[Executive Summary](index=1&type=section&id=Executive%20Summary) Citizens, Inc. achieved strong Q2 2025 results, marked by consistent premium growth, record insurance in force, and significant agent network expansion [Second Quarter 2025 Financial Results Overview](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Results%20Overview) Citizens, Inc. achieved strong Q2 2025 results, marked by consistent first-year premium growth, record direct insurance in force, and significant agent network expansion - Strategic roadmap is delivering tangible results, marked by **11 consecutive quarters of year-over-year growth in first year premiums**[3](index=3&type=chunk) - Company expects **revenue and profit growth for the full year 2026**, supported by its robust global business model, competitive advantages in expanding niche markets, rapid sales force expansion, and expertise in profitable product development[4](index=4&type=chunk) Key Operational Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in billions) | Q2 2024 (in billions) | Change | | :-------------------------------- | :-------------------- | :-------------------- | :----- | | Producing Agents (YoY increase) | N/A | N/A | 53% | | Producing Agents (from 2024 year-end) | N/A | N/A | 28% | | Total Direct Insurance in Force | $5.35 | N/A | Highest-ever | [Recent Business Highlights](index=1&type=section&id=Recent%20Business%20Highlights) Citizens, Inc. achieved record operational and financial results in Q2 2025, driven by agent network expansion, increased insurance in force, revenues, and net income [Operational and Financial Achievements](index=1&type=section&id=Operational%20and%20Financial%20Achievements) Citizens, Inc. achieved record operational and financial results in Q2 2025, with significant growth in its agent network, total direct insurance in force, revenues, and net income Q2 2025 Key Financial Highlights | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change | | :----------------------------------- | :-------------------- | :-------------------- | :----- | | Total Revenues | $65.1 | $62.1 | +4.8% | | Net Income | $6.5 | $4.0 | +62.5% | | Income per fully diluted Class A share | $0.13 | $0.08 | +62.5% | | Book value per Class A share | $4.56 | N/A | +18% YoY | | Total Direct Insurance in Force (in billions) | $5.35 | $5.12 | +4.4% YoY | | Direct First Year Life & A&H Premiums | N/A | N/A | +20% YoY | | Income before federal income tax | $6.9 | $3.3 | +109.1% | | Adjusted income before federal income tax | $4.5 | $7.1 | -36.7% | - Record number of agents: global network of producing agents increased **53% since June 30, 2024**, and **28% from 2024 year-end**[6](index=6&type=chunk)[7](index=7&type=chunk) - Income before federal income tax increase was driven by higher life insurance premiums, a **$2.7 million increase in investment-related gains**, and lower general expenses due to a **$3.5 million legal fee accrual** in the prior year quarter (no comparable expense in current quarter)[7](index=7&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) Detailed financial results for Q2 2025 show increased revenues and net income, alongside improved balance sheet metrics, despite some adjusted profitability declines [Revenue and Premium Performance](index=2&type=section&id=Revenue%20and%20Premium%20Performance) Total revenues increased in Q2 2025, driven by higher direct first-year life and A&H premiums, increased renewal premiums, and significant investment-related gains Q2 2025 Revenue and Premium Data | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change | | :----------------------------------- | :-------------------- | :-------------------- | :----- | | Total Revenues | $65.1 | $62.1 | +4.8% | | Adjusted Total Revenues (excl. investment gains/losses) | $62.7 | $62.3 | +0.6% | | Direct First Year Life & A&H Premiums | N/A | N/A | +20% YoY | | Direct Renewal Premiums | $37.0 | $36.0 | +2.8% | | Investment Related Gains | +$2.7 | N/A | Increase | - Increase in direct first year life and A&H premiums was driven by newer products and an increased number of producing agents[8](index=8&type=chunk) [Benefits and Expenses](index=2&type=section&id=Benefits%20and%20Expenses) Total benefits and expenses decreased in Q2 2025, primarily due to lower general expenses and reduced commissions, partially offset by higher insurance benefits and growth-related costs Q2 2025 Benefits and