Company Overview - Citizens Inc specializes in international life and endowment products and domestic final expense insurance in niche markets globally[11] - The company has over 250 employees, more than 3,300 producing agents, and $1.7 billion in assets[12] - Gross insurance in-force reached a highest-ever of $5.35 billion[12] - In 2024, premium revenue was diversified, with 34% from Taiwan, 15% from the United States, and smaller percentages from other countries[12] - The company rejoined the Russell 3000® and Russell 2000® indexes in June 2025[12] Financial Performance and Growth - The company's stock price increased 76% compared to the S&P 500 increase of 19% in the 12-month period ended 9/8/25[30] - Total revenues reached $65.1 million in Q2 2025, up from $62.1 million in the year-ago quarter[89] - Direct first-year life and A&H premiums increased by 20% in Q2 2025[37, 89] - Book value per share (GAAP) grew 18% year-over-year[97] Strategic Initiatives - The company's strategic roadmap focuses on driving revenue and EPS growth[26] - The company has increased its global network of producing agents by 53% since Q2 2024[19, 37] - The company is expanding its licenses to 43 underpenetrated U S states and Washington, DC[15, 19, 44]

Company Overview - Citizens (CIA) shares increased by 5.4% to close at $5.89, with a notable trading volume, and have gained 11.4% over the past four weeks [1] - The company is positioned for growth due to a solid customer base, strong presence in underserved markets, streamlined sales processes, and new product introductions [1] Financial Strength - Citizens has a low-risk business model and a strong balance sheet supported by a prudent investment portfolio, reserves, and liquidity, enhancing its financial flexibility [2] - The company has no debt and has access to a $20 million line of credit [2] Earnings Expectations - Citizens is expected to report quarterly earnings of $0.06 per share, reflecting a year-over-year increase of 20%, with revenues projected at $63.46 million, up 4.2% from the previous year [2] - The consensus EPS estimate for Citizens has remained unchanged over the last 30 days, indicating stability in earnings expectations [4] Industry Context - Citizens operates within the Zacks Insurance - Life Insurance industry, where Jackson Financial (JXN) also operates, showing a 1.2% increase in its last trading session [4] - Jackson Financial's consensus EPS estimate has remained unchanged at $5.23, representing a 13.7% increase year-over-year, and it holds a Zacks Rank of 2 (Buy) [5]

Core Viewpoint - Citizens, Inc. will hold a business update conference call and webcast on September 24, 2025, to discuss company developments and respond to questions from analysts and investors [1][2]. Company Overview - Citizens, Inc. (NYSE: CIA) is a diversified financial services company that specializes in life, living benefits, and final expense insurance, serving individuals and small businesses in the U.S., Latin America, and Asia [3]. - The company operates two primary segments: Life Insurance, where it is a market leader in U.S. Dollar denominated life insurance, and Home Service Insurance, primarily in the U.S. Gulf coast region [3]. - Citizens employs a customer-centric growth strategy, offering innovative products in multiple languages including English, Spanish, Portuguese, and Mandarin [3]. - The company's stock is included in the Russell 2000® and Russell 3000® indexes [3].

