up 11% from $3.94 a year earlier[11]. - Stockholders' equity at the end of the period was $218,139,000, an increase of 11.7% from $195,183,000 in 2024[39]. - The book value per Class A common share - diluted increased to $4.37 in 2025 from $3.94 in 2024, representing an increase of 10.9%[39]. - The company reported accumulated other comprehensive income (loss) of $(87,074,000) as of March 31, 2025, compared to $(99,770,000) in 2024[39]. Forward-Looking Statements - The company anticipates future performance and operational strategies may be impacted by various risks and uncertainties, as outlined in their forward-looking statements[40]. - The company has no obligation to update any forward-looking statements as a result of new information or future events[40]. Share Information - The weighted average shares of Class A outstanding - diluted increased to 50,912 in 2025 from 50,561 in 2024[37].

International Operations and Risks - Approximately 67% of the company's direct insurance premiums are generated from policyholders in foreign countries, primarily in Latin America and the Pacific Rim [76]. - The company faces significant international regulatory risks, as it does not register to do business in foreign countries and relies on independent consultants for sales [77]. - The company only sells U.S. dollar-denominated products, which may be adversely affected by currency control laws in foreign countries [81]. - Political instability in many operating countries could negatively impact policyholder premium payments and new product sales [82]. - The company has developed an anti-money laundering program to mitigate risks associated with high-risk jurisdictions, such as Colombia and Venezuela [86]. Financial and Liquidity Risks - Higher than expected policyholder claims related to unforeseen events, such as pandemics, could severely disrupt operations and financial condition [95]. - Unanticipated early policyholder withdrawals or surrenders pose a liquidity risk, potentially leading to increased volatility in results [96]. - The company faces potential liquidity risks if policyholders with mature policies opt for lump sum distributions at higher levels than anticipated, particularly with a significant amount of aging endowment products reaching maturity [97]. - Unanticipated early withdrawals or greater than expected lump sum distributions could force the company to sell investments or seek third-party financing, adversely affecting liquidity and financial condition [98]. - The company is subject to regulatory risks that could impact cash flow and financial condition, including the need to maintain minimum capital and surplus requirements [104][109]. - A capital maintenance agreement with the Colorado Division of Insurance requires the company to ensure that CICA Domestic's Risk-Based Capital (RBC) remains above 350%, which could strain capital resources [111]. - The company pays advance commissions on some insurance products, which increases expenses and reduces statutory capital until commissions are recouped, potentially leading to cash flow strain [112]. - The company’s ability to pay dividends or service payments is dependent on its insurance subsidiaries, which are subject to regulatory approval and minimum capital requirements [113]. Market and Economic Conditions - Economic conditions such as inflation or recession could lead to decreased new sales and increased lapses, adversely affecting premium revenue and benefit expenses [120]. - Market volatility, particularly declining equity markets, negatively impacted the fair market value of equity securities, leading to investment-related losses that adversely affected GAAP operating revenue and profitability [122]. - Low or declining interest rates have led to reduced net investment income and low yields due to reinvestment in lower interest rate bonds [122]. - Rising interest rates may reduce the market values of fixed income assets, leading to material unrealized losses and negatively affecting stockholders' equity [122]. Distribution and Sales Risks - The company relies on a small number of foreign agencies for distribution, which may impact its ability to attract effective sales representatives [83]. - The company relies heavily on independent marketing agencies for product distribution, and any loss of these relationships could negatively impact sales and policy retention [100]. - A downgrade by rating agencies could limit the ability to attract independent insurance agencies and reduce product attractiveness to consumers [119]. Technology and Cybersecurity Risks - The company relies on its technology systems to operate its business, and any failure in these systems could materially adversely impact business operations and financial condition [131]. - Significant resources are devoted to maintaining and enhancing information technology systems to protect against cybersecurity risks [128]. - The company may face litigation and financial losses from cyber risks that exceed its insurance policy limits [130]. Shareholder and Regulatory Considerations - The company has approximately 83,000 shareholders, with about 40% holding less than 100 shares each, which may complicate obtaining approval for corporate actions [132]. - The Class A common stock is not registered in any foreign country, which could negatively impact its price if foreign regulatory authorities impose penalties [133]. - Insurance laws in the jurisdictions where the company's insurance subsidiaries are domiciled may discourage takeovers and business combinations that shareholders might consider beneficial [134].