Expenses | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change | | :-------------------------- | :-------------------- | :-------------------- | :----- | | Total Benefits and Expenses | $58.2 | $58.8 | -1.0% | - Decrease in expenses primarily due to lower other general expenses associated with a legal fee accrual in Q2 2024 and lower commissions due to a coinsurance agreement with RGA Reinsurance Company[9](index=9&type=chunk) - Decreases were partially offset by higher insurance benefits paid or provided due to maturing endowments in the international business and general expenses associated with business growth and higher equity compensation costs[9](index=9&type=chunk) [Profitability and Earnings Per Share](index=2&type=section&id=Profitability%20and%20Earnings%20Per%20Share) Net income and diluted EPS significantly increased in Q2 2025 due to higher premiums, investment gains, and reduced general expenses, though adjusted income metrics decreased from increased insurance benefits Q2 2025 Profitability Metrics | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change | | :----------------------------------- | :-------------------- | :-------------------- | :----- | | Income before federal income tax | $6.9 | $3.3 | +109.1% | | Adjusted income before federal income tax | $4.5 | $7.1 | -36.7% | | Net Income | $6.5 | $4.0 | +62.5% | | Income per fully diluted Class A share | $0.13 | $0.08 | +62.5% | | Adjusted after-tax operating income | $4.2 | $8.6 | -51.1% | | Adjusted income per fully diluted Class A share | $0.08 | $0.17 | -52.9% | - The increase in income before federal income tax was driven by higher life insurance premiums, increased investment-related gains, and a decrease in general expenses due to a prior-year legal fee accrual[10](index=10&type=chunk) - Adjusted income before federal income tax decreased primarily due to increased insurance benefits paid or provided, mainly from higher matured endowments in the international business[10](index=10&type=chunk) [Balance Sheet Highlights](index=2&type=section&id=Balance%20Sheet%20Highlights) Citizens, Inc. maintained a strong balance sheet with **$1.7 billion** in total assets and no debt, achieving significant year-over-year book value per Class A share growth for ten consecutive quarters Q2 2025 Balance Sheet Data | Metric | June 30, 2025 (in billions) | June 30, 2024 (in billions) | Change | | :----------------------------------- | :-------------------------- | :-------------------------- | :----- | | Total Assets | $1.7 | N/A | N/A | | Cash and Cash Equivalents (in millions) | $22.7 | N/A | N/A | | Debt | $0 | $0 | No Debt | | Book value per Class A share | $4.56 | $3.85 | +18% YoY | | Book value per Class A share (excl. AOCI) | $6.22 | $6.02 | +3% YoY | - The Company has achieved **ten consecutive quarters of book value per Class A share growth**[13](index=13&type=chunk) [Investments](index=3&type=section&id=Investments) Investment performance in Q2 2025 saw a slight decrease in net investment income and average pre-tax yield, while fixed maturity securities remained stable [Investment Performance](index=3&type=section&id=Investment%20Performance) Net investment income slightly decreased in Q2 2025, with a marginal dip in average pre-tax yield on the portfolio, while fixed maturity securities remained stable Q2 2025 Investment Data | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change | | :----------------------------------- | :-------------------- | :-------------------- | :----- | | Net Investment Income | $17.2 | $17.5 | -1.7% | | Average Pre-Tax Yield on Portfolio | 4.50% | 4.60% | -0.10 pp | | Fixed Maturity Securities (carrying value, in billions) | $1.2 | N/A | Relatively same as Dec 31, 2024 | [Cash Flow](index=3&type=section&id=Cash%20Flow) Citizens, Inc. maintained positive operating cash flow for H1 2025, continuing a long-term trend, and ended the quarter with a strong cash position and no debt [Operating Cash Flow](index=3&type=section&id=Operating%20Cash%20Flow) Citizens, Inc. maintained positive net cash from operating activities for H1 2025, continuing a trend since 2004, and ended the quarter with a strong cash position and no debt Cash Flow and Liquidity (as of June 30, 2025) | Metric | Value | | :----------------------------------- | :------ | | Net Cash Provided by Operating Activities (6 months, in millions) | $4.2 | | Cash and Cash Equivalents (in millions) | $22.7 | | Debt | $0 | - The Company has had **positive net cash provided by operating activities annually since 2004**[15](index=15&type=chunk) [Upcoming Conference](index=3&type=section&id=Upcoming%20Conference) Citizens management is scheduled to present at the Emerging Growth Virtual Conference on September 24, 2025, with a live webcast available [Emerging Growth Virtual Conference](index=3&type=section&id=Emerging%20Growth%20Virtual%20Conference) Citizens management is scheduled to present at the Emerging Growth Virtual Conference on September 24, 2025, with a live webcast and slide presentation available on the Investor Relations website - Citizens management plans to present at the Emerging Growth Virtual Conference on **September 24, 2025, at 1:45 ET**[16](index=16&type=chunk) - A live, interactive webcast and slide presentation will be accessible on the Company's Investor Relations website under the Events tab and will be archived for future viewing[16](index=16&type=chunk) [About Citizens, Inc.](index=3&type=section&id=About%20Citizens%2C%20Inc.) Citizens, Inc. is a diversified financial services company specializing in life, living benefits, and final expense insurance across two primary segments [Company Overview and Business Segments](index=3&type=section&id=Company%20Overview%20and%20Business%20Segments) Citizens, Inc. is a diversified financial services company specializing in life, living benefits, and final expense insurance, operating through two primary segments: Life Insurance and Home Service Insurance - Citizens, Inc. (NYSE: CIA) is a diversified financial services company providing life, living benefits and final expense insurance and other financial products[17](index=17&type=chunk) - The company operates two primary segments: Life Insurance (international U.S. Dollar denominated life insurance and domestic niche final expense products) and Home Service Insurance (final expense life insurance in the U.S. Gulf coast region)[17](index=17&type=chunk) - Products are offered in English, Spanish, Portuguese, and Mandarin, catering to evolving customer needs[17](index=17&type=chunk) [Explanatory Notes on Use of Non-GAAP Measures](index=3&type=section&id=Explanatory%20Notes%20on%20Use%20of%20Non-GAAP%20Measures) This section defines non-GAAP financial measures used by Citizens, Inc. to clarify underlying business trends by excluding non-operating items [Non-GAAP Financial Measures Definitions](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20Definitions) This section defines non-GAAP financial measures used by Citizens, Inc. to provide a clearer understanding of underlying business trends by excluding discrete non-operating events and items - Non-GAAP measures are used to improve understanding of underlying business trends by adjusting for discrete events and items not indicative of operating trends[18](index=18&type=chunk) - Adjusted Revenues exclude investment related gains (losses) to evaluate revenues generated by core business activities[19](index=19&type=chunk) - Adjusted Income Before Federal Income Tax, Adjusted After-Tax Operating Income, Adjusted Earnings Per Share, and Adjusted Book Value Per Class A Common Share are defined to exclude items like investment related gains/losses, ceased business income/loss, legal fee accruals, and AOCI to enhance comparability and evaluate underlying profitability/book value growth[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) [Selected Consolidated Financial Data](index=4&type=section&id=Selected%20Consolidated%20Financial%20Data) Consolidated financial data for Q2 2025 shows increases in total assets, stockholders' equity, revenues, net income, and book value per share [Consolidated Financial Performance](index=4&type=section&id=Consolidated%20Financial%20Performance) Consolidated financial data for Q2 2025 shows increases in total assets, stockholders' equity, total revenues, net income, and book value per share Selected Consolidated Financial Data (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change | | :------------------------------------ | :----------------- | :----------------- | :----- | | **Balance sheet data** | | | | | Total assets | $1,712.5 | $1,662.5 | +3.0% | | Total liabilities | $1,483.5 | $1,471.0 | +0.8% | | Total stockholders' equity | $229.0 | $191.5 | +19.6% | | Total direct insurance in force | $5,347.0 | $5,119.9 | +4.4% | | **Operating