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial information, including financial statements and related notes [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Citizens, Inc. and its subsidiaries, including balance sheets, statements of operations and comprehensive income (loss), statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial components [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric (In thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Assets | $1,712,500 | $1,685,325 | | Total Liabilities | $1,483,474 | $1,474,970 | | Total Stockholders' Equity | $229,026 | $210,355 | - Fixed maturity securities available-for-sale increased to **$1,242,271 thousand** at June 30, 2025, from **$1,220,961 thousand** at December 31, 2024[9](index=9&type=chunk) [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) This section details the company's revenues, expenses, net income, and other comprehensive income over specific periods | Metric (In thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $65,086 | $62,084 | $120,738 | $119,796 | | Net Income (Loss) | $6,459 | $3,959 | $4,836 | $8,501 | | Basic and Diluted EPS (Class A) | $0.13 | $0.08 | $0.10 | $0.17 | | Other Comprehensive Income (Loss) | $3,419 | $(8,154) | $12,310 | $10,231 | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in the company's equity, including net income, comprehensive income, and stock compensation | Metric (In thousands) | December 31, 2024 | June 30, 2025 | | :-------------------- | :---------------- | :------------ | | Total Stockholders' Equity | $210,355 | $229,026 | | Net Income (Loss) (Six Months) | $57,062 (Retained Earnings) | $61,898 (Retained Earnings) | | Other Comprehensive Income (Loss) (Six Months) | $(95,965) | $(83,655) | - Stock-based compensation contributed **$1,525 thousand** to stockholders' equity during the six months ended June 30, 2025[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flow Activity (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $4,218 | $11,376 | | Net cash used in investing activities | $(6,635) | $(10,201) | | 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 end of period | $22,671 | $26,344 | [Notes to Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed explanations and disclosures supporting the consolidated financial statements [(1) FINANCIAL STATEMENTS](index=10&type=section&id=(1)%20FINANCIAL%20STATEMENTS) This note describes the company's reportable segments and the types of insurance products offered within each - The Company operates through two reportable segments: **Life Insurance** (CICA Domestic and CICA International) and **Home Service Insurance** (SPLIC and MGLIC)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - CICA Domestic issues ordinary whole life, final expense, and life products with living benefits in the U.S., while CICA International offers U.S. dollar-denominated endowment and whole life products to non-U.S. residents[31](index=31&type=chunk)[32](index=32&type=chunk) - The Home Service Insurance segment focuses on middle- and lower-income markets in Louisiana, Mississippi, and Arkansas, providing small face amount whole life, industrial life, pre-need policies, and critical illness policies[33](index=33&type=chunk) [(2) ACCOUNTING PRONOUNCEMENTS](index=11&type=section&id=(2)%20ACCOUNTING%20PRONOUNCEMENTS) This note discusses the impact of new accounting standards on the company's financial disclosures - The Company is evaluating ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures," effective for annual periods after December 15, 2026, which will impact disclosures but not financial condition or results of operations[39](index=39&type=chunk) [(3) INVESTMENTS](index=11&type=section&id=(3)%20INVESTMENTS) This note details the company's investment portfolio, including fixed maturity and equity securities | Investment Category (In thousands) | June 30, 2025 (Amount) | June 30, 2025 (%) | December 31, 2024 (Amount) | December 31, 2024 (%) | | :--------------------------------- | :--------------------- | :---------------- | :------------------------- | :-------------------- | | 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% | | Fixed Maturity Securities (In thousands) | June 30, 2025 (Gross Unrealized Losses) | December 31, 2024 (Gross Unrealized Losses) | | :--------------------------------------- | :-------------------------------------- | :------------------------------------------ | | Total fixed maturity securities | $170,242 | $185,741 | - The Company recorded **no credit valuation losses** on fixed maturity securities for the three and six months ended June 30, 2025 and 2024[48](index=48&type=chunk) - As of June 30, 2025, **98.6%** of the fair value of the fixed maturity securities portfolio was rated investment grade, with unrealized losses primarily due to noncredit-related factors like changes in credit spreads and rising interest rates[51](index=51&type=chunk)[52](index=52&type=chunk) [(4) FAIR VALUE MEASUREMENTS](index=15&type=section&id=(4)%20FAIR%20VALUE%20MEASUREMENTS) This note explains the methodologies and inputs used to determine the fair value of financial instruments - Fixed