Revenue Growth - Total annual premium revenue grew for the first time since 2017, with insurance issued exceeding $1.1 billion, a 54% increase from 2023 [3] - Total revenues for the full year 2024 were $245.0 million, up from $240.7 million in 2023, while adjusted total revenues increased to $247.6 million from $239.9 million [6] - Direct first year life and A&H premiums increased by 71% in 2024, driven by growth in both domestic and international markets [10] - Total direct insurance in force reached over $5.2 billion at December 31, 2024, marking a significant increase from $4.9 billion in 2023 [7] - The global network of producing agents increased by 72% since December 31, 2023, contributing to sales growth [7] Income and Profitability - Income before federal income tax for the full year 2024 was $15.0 million, down from $26.2 million in 2023, primarily due to a non-cash decrease in investment related gains [10] - Net income for the full year 2024 was $14.9 million, or $0.29 per fully diluted Class A share, compared to $24.4 million, or $0.48 per share in 2023 [10] - Income before federal income tax for the Life Insurance Segment was $5,258, a decline of 36.0% compared to $8,226 in 2023 [27] Cash Flow and Liquidity - Positive net cash provided by operating activities was $31.9 million in 2024, compared to $22.1 million in 2023, reflecting consistent liquidity strength [10] Book Value and Equity - Book value per Class A share increased by 21% over the year-ago to $4.21, while adjusted book value per share excluding AOCI increased by 5% to $6.14 [10] - Book value per Class A common share, diluted, increased to $4.21, up from $3.47 in 2023, reflecting a growth of 21.3% [33] - Stockholders' equity, excluding accumulated other comprehensive income (AOCI), was $306,320, compared to $290,284 in 2023, marking an increase of 5.5% [33] Segment Performance - Total benefits and expenses in the Life Insurance Segment increased to $44,055, up from $43,083, indicating a rise of 2.3% [27] - Total revenues for the Life Insurance Segment decreased to $49,313, down 3.9% from $51,309 in 2023 [27] - Insurance premiums in the Life Insurance Segment rose to $38,522, a 6.9% increase from $36,017 in the same period last year [27] - The Home Service Insurance Segment reported total revenues of $13,977, down 8.6% from $15,295 in 2023 [27] Future Outlook - The company plans to introduce 2 to 3 new products or major product enhancements, achieving product enhancement and two new products in 2024 [10] - The company anticipates continued focus on operational strategy and market expansion, with forward-looking statements indicating potential growth opportunities [34]

Financial Performance - Total revenues for the three months ended September 30, 2024, increased to $61,731,000, up from $59,390,000 in the same period of 2023, representing a growth of 3.8%[22] - Net income for the three months ended September 30, 2024, was $2,790,000, slightly up from $2,698,000 in the same period of 2023, indicating a growth of 3.4%[22] - Total revenues for the nine months ended September 30, 2024, reached $181,527 thousand, an increase from $173,831 thousand in the same period of 2023, representing a growth of approximately 4.0%[130] - Life insurance premiums for the nine months ended September 30, 2024, were $91,667 thousand, compared to $86,128 thousand for the same period in 2023, reflecting a growth of about 6.0%[130] - The net investment income for the nine months ended September 30, 2024, was $52,404 thousand, up from $51,687 thousand in the prior year, indicating a slight increase of approximately 1.4%[130] Assets and Liabilities - Total assets as of September 30, 2024, amounted to $1,735,809,000, an increase from $1,668,928,000 at the end of 2023, marking a growth of 4.0%[21] - Total liabilities increased to $1,528,236,000 as of September 30, 2024, compared to $1,496,799,000 at the end of 2023, reflecting a rise of 2.1%[21] - The company’s retained earnings increased to $53,441,000 as of September 30, 2024, up from $42,150,000 at the end of 2023, indicating a growth of 26.8%[21] Investments - The company reported a total of $1,445,109,000 in total investments as of September 30, 2024, up from $1,402,347,000 in 2023, which is an increase of 3.0%[20] - Fixed maturity securities accounted for 86.2% of total cash and invested assets, totaling $1,273,497 thousand as of September 30, 2024[42] - The total cash and invested assets increased to $1,477,491 thousand as of September 30, 2024, compared to $1,429,344 thousand at the end of 2023[42] Income and Expenses - The total comprehensive income for the nine months ended September 30, 2024, was $34,763,000, compared to $24,073,000 in 2023, reflecting an increase of 44.1%[22] - The total benefits and expenses for the nine months ended September 30, 2024, were $156,431 thousand, an increase from $154,431 thousand in the same period of 2023[130] - The company accrued approximately $5 million in potential liabilities related to a trade secret lawsuit, pending