items** | | | | | Insurance premiums | $43.4 | $42.6 | +1.9% | | Net investment income | $17.2 | $17.5 | -2.1% | | Investment related gains (losses), net | $2.4 | $(0.3) | N/A | | Total revenues | $65.1 | $62.1 | +4.8% | | Claims and surrenders | $40.2 | $34.5 | +16.5% | | Other general expenses | $13.5 | $16.6 | -19.2% | | Total benefits and expenses | $58.2 | $58.8 | -1.0% | | Income (loss) before federal income tax | $6.9 | $3.3 | +109.4% | | Federal income tax expense (benefit) | $0.5 | $(0.7) | N/A | | Net income (loss) | $6.5 | $4.0 | +63.1% | | **Per share data** | | | | | Book value per share | $4.56 | $3.85 | +18.4% | | Diluted income (loss) per Class A share | $0.13 | $0.08 | +62.5% | [Definition of Reported Segments](index=5&type=section&id=Definition%20of%20Reported%20Segments) Citizens, Inc. operates two primary insurance segments: Life Insurance and Home Service Insurance, offering diverse products across various markets [Segment Overview](index=5&type=section&id=Segment%20Overview) Citizens, Inc. operates two primary insurance segments: Life Insurance, offering international and domestic products, and Home Service Insurance, focused on final expense policies in the U.S. Gulf coast - The Life Insurance segment issues U.S. dollar-denominated ordinary whole life and endowment policies predominantly to non-U.S. residents and sells whole life final expense, living benefits, and critical illness products domestically[26](index=26&type=chunk) - The Home Service Insurance segment provides final expense life insurance policies marketed to middle- and lower-income households and whole life products in Louisiana, Mississippi, and Arkansas[27](index=27&type=chunk) [Selected Segment Financial Data](index=5&type=section&id=Selected%20Segment%20Financial%20Data) Selected segment financial data highlights performance for Life Insurance and Home Service Insurance, detailing asset, revenue, and profitability trends [Life Insurance Segment Performance](index=5&type=section&id=Life%20Insurance%20Segment%20Performance) The Life Insurance segment reported increased total assets, insurance premiums, and revenues in Q2 2025, leading to higher income before federal income tax, despite slightly lower net investment income Life Insurance Segment Financial Data (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change | | :------------------------------------ | :----------------- | :----------------- | :----- | | Total assets | $1,311.1 | $1,263.5 | +3.8% | | Insurance premiums | $32.6 | $31.6 | +3.3% | | Net investment income | $13.4 | $13.8 | -3.0% | | Investment related gains (losses), net | $2.6 | $(0.3) | N/A | | Total revenues | $50.8 | $47.4 | +7.3% | | Claims and surrenders | $35.2 | $29.2 | +20.8% | | Total benefits and expenses | $42.6 | $39.9 | +6.9% | | Income (loss) before federal income tax | $8.1 | $7.5 | +9.0% | [Home Service Insurance Segment Performance](index=5&type=section&id=Home%20Service%20Insurance%20Segment%20Performance) The Home Service Insurance segment saw slight decreases in premiums and revenues in Q2 2025, yet increased income before federal income tax, supported by higher net investment income Home Service Insurance Segment Financial Data (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change | | :------------------------------------ | :----------------- | :----------------- | :----- | | Total assets | $365.4 | $357.7 | +2.1% | | Insurance premiums | $10.7 | $11.0 | -1.9% | | Net investment income | $3.6 | $3.5 | +1.9% | | Investment related gains (losses), net | $(0.2) | $0.02 | N/A | | Total revenues | $14.1 | $14.5 | -2.7% | | Claims and surrenders | $5.0 | $5.4 | -6.8% | | Total benefits and expenses | $12.5 | $13.1 | -4.6% | | Income (loss) before federal income tax | $1.6 | $1.4 | +13.9% | [GAAP to Non-GAAP Reconciliations](index=6&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) This section provides reconciliations of GAAP to non-GAAP financial measures, including adjusted revenues, income, EPS, and book value per share [Reconciliation of Adjusted Total Revenues](index=6&type=section&id=Reconciliation%20of%20Adjusted%20Total%20Revenues) Adjusted total revenues, excluding investment-related gains/losses, showed a slight increase in Q2 2025, indicating stable core revenue growth Reconciliation of Adjusted Total Revenues (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change | | :------------------------------------ | :----------------- | :----------------- | :----- | | Total revenues | $65.1 | $62.1 | +4.8% | | Less: Investment related gains (losses) | $2.4 | $(0.3) | N/A | | Adjusted total revenues | $62.7 | $62.3 | +0.5% | [Reconciliation of Adjusted Income Before Federal Income Tax](index=6&type=section&id=Reconciliation%20of%20Adjusted%20Income%20Before%20Federal%20Income%20Tax) Adjusted income before federal income tax decreased significantly in Q2 2025, primarily due to excluding investment gains and the absence of a prior-year legal fee accrual benefit Reconciliation of Adjusted Income Before Federal Income Tax (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change | | :------------------------------------ | :----------------- | :----------------- | :----- | | Income (loss) before federal income tax | $6.9 | $3.3 | +109.4% | | Less: Investment related gains (losses) | $2.4 | $(0.3) | N/A | | Less: Property insurance business income (loss) | $0 | $(0.08) | N/A | | Less: Legal fee accrual | $0 | $(3.5) | N/A | | Adjusted income before federal income tax | $4.5 | $7.1 | -36.8% | [Reconciliation of Adjusted After-Tax Operating Income and EPS](index=6&type=section&id=Reconciliation%20of%20Adjusted%20After-Tax%20Operating%20Income%20and%20EPS) Adjusted after-tax operating income and diluted adjusted EPS both decreased substantially in Q2 2025, reflecting the impact of non-GAAP adjustments, including excluded investment gains and prior-year legal fee accrual Reconciliation of Adjusted After-Tax Operating Income (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change | | :------------------------------------ | :----------------- | :----------------- | :----- | | Net income (loss) | $6.5 | $4.0 | +63.1% | | Less: Investment related gains (losses) | $2.4 | $(0.3) | N/A | | Less: Property insurance business income (loss) | $0 | $(0.08) | N/A | | Less: Legal fee accrual | $0 | $(3.5) | N/A | | Income tax impact | $(0.2) | $(0.8) | N/A | | Adjusted after-tax operating income | $4.2 | $8.6 | -50.8% | Adjusted Earnings Per Share of Class A Common Stock (Three Months Ended June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change | | :------------------------------------ | :----------------- | :----------------- | :----- | | Adjusted after-tax operating income | $4.2 | $8.6 | -50.8% | | Diluted adjusted earnings per share of Class A common stock | $0.08 | $0.17 | -52.9% | [Reconciliation of Stockholders' Equity and Book Value per Share](index=7&type=section&id=Reconciliation%20of%20Stockholders%27%20Equity%20and%20Book%20Value%20per%20Share) Stockholders' equity and book value per Class A common share, both including and excluding AOCI, showed positive year-over-year growth, indicating improved shareholder value Reconciliation of Stockholders' Equity and Book Value per Class A Common Share (As of June 30) | Metric | 2025 (in millions) | 2024 (in millions) | Change | | :------------------------------------ | :----------------- | :----------------- | :----- | | Stockholders' equity, end of period | $229.0 | $191.5 | +19.6% | | Less: Accumulated other comprehensive income (loss) (AOCI) | $(83.7) | $(107.9) | N/A | | Stockholders' equity, end of period, excluding AOCI | $312.7 | $299.4 | +4.4% | | Book value per Class A common share - diluted | $4.56 | $3.85 | +18.4% | | Less: Per share impact of AOCI | $(1.66) | $(2.17) | N/A | | Book value per Class A common share - diluted, excluding AOCI | $6.22 | $6.02 | +3.3% | [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) This section provides a standard disclaimer for forward-looking statements, noting that future performance involves risks and uncertainties and may differ from expectations [Disclaimer on Future Performance](index=7&type=section&id=Disclaimer%20on%20Future%20Performance) This section provides a standard disclaimer for forward-looking statements, emphasizing that future performance involves risks and uncertainties and may differ materially from expectations - Forward-looking statements relate to expectations regarding business performance, operational strategy, capital expenditures, technological changes, and regulatory actions[38](index=38&type=chunk) - Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond the company's control[38](index=38&type=chunk) - The Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in the Company's expectations[38](index=38&type=chunk) [Investor Relations Contacts](index=7&type=section&id=Investor%20Relations%20Contacts) Contact information for Citizens, Inc. Investor Relations, handled by Darrow Associates, is provided [Contact Information](index=7&type=section&id=Contact%20Information) Contact information for Citizens, Inc. Investor Relations, handled by Darrow Associates, is provided - Investor Relations contacts are Jeff Christensen and Matt Kreps from Darrow Associates Investor Relations[39](index=39&type=chunk) - Contact can be made via email at CIA@darrowir.com or by phone at 703-297-6917 (Jeff) and 214-597-8200 (Matt)[39](index=39&type=chunk)