maturity securities are primarily classified as **Level 2 assets** (**$1.2 billion**, **92.0%** of total financial assets at fair value) and valued using third-party pricing sources[67](index=67&type=chunk) - Equity securities are classified as **Level 1 assets**, with fair values based on quoted market prices[68](index=68&type=chunk) - Limited partnerships, policy loans, residential mortgage loans, and annuity liabilities are generally classified as **Level 3**, with fair values estimated using NAV per share or discounted cash flows with unobservable inputs[69](index=69&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) [(5) DEFERRED POLICY ACQUISITION COSTS AND COST OF INSURANCE ACQUIRED](index=20&type=section&id=(5)%20DEFERRED%20POLICY%20ACQUISITION%20COSTS%20AND%20COST%20OF%20INSURANCE%20ACQUIRED) This note details balances and changes in deferred policy acquisition costs and cost of insurance acquired | Metric (In thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Consolidated DAC balance | $208,944 | $199,635 | | Consolidated COIA balance | $9,269 | $9,446 | - DAC capitalization decreased for the six months ended June 30, 2025, compared to the prior year, mainly due to increased ceding commissions and expenses from a full six months of reinsurance with RGA, partially offset by higher first-year sales[83](index=83&type=chunk) [(6) POLICYHOLDERS' LIABILITIES](index=22&type=section&id=(6)%20POLICYHOLDERS%27%20LIABILITIES) This note outlines policyholder obligations, including future policy benefit reserves and policyholder funds | Policy Liabilities (In thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total future policy benefit reserves | $1,171,356 | $1,173,105 | | Total policyholders' funds | $255,779 | $245,020 | | Weighted-Average Duration (In years) | June 30, 2025 (Life Insurance) | June 30, 2025 (Home Service Insurance) | | :----------------------------------- | :----------------------------- | :------------------------------------- | | Permanent (current discount rate) | 8.5 | 14.2 | | Permanent Limited Pay (current discount rate) | 7.6 | 13.1 | | Weighted-Average Interest Rate (%) | June 30, 2025 (Life Insurance) | June 30, 2025 (Home Service Insurance) | | :--------------------------------- | :----------------------------- | :------------------------------------- | | Permanent (current discount rate) | 5.12% | 5.62% | | Permanent Limited Pay (current discount rate) | 5.12% | 5.58% | [(7) REINSURANCE](index=29&type=section&id=(7)%20REINSURANCE) This note describes reinsurance arrangements and their impact on insurance in force and recoverable amounts - CICA International increased its retention amount for new policies to **$250,000** from **$100,000** as of April 1, 2025[103](index=103&type=chunk) - CICA Domestic entered a coinsurance agreement with RGA Reinsurance Company in Q2 2024, reinsuring **50%** of its newly written final expense business[103](index=103&type=chunk) | Reinsurance Metric (In thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Net life insurance in force | $4,500,351 | $4,409,718 | | Reinsurance recoverable | $9,400 | $6,900 | [(8) COMMITMENTS AND CONTINGENCIES](index=30&type=section&id=(8)%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's financial commitments and potential contingent liabilities - CICA International is committed to fund investments up to **$10.5 million** related to limited partnerships as of June 30, 2025[109](index=109&type=chunk) - The Company renewed its **$20 million** senior secured revolving credit facility with Regions Bank, maturing May 5, 2027, and had not borrowed any funds as of June 30, 2025[110](index=110&type=chunk)[113](index=113&type=chunk) [(9) STOCKHOLDERS' EQUITY AND RESTRICTIONS](index=31&type=section&id=(9)%20STOCKHOLDERS%27%20EQUITY%20AND%20RESTRICTIONS) This note details stockholders' equity composition and regulatory capital requirements for insurance subsidiaries - As of August 1, 2025, the Registrant had **50,245,367 shares** of Class A common stock outstanding[4](index=4&type=chunk) | EPS (Class A Common Stock) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------- | :----------------------------- | :----------------------------- | | Basic and diluted | $0.10 | $0.17 | - All domestic insurance subsidiaries exceeded minimum NAIC regulatory capital requirements at June 30, 2025, with CICA Domestic's RBC above **350%**[119](index=119&type=chunk) - CICA International exceeded Puerto Rico's minimum capital of **$750,000** and premium to surplus ratio of **7 to 1** at June 30, 2025[120](index=120&type=chunk) [(10) SEGMENT AND OTHER OPERATING INFORMATION](index=32&type=section&id=(10)%20SEGMENT%20AND%20OTHER%20OPERATING%20INFORMATION) This note provides financial performance and operational details for the company's distinct business segments - The Life Insurance segment issues endowment and whole life contracts to non-U.S. residents and whole life, final expense, and living benefits products in the U.S.