the outcome of an appeal[111] Insurance Operations - The Life Insurance segment issued endowment contracts and ordinary whole life insurance, while the Home Service Insurance segment focused on middle- and lower-income markets[123][124] - The company entered into a coinsurance agreement with RGA Reinsurance Company, allowing RGA to reinsure 50% of its newly written final expense business, enhancing capacity for growth[101] - The Home Service Insurance segment reported a loss of $80,000 for the three months ended September 30, 2024, compared to a loss of $443,000 in the same period of 2023[190] Policy Benefits and Reserves - The present value of expected future policy benefits for the Life Insurance segment was $1,226,514 at the end of the period, compared to $1,168,472 at the beginning of the year, indicating an increase of about 5%[84] - The total life insurance reserves increased to $1,236,873,000 as of September 30, 2024, from $1,147,601,000 in the previous year, marking an increase of approximately 7.8%[89] - Future policy benefit reserves increased due to higher sales and persistency, reflecting the liability for expected future policy benefits[183] Cash Flow and Operating Activities - The company reported a net cash provided by operating activities of $21,092 thousand for the nine months ended September 30, 2024, an increase from $15,444 thousand in the prior year, marking a growth of 36.1%[26] - The company experienced a net cash used in investing activities of $13,334 thousand for the nine months ended September 30, 2024, compared to $18,471 thousand in 2023, showing a reduction of 27.8%[27] Market and Growth Strategies - The company continues to focus on expanding its market presence and enhancing its product offerings to drive future growth[88] - First-year premiums in the Life Insurance segment nearly doubled quarter-over-quarter and year-to-date compared to 2023, driven by the expansion of domestic distribution[148] - The Life Insurance segment growth was driven by new domestic final expense products, which accounted for over 50% of insurance issued, and international whole life products, which made up 68% of total international insurance issued[170]

Financial Performance - Total revenues increased 4% to $61.7 million in Q3 2024, compared to $59.4 million in Q3 2023[4] - Net income for Q3 2024 was $2.8 million, or $0.05 per fully diluted Class A share, compared to $2.7 million, or $0.05 per share, in Q3 2023[9] - Income before federal income tax for the three months ended September 2024 was $3,037,000, down from $4,641,000 for the same period in 2023, representing a decrease of 34.5%[23] - Adjusted income before federal income tax for the nine months ended September 2024 was $13,301,000, compared to $19,041,000 for the same period in 2023, reflecting a decline of 30.4%[23] Insurance Metrics - Insurance issued reached a record $307.6 million in Q3 2024, a 75% increase year-over-year, marking the fourth consecutive quarter of record insurance issued[3] - Direct first year life and A&H premiums increased 70% to $8.8 million in Q3 2024, continuing eight consecutive quarters of year-over-year growth[4] - Total direct insurance in force reached $5.2 billion as of September 30, 2024, up from $4.8 billion a year earlier[3] Agent Growth - The number of producing agents increased by 86% since December 31, 2023, and by 57% since March 31, 2024[3] Cash Flow and Equity - Positive net cash provided by operating activities was $9.7 million in Q3 2024, with the company maintaining positive cash flow since 2004[11] - Stockholders' equity as of September 2024 was $207,573,000, an increase from $152,747,000 as of September 2023, indicating a growth of 36%[24] - The company’s stockholders' equity, excluding accumulated other comprehensive income (AOCI), was $302,256,000 as of September 2024, compared to $279,414,000 in September 2023, reflecting a growth of 8.1%[24] Book Value - Book value per Class A share increased 35% to $4.16 compared to the same quarter last year[4] - Book value per Class A common share, diluted, excluding AOCI, increased to $6.06 as of September 2024 from $5.63 as of September 2023, marking an increase of 7.6%[24] Future Outlook - The company aims to increase first year premium revenues by at least 25% in 2024, with a year-to-date increase of 66% as of September 30, 2024[5] - The company anticipates continued operational strategy adjustments and capital expenditures in the upcoming quarters, although specific projections are not guaranteed[25] - The company has not provided specific guidance for future performance but acknowledges potential risks and uncertainties that may affect outcomes[25] Legal and Investment - Legal fee accruals for the nine months ended September 2024 included a charge of $3,500,000, which was not present in the same period in 2023[23] - The company reported investment-related gains of $1,537,000 for the nine months ended September 2024, compared to losses of $477,000 for the same period in 2023[23] Property Insurance Performance - The company’s property insurance business reported a loss of $74,000 for the nine months ended September 2024, compared to a loss of $1,164,000 for the same period in 2023, indicating an improvement[23]