Core Insights - Citizens, Inc. reported strong financial results for Q2 2025, with total revenues of $65.1 million, up from $62.1 million in Q2 2024, and net income of $6.5 million, an increase from $4.0 million in the prior year [5][10][24] - The company achieved its highest-ever total direct insurance in force at $5.35 billion, reflecting a 4.4% increase year-over-year, driven by new product sales [6][5] - Citizens has seen a 53% increase in its producing agents since June 30, 2024, indicating significant growth in its distribution network [5][6] Financial Performance - Total revenues for Q2 2025 were $65.1 million, compared to $62.1 million in Q2 2024, with adjusted total revenues of $62.7 million, slightly up from $62.3 million [7][30] - Net income for Q2 2025 was $6.5 million, or $0.13 per fully diluted Class A share, compared to $4.0 million, or $0.08 per share in Q2 2024 [10][24] - Book value per Class A share increased by 18% to $4.56 as of June 30, 2025, compared to $3.85 a year earlier [5][24] Growth Drivers - Direct first-year life and accident & health (A&H) premiums increased by 20% in Q2 2025 compared to the same quarter in 2024, marking eleven consecutive quarters of year-over-year growth in first-year premiums [6][7] - The company reported a record number of agents, with a 53% increase since June 30, 2024, and a 28% increase from the end of 2024 [5][6] - Citizens' strategic roadmap focuses on expanding product offerings and distribution channels, contributing to its growth trajectory [2][3] Investment and Cash Flow - Citizens has maintained positive net cash from operations every year since 2004, with $4.2 million in net cash provided by operating activities for the first half of 2025 [13] - The company reported total assets of $1.7 billion and cash and cash equivalents of $22.7 million with no debt as of June 30, 2025 [5][13] Market Position and Outlook - Citizens is well-positioned for revenue and profit growth in 2026, supported by its global business model and competitive advantages in niche markets [3] - The company continues to focus on profitable product development and expanding its sales force to drive long-term value creation for customers and shareholders [3][2]

Company Overview - Citizens, Inc. is a diversified financial services company specializing in life, living benefits, and final expense insurance, serving individuals and small businesses in the U.S., Latin America, and Asia [5] - The company operates two primary segments: Life Insurance and Home Service Insurance, with a focus on innovative products and customer-centric growth strategies [5] Index Inclusion - Citizens, Inc. has been selected to rejoin the Russell 3000® index and the Russell 2000® index effective June 30, 2025, as part of the 2025 Russell indexes reconstitution [1][3] - Membership in the Russell 3000® Index signifies automatic inclusion in the large-cap Russell 1000® Index or small-cap Russell 2000® Index, enhancing visibility among institutional and retail investors [3] Financial Performance - The company reported its highest-ever total direct insurance in force of $5.28 billion, reflecting its commitment to profitable growth and capital management [4] - Citizens, Inc. has maintained positive cash flow from operations annually since 2004, indicating strong operational performance [4] Industry Context - Russell indexes are widely utilized by investment managers and institutional investors, with approximately $10.6 trillion in assets benchmarked against the Russell US indexes as of June 2024 [2] - FTSE Russell, the global index provider, calculates thousands of indexes covering 98% of the investable market globally, with about $18.1 trillion benchmarked to its indexes [6]

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]