[122](index=122&type=chunk) - The Home Service Insurance segment focuses on lower-income markets in Louisiana, Mississippi, and Arkansas, offering small face amount whole life, industrial life, pre-need policies, and critical illness policies[123](index=123&type=chunk) | Income (Loss) Before Federal Income Tax (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------------- | :----------------------------- | :----------------------------- | | Life Insurance | $8,391 | $13,272 | | Home Service Insurance | $1,727 | $2,034 | | Other Non-Insurance Enterprises | $(4,991) | $(7,079) | | Total Earned Premiums by Country (In thousands) | Six Months Ended June 30, 2025 | | :---------------------------------------------- | :----------------------------- | | United States | $33,483 | | Colombia | $13,015 | | Taiwan | $7,053 | | Venezuela | $6,672 | | Ecuador | $6,566 | | Argentina | $5,019 | [(11) INCOME TAXES](index=38&type=section&id=(11)%20INCOME%20TAXES) This note details income tax expense, effective tax rates, and deferred tax assets and liabilities | Effective Tax Rate (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Tax benefit effective rates | 5.7% | (3.3)% | - CICA International benefits from a Puerto Rico tax exemption decree, freezing the income tax rate at **0%** on taxable earnings up to **$1.2 million** and **4%** on earnings exceeding **$1.2 million**[136](index=136&type=chunk) - Valuation allowances on capital deferred tax assets were **$4.8 million** at June 30, 2025, and **$5.0 million** at June 30, 2024[137](index=137&type=chunk) - The Company is assessing the impact of the newly enacted One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements[138](index=138&type=chunk) [(12) OTHER COMPREHENSIVE INCOME (LOSS)](index=38&type=section&id=(12)%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) This note presents components of other comprehensive income (loss) and their impact on accumulated balances | Accumulated Other Comprehensive Income (Loss) (In thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------------------------------- | :------------ | :---------------- | | Balance, net of tax | $(83,655) | $(95,965) | | Other Comprehensive Income (Loss) Components (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------------- | :----------------------------- | :----------------------------- | | Unrealized gains (losses) on fixed maturity securities, net | $18,828 | $(27,027) | | Change in current discount rate for liability for future policy benefits | $(4,586) | $39,517 | [(13) RELATED PARTY TRANSACTIONS](index=39&type=section&id=(13)%20RELATED%20PARTY%20TRANSACTIONS) This note confirms no material changes in routine related party transactions during the reporting period - No material changes occurred in routine related party transactions (management service agreements, tax sharing, inter-company dividends, and capital contributions) during the six months ended June 30, 2025[142](index=142&type=chunk) [(14) SUBSEQUENT EVENTS](index=39&type=section&id=(14)%20SUBSEQUENT%20EVENTS) This note reports significant events occurring after the balance sheet date but before financial statement issuance - No other significant subsequent events requiring recognition or disclosure were identified through the report issuance date[143](index=143&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting key drivers, segment performance, investment strategies, and liquidity management, along with forward-looking statements and critical accounting policies [Forward-Looking Statements](index=40&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains statements about future expectations subject to risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, and the Company assumes no obligation to revise or update them, except as required by law[145](index=145&type=chunk)[146](index=146&type=chunk) [Objective of Our Management's Discussion and Analysis](index=40&type=section&id=Objective%20of%20Our%20Management%27s%20Discussion%20and%20Analysis) This section outlines the MD&A's purpose: to provide insights into financial changes and future performance trends - The MD&A aims to provide investors with information to assess material changes in financial condition (December 31, 2024, to June 30, 2025) and results of operations (three and six months ended June 30, 2025, compared to 2024), and to discuss trends affecting future performance[148](index=148&type=chunk) [Overview](index=40&type=section&id=Overview) This section describes Citizens, Inc.'s business, product offerings, and operating segments - Citizens, Inc. provides insurance products with living and death benefits, specializing in individual whole life, endowment, and final expense insurance in niche markets globally[149](index=149&type=chunk) - Revenues are primarily derived from life insurance premiums and net investment income, with expenses including sales costs, operating expenses, and income taxes[150](index=150&type=chunk) - The Company operates in two segments: **Life Insurance** (CICA Domestic and CICA International) and **Home Service Insurance** (Security Plan Life Insurance Company)[151](index=151&type=chunk) [Events That Impacted Our Business](index=41&type=section&id=Events%20That%20Impacted%20Our%20Business) This section highlights significant events and factors that have influenced the company's business operations - The