Financial Performance - Total revenues increased by 6% to $62.1 million in Q2 2024, up from $58.5 million in the same quarter last year[3] - Net income for Q2 2024 was $4.0 million, or $0.08 per fully diluted Class A share, down from $6.1 million, or $0.12 per share in Q2 2023[6] - Adjusted income before federal income tax for the three months ended June 2024 was $7,131,000, compared to $6,400,000 for the same period in 2023, representing an increase of 11.5%[17] - The total income before federal income tax for the six months ended June 2024 was $8,227,000, down from $12,759,000 for the same period in 2023, a decrease of 35.5%[17] Insurance and Premiums - Insurance issued reached a record $295.2 million in Q2 2024, an 86% increase compared to Q2 2023, driven by new products and an increase in producing agents[2] - Direct first year life and A&H premiums increased by 85% to $7.9 million in Q2 2024, marking the seventh consecutive quarter of year-over-year growth[3] - The company aims to increase first year premium revenues by at least 25% and expand its global network of producing agents by at least 20% in 2024[4] Assets and Equity - Cash and cash equivalents stood at $26.3 million with no debt as of June 30, 2024[8] - Stockholders' equity, excluding accumulated other comprehensive income (AOCI), increased to $299,393,000 as of June 2024, up from $275,209,000 as of March 2023, reflecting a growth of 8.5%[18] - Book value per Class A share increased by 30% to $3.85 compared to the same quarter last year[3] - Book value per Class A common share, diluted, excluding AOCI, rose to $6.02 as of June 2024, compared to $5.55 as of March 2023, indicating an increase of 8.5%[18] Expenses and Losses - Total benefits and expenses increased by $6.3 million to $58.8 million in Q2 2024, primarily due to higher matured endowments and increased general expenses[5] - The company reported a loss of $3,500,000 related to legal fee accrual for the three months ended June 2024[17] - Investment-related losses for the three months ended June 2024 were $(253,000), compared to gains of $703,000 for the same period in 2023[17] Operational Strategy and Future Outlook - The company anticipates continued growth in operational strategy and capital expenditures, although specific future performance is subject to risks and uncertainties[19] - The company has not provided specific guidance for future earnings but emphasizes the importance of monitoring market conditions and regulatory changes[19] - The company has no obligation to update forward-looking statements, which may involve risks and uncertainties that could affect actual outcomes[19] Agent Network - The global network of producing agents increased by 45% since December 31, 2023, with a 21% increase in Q2 2024 alone[2] - The accumulated other comprehensive income (loss) decreased from $(128,363,000) as of March 2023 to $(107,924,000) as of June 2024, indicating an improvement in comprehensive income[18]

Financial Performance - Total assets reached $1.7 billion, with total investments of $1.4 billion, and fixed maturity securities comprised 88% of total investments [123]. - Net income before federal income taxes decreased to $3.3 million for the three months ended June 30, 2024, down from $6.0 million in the same period of 2023 [121]. - Total revenues increased to $62,084,000 for the three months ended June 30, 2024, up from $58,527,000 in the prior year, and $119,796,000 for the six months ended June 30, 2024, compared to $114,441,000 [128]. - The company reported a net income per share of Class A common stock of $0.08 and $0.17 for the three and six months ended June 30, 2024, respectively [123]. - Total income before federal income tax for the three months ended June 30, 2024, was $3.3 million, a decrease from $6.0 million in the same period of 2023 [143]. Insurance Segment Performance - First year premiums in the Life Insurance segment more than doubled quarter-over-quarter and almost doubled year-to-date compared to 2023 [113]. - Total insurance issued increased by 73% in the six months ended June 30, 2024, compared to the prior year period, driven by new products and expanded distribution channels [125]. - Life Insurance segment growth driven by strong sales of new domestic final expense products, accounting for over 50% of insurance issued through June 30, 2024 [126]. - Life Insurance segment premiums increased by 10% to $31.6 million for the three months ended June 30, 2024, compared to $28.8 million in 2023, driven by a 103% increase in first-year premiums [146]. - International whole life product sales represented 65% of total insurance issued internationally in the Life Insurance segment for the six months ended June 30, 2024 [126]. Investment Income - Net investment income increased by 2% for both the three and six months ended June 30, 2024, reaching $18 million and $36 million respectively [117]. - Net investment income for the three months ended June 30, 2024, was $17,540,000, compared to $17,241,000 in the prior year, and $35,027,000 for the six months ended June 30, 2024, compared to $34,315,000 [131]. - Net investment income rose by 2% to $13.8 million for the three months ended June 30, 2024, compared to $13.5 million in the same period of 2023 [149]. Claims and Benefits - Claims and surrenders expenses included a $1.8 million increase in benefits paid due to higher matured endowments reaching their contractual maturity dates [121]. - Total insurance benefits paid increased to $36,029,000 for the three months ended June 30, 2024, from $34,049,000 in the prior year, and $71,149,000 for the six months ended June 30, 2024, compared to $65,358,000 [133]. - Claims and surrenders totaled $34,530,000 for the three months ended June 30, 2024, compared to $32,776,000 in the prior year, and $67,643,000 for the six months ended June 30, 2024, compared to $63,075,000 [134]. - Death benefit payments increased in the first half of 2024 due to a significant rise in insurance issued, while surrender benefits slightly decreased [180]. - The company reported a decrease in death claim benefits to $1.2 million for the three months ended June 30, 2024, from $1.4 million in 2023 [151]. Operating Expenses - Operating expenses increased due to the accrual of $3.5 million in legal fees related to a trade secret lawsuit [119]. - The company experienced a slight decline in renewal premiums for the six months ended June 30, 2024, due to high surrenders and matured endowments [146]. Reinsurance and Risk Management - The company entered into a coinsurance agreement with RGA Reinsurance Company to reinsure 50% of its newly written final expense business [113]. - Reinsurance ceded premiums increased due to a new coinsurance agreement with RGA entered in the second quarter of 2024 [130]. - The company is closely monitoring policyholder behavior patterns to manage liquidity risks associated with commission advances and policy surrenders [182]. Capital and Liquidity - The company has no debt as of June 30, 2024, and liquidity is primarily derived from cash flow from operations and marketable securities [172]. - The company renewed its Credit Facility with Regions Bank on May 3, 2024, providing additional liquidity for short-term or long-term needs [176]. - Citizens may need to contribute capital to CICA Domestic to maintain the required RBC ratio if growth exceeds current resources, impacting overall liquidity [185]. - Approximately 18% of endowments, representing about 6% of in-force business, are set to mature within the next five years, posing potential liquidity risks if policyholders opt for lump sum distributions [181]. Investment Portfolio - The carrying value of fixed maturity securities was $1.21 billion as of June 30, 2024, down from $1.24 billion at December 31, 2023, indicating a slight reduction in investment portfolio size [161]. - Cash and cash equivalents decreased to $26.34 million as of June 30, 2024, from $26.99 million at December 31, 2023, reflecting fluctuations due to operating and investing activities [162]. - Other long-term investments increased by $9.4 million as of June 30, 2024, attributed to additional funding and increases in fair market value of limited partnership investments [162]. - The Company’s municipal bond portfolio included $277.2 million in obligations of states and political subdivisions as of June 30, 2024, down from $287.2 million at December 31, 2023 [163]. - The total fair value of the company's municipal bonds in Texas was $61,564,000, while in California it was $42,406,000 as of June 30, 2024 [168][169].

Revenue and Growth - Insurance issued increased 61% to $274.5 million in Q1 2024 compared to the same period in 2023, driven by new products and an increase in producing agents[4] - Total revenues increased 3% to $57.7 million in Q1 2024, up from $55.9 million in the year-ago quarter[5] - First year life and A&H premiums increased 42% to $5.9 million in Q1 2024, marking the sixth consecutive quarter of year-over-year growth[4] - The global network of producing agents increased by 20% at the end of Q1 2024 compared to December 31, 2023[4] - Citizens plans to introduce 2 to 3 new products or major product enhancements in 2024[4] Financial Performance - Net income for Q1 2024 was $4.5 million, or $0.09 per fully diluted Class A share, down from $4.9 million, or $0.10 per share in Q1 2023[7] - Cash and cash equivalents stood at $23.2 million with no debt as of March 31, 2024[10] - Book value per Class A share increased 28% to $3.94 compared to the year-ago quarter[4] - Positive net cash provided by operating activities was $6.8 million in Q1 2024, continuing a trend of positive cash flow since 2004[10] Investment Performance - The average pre-tax yield on the investment portfolio was 4.6% in Q1 2024, an increase of 9 basis points from the prior year[8]