business has been impacted by factors described in the 2024 Form 10-K Risk Factors and events in the Form 10-Q for Q1 2025, including a BlackRock write-down[152](index=152&type=chunk) [Financial Highlights](index=41&type=section&id=Financial%20Highlights) This section summarizes key financial performance indicators and significant changes during the reporting period | Metric (In millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------- | :------ | :------ | :------- | :------- | | Net income before federal income tax | $6.9 | $3.3 | $5.1 | $8.2 | - The increase in Q2 net income before tax was driven by a **$0.8 million** increase in total premium revenue, a **$2.7 million** increase in investment-related gains, and a **$3.2 million** decrease in general expenses (due to a prior-year legal fee), partially offset by increased insurance benefits and stock unit grant expenses[153](index=153&type=chunk) - The decrease in YTD net income before tax was due to a **$1.2 million** decrease in investment-related gains (BlackRock write-down) and a **$4.8 million** increase in insurance benefits, partially offset by a **$2.0 million** increase in total premium revenue and a **$1.8 million** decline in other general expenses[153](index=153&type=chunk) - As of June 30, 2025, total assets were **$1.7 billion**, total direct insurance in force was **$5.35 billion**, and diluted earnings per share of Class A common stock for the six months was **$0.10**[155](index=155&type=chunk) [The Factors that Drive our Operating Results](index=43&type=section&id=The%20Factors%20that%20Drive%20our%20Operating%20Results) This section identifies primary elements influencing financial performance, including sales, investments, and expenses - Primary drivers of operating results include sales and product mix, premium revenues, investments, claims and surrenders, operating expenses, and actuarial assumptions[163](index=163&type=chunk) - Product mix is trending towards newer whole life products (international and domestic) with smaller margins, replacing higher-margin endowment products, a trend expected to continue[158](index=158&type=chunk) - Direct first-year premiums increased **32%** for the six months ended June 30, 2025, driven by sales of newer products and an increased number of producing agents, primarily in CICA Domestic final expense business[161](index=161&type=chunk) - Net investment income decreased slightly due to lower income from limited partnership investments[166](index=166&type=chunk) - Matured endowments increased as expected, while death claim benefits decreased due to lower volume and the RGA coinsurance agreement[167](index=167&type=chunk) - Operating expenses decreased due to a **$3.5 million** legal fee expense incurred in the prior year, despite continued investment in growth and higher equity compensation costs[169](index=169&type=chunk) [Our Operating Segments](index=46&type=section&id=Our%20Operating%20Segments) This section provides an overview of the company's distinct business segments and their performance drivers | Segment | Six Months Ended June 30, 2025 (Amount of Insurance Issued) | Six Months Ended June 30, 2024 (Amount of Insurance Issued) | | :-------------------- | :------------------------------------------ | :------------------------------------------ | | Life Insurance | $393,859,068 | $446,188,231 | | Home Service Insurance | $123,403,197 | $123,431,074 | | Total | $517,262,265 | $569,619,305 | - CICA International benefited from increased sales of its whole life product, accounting for **67%** of total insurance issued in that segment, leading to higher policy face amounts[176](index=176&type=chunk) - Home Service Insurance segment's growth is impacted by inflation on the cost of living, affecting new sales among lower-income individuals[177](index=177&type=chunk) - Overall insurance in force growth is impacted by persistency rates, policy maturities, and surrenders[180](index=180&type=chunk) [Consolidated Results of Operations](index=47&type=section&id=Consolidated%20Results%20of%20Operations) This section analyzes the company's overall financial performance, including revenues, benefits, and expenses [Revenues](index=47&type=section&id=Revenues) This section details sources and changes in total revenues, including premiums and investment income | Revenue (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $65,086 | $62,084 | $120,738 | $119,796 | | Total Life and A&H premiums | $43,388 | $42,559 | $83,185 | $81,234 | | Net investment income | $17,169 | $17,540 | $34,546 | $35,027 | | Investment related gains (losses), net | $2,408 | $(253) | $(486) | $710 | - Direct first-year premiums increased **20%** and **32%** for the three and six months ended June 30, 2025, respectively, driven by sales of newer products and expanded domestic distribution[183](index=183&type=chunk) - Investment related losses for the six months ended June 30, 2025, were primarily due to a non-cash write-down of the BlackRock ESG investment[185](index=185&type=chunk) [Benefits and Expenses](index=49&type=section&id=Benefits%20and%20Expenses) This section analyzes the company's insurance benefits paid, claims, surrenders, and operating expenses | Benefits and Expenses (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total benefits and expenses | $58,172 | $58,782 | $115,611 | $111,569 | | Claims and surrenders | $40,220 | $34,530 | $80,318 | $67,643 | | Other general expenses | $13,459 | $16,639 | $26,152 | $27,977 | | Amortization of deferred policy acquisition costs | $4,613 | $4,273 | $9,260 | $8,311 | - Matured endowment benefits significantly increased for both three and six months ended June 30, 2025, as many endowment policies reached contractual maturity dates, with continued increases expected throughout 2025[188](index=188&type=chunk)[189](index=189&type=chunk) - Death claim benefits decreased due to lower volume and the coinsurance agreement with RGA[188](index=188&type=chunk) - Other general expenses decreased due to a **$3.5 million** legal fee incurred in the prior year, despite ongoing costs for strategic growth initiatives and equity compensation[193](index=193&type=chunk) [Segment Operations](index=50&type=section&id=Segment%20Operations) This section provides a detailed analysis of financial performance and key drivers for each operating segment [Life Insurance](index=51&type=section&id=Life%20Insurance) This section analyzes the Life Insurance segment's financial performance, including income, revenues, and benefits | Metric (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Income before federal income tax | $8,391 | $13,272 | | Total Revenues | $92,080 | $90,495 | | Total Benefits and Expenses | $83,689 | $77,223 | - Income before federal income tax decreased for the six months ended June 30, 2025, primarily due to a **$0.9 million** decrease in investment-related gains (BlackRock write-down) and a **$5.0 million** increase in insurance benefits paid (matured endowments)[203](index=203&type=chunk) - Direct premiums increased by **$6.1 million** for the six months ended June 30, 2025, driven by sales of newer products and an increased number of producing agents, primarily in CICA Domestic[205](index=205&type=chunk) - Sales in Taiwan are declining due to distribution agency difficulties, regulatory challenges, and geopolitical shifts, while Venezuela faces headwinds from the strength of the US dollar[208](index=208&type=chunk) | Claims and Surrenders (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Matured endowment benefits | $35,531 | $21,476 | | Death claim benefits | $2,177 | $3,184 | [Home Service Insurance](index=54&type=section&id=Home%20Service%20Insurance) This section analyzes the Home Service Insurance segment's financial performance, including income, revenues, and premiums | Metric (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Income before federal income tax | $1,727 | $2,034 | | Total Revenues | $28,295 | $28,784 | | Total Benefits and Expenses | $26,568 | $26,750 | - Income before federal income tax decreased for the six months ended June 30, 2025, due to investment-related losses, partially offset by lower insurance benefits paid[216](index=216&type=chunk) | Premiums (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :----------------------------- | :----------------------------- | | Total life and A&H premiums | $21,388 | $21,768 | - Life and A&H premiums slightly declined due to strategic actions to improve sales quality and persistency (leading to a decrease in agent sales force) and external economic pressures like inflation[218](index=218&type=chunk) - Death claim benefits decreased slightly due to lower volume of reported claims[219](index=219&type=chunk) [Other Non-Insurance Enterprises](index=56&type=section&id=Other%20Non-Insurance%20Enterprises) This section analyzes other non-insurance enterprises' financial performance, focusing on income or loss before tax | Metric (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Loss before federal income tax | $(4,991) | $(7,079) | - The decreased loss was primarily due to lower other general expenses, specifically a **$3.5 million** legal fee expense incurred in the prior year, partially offset by increased equity incentive compensation costs[220](index=220&type=chunk) [Investments](index=56&type=section&id=Investments) This section discusses the company's investment portfolio, including fixed maturity securities, cash, and other investments | Investment Category (In thousands) | June 30, 2025 (Amount) | June 30, 2025 (%) | December 31, 2024 (Amount) | December 31, 2024 (%) | | :--------------------------------- | :--------------------- | :---------------- | :------------------------- | :-------------------- | | 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 | $171,550 | 11.9% | $170,267 | 12.0% | | Total cash, cash equivalents and invested assets | $1,436,492 | 100.0% | $1,420,499 | 100.0% | - The carrying value of fixed maturity securities increased to **$1.24 billion** at June 30, 2025, from **$1.22 billion** at December 31, 2024, primarily due to interest rate sensitivity on fair value[224](index=224&type=chunk) - The weighted average credit rating of the fixed maturity securities portfolio remained **'A'** at both June 30, 2025, and December 31, 2024[224](index=224&type=chunk) - The municipal fixed maturity security portfolio totaled **$271.3 million** at June 30, 2025, with significant concentrations in Texas (**21%**) and California (**16%**) issuers[226](index=226&type=chunk)[230](index=230&type=chunk) - Gross unrealized losses on available-for-sale fixed maturity securities decreased to **$170.2 million** at June 30, 2025, from **$185.7 million** at December 31, 2024, due to a decrease in average market interest rates[236](index=236&type=chunk) [Liquidity and Capital Resources](index=59&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet financial obligations and manage capital, including cash flows and credit facilities | Capital Resources (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 | - Cash provided by operating activities was **$4.2 million** for the six months ended June 30, 2025[240](index=240&type=chunk) - The Company has a **$20 million** senior secured revolving credit facility with Regions Bank, which was undrawn as of June 30, 2025, providing additional liquidity[244](index=244&type=chunk) - Approximately **19%** of endowments in force (**6%** of total in force business) will mature in the next five years, with the highest level in 2025, posing a liquidity risk if policyholders elect lump sum distributions[249](index=249&type=chunk) - High levels of surrenders persist due to factors like expired surrender charges, increasing interest rates, and inflationary pressures[250](index=250&type=chunk) - Rapid growth in first-year sales of products with advance commissions creates liquidity strain, partially offset by the RGA coinsurance agreement[252](index=252&type=chunk) - All domestic insurance subsidiaries exceeded minimum NAIC RBC levels, and CICA International exceeded Puerto Rico's minimum capital requirements at June 30, 2025[255](index=255&type=chunk)[257](index=257&type=chunk) [Critical Accounting Policies](index=62&type=section&id=Critical%20Accounting%20Policies) This section identifies the accounting policies that require significant judgment and estimation by management - The critical accounting policies remain consistent with those described in the 2024 Form 10-K[260](index=260&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=63&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Citizens, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is not required to provide information for this item as it is a smaller reporting company[261](index=261&type=chunk) [Item 4. Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=63&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on management's assessment of the effectiveness of disclosure controls and procedures - Management, including the principal executive officer and principal financial officer, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[263](index=263&type=chunk) [Changes in Internal Control Over Financial Reporting](index=63&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports any material changes in internal control over financial reporting during the period - No material changes in the Company's internal control over financial reporting occurred during the three months ended June 30, 2025[264](index=264&type=chunk) [PART II. OTHER INFORMATION](index=64&type=section&id=Part%20II.%20OTHER%20INFORMATION) This section includes additional disclosures not covered in financial information, such as legal proceedings and exhibits [Item 1. Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms that there have been no material developments in legal proceedings during the three months ended June 30, 2025, from those previously disclosed - No material developments in legal proceedings occurred during the three months ended June 30, 2025[268](index=268&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes in the company's risk factors during the three months ended June 30, 2025 - No material changes in risk factors occurred during the three months ended June 30, 2025[269](index=269&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that there were no unregistered sales of equity securities or use of proceeds to disclose - None[270](index=270&type=chunk) [Item 3. Defaults Upon Senior Securities](index=64&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there are no defaults upon senior securities to report - Not applicable[271](index=271&type=chunk) [Item 4. Mine Safety Disclosures](index=64&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Not applicable[272](index=272&type=chunk) [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) This section reports no other information, specifically noting that no directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements - No directors or executive officers adopted or terminated any Rule 10b5-1(c) trading arrangements during the three months ended June 30, 2025[275](index=275&type=chunk) [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, certifications, and XBRL documents - Exhibits include Restated and Amended Articles of Incorporation, Amended and Restated Bylaws, CEO and CFO certifications (Sarbanes-Oxley Act), and Inline XBRL documents[277](index=277&type=chunk)

[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].