Financial Performance - Citizens, Inc. reported a net loss of $3.6 million for Q1 2020, an improvement from a net loss of $3.8 million in the same period last year, resulting in a $0.01 per share improvement [127]. - Total revenues decreased by 11% year-over-year to $55.7 million in Q1 2020, primarily due to realized investment losses compared to a one-time gain in the prior year [127]. - Total revenues for the three months ended March 31, 2020, were $55,722,000, a decrease of 10.5% compared to $62,406,000 for the same period in 2019 [132]. - Total revenue for Q1 2020 was $42,558 thousand, down from $46,723 thousand in Q1 2019, reflecting a decrease in premiums and realized investment gains [162]. - Total benefits and expenses for Q1 2020 were $57,957,000, a decrease of 4.8% from $60,398,000 in Q1 2019 [139]. Insurance Premiums and Claims - Insurance premiums declined by 2.7% in Q1 2020, totaling $41.3 million, with first-year premiums in the Life Insurance segment increasing by 19.4% [127]. - Life insurance premiums decreased by 2.5% to $39,946,000 in Q1 2020 from $40,980,000 in Q1 2019, while first-year premiums in the Life Insurance segment increased by 19.4% [132]. - Claims and surrenders expense increased by 14.8% in Q1 2020, primarily due to higher surrender benefits and matured endowments in the Life Insurance segment [127]. - Claims and surrenders increased by 15.5% to $26,449,000 in Q1 2020 compared to $23,033,000 in Q1 2019 [141]. - Claims and surrenders increased by 17.4% in Q1 2020, totaling $20,160 thousand compared to $17,162 thousand in Q1 2019, with a notable 27.4% rise in surrender benefits [169]. Investment Income and Performance - Net investment income increased by 10.0% year-over-year to $15.2 million, driven by a growing asset base and improved cash management [127]. - Net investment income for the first quarter of 2020 was $15,169,000, an increase of 9.9% from $13,796,000 in Q1 2019 [134]. - Net investment income for Q1 2020 was $11,480 thousand, an increase from $10,169 thousand in Q1 2019, attributed to growth in average invested assets [162]. - The average yield on the consolidated portfolio was an annualized rate of 4.31% for Q1 2020, compared to 4.08% in the same period of 2019 [127]. - The annualized yield on average invested assets was 4.31% for Q1 2020, compared to 4.08% for the same period in 2019 [134]. - The annualized yield on average invested assets improved to 4.48% in Q1 2020 from 4.36% in Q1 2019 [185]. Asset Management and Securities - Citizens, Inc. had approximately $1.7 billion in assets and $4.7 billion in direct insurance in force as of March 31, 2020 [120]. - The total carrying value of the company's securities was $1,356,244, a decrease of 1.5% from $1,377,959 as of December 31, 2019 [199]. - The company held 37.0% of its securities rated AA, down from 37.2% in the previous period, while AAA rated securities decreased from 4.1% to 3.5% [199]. - The total fair value of municipal fixed maturity securities was $503,295, with 54.5% rated AA and 31.0% rated A [204]. - The investment portfolio consists of 92.7% marketable fixed maturity securities classified as available-for-sale, with a significant portion maturing in the next several years [210]. Operational and Strategic Initiatives - General expenses decreased by 18.8% in Q1 2020, reflecting the execution of strategic cost-saving initiatives [127]. - The company expects to maintain sufficient liquidity to meet its operational needs despite potential impacts from the COVID-19 pandemic [208]. - The company closely monitors credit ratings for potential downgrades due to the COVID-19 pandemic [200]. - The company has not experienced increased surrenders due to the COVID-19 pandemic, but continues to monitor early withdrawals [211]. Tax and Compliance - The effective tax rate for Q1 2020 was (60.3)%, significantly lower than 289.3% for the same period in 2019, influenced by prior gains [145]. - As of March 31, 2020, the company established a liability of $10.0 million for probable liabilities and expenses related to a tax compliance matter [213].

Financial Performance - As of December 31, 2019, Citizens, Inc. had approximately $1.7 billion in assets and $4.2 billion in insurance in force[17]. - Total assets grew by 8.0%, or $129 million, reaching $1.7 billion as of December 31, 2019[217]. - Total stockholders' equity increased by 38.4% from $187.7 million at December 31, 2018, to $259.8 million at December 31, 2019, primarily due to net unrealized gains on available-for-sale securities of $71.8 million[217]. - Insurance premiums declined by 1.9% in 2019, totaling $184.3 million compared to $187.9 million in 2018, driven by fewer renewal premiums in the Life Insurance segment[217]. - First year premiums in the Life Insurance segment increased by 2.1% in 2019, reflecting growth following investments in sales and marketing activities[217]. Insurance Premiums and Segments - International direct premiums comprised approximately 96% of total direct premiums in the Life Insurance segment and 71% of total direct premiums overall in 2019[26]. - The Home Service Insurance segment accounted for 25% of total direct premiums in 2019[39]. - Domestic direct premiums represented approximately 4% of total direct premiums in the Life Insurance segment and 3% of total direct premiums overall in 2019[35]. Technology and Operations - The Company is reviewing technology options to transition from its legacy administration system to a modernized technology platform[45]. - The Company maintains a single integrated information technology system that has been in place for over 30 years and is undergoing ongoing updates[44]. - Citizens, Inc. is focusing on expanding distribution and issuing newly enhanced products in 2020 in response to the low interest rate environment[31]. Regulatory Compliance and Risks - The company is subject to comprehensive regulations under various U.S. laws, including the USA Patriot Act and the Dodd-Frank Act[53]. - The company faces significant regulatory risks related to foreign insurance sales, which may adversely affect its operations and financial condition[75]. - A comprehensive compliance review confirmed risks associated with foreign insurance laws, indicating a lack of uniform regulation and clarity in certain jurisdictions[76]. - Regulatory compliance in Bermuda is critical, as failure to adhere to local laws could result in increased costs and operational restrictions[89]. - The company is exploring alternatives to its current business model in response to regulatory challenges in foreign markets[79]. Investment Portfolio and Risks - As of December 31, 2019, fixed maturities accounted for $1.4 billion, or 93.1% of total investments of $1.5 billion[99]. - Approximately 98.8% of fixed maturities were investment grade, with 69.3% rated A or above[99]. - The company may face credit risk in its investment portfolio, with potential defaults impacting investment income and leading to realized losses[98]. - The company evaluates its investment portfolio for impairments, which may require additional impairments in the future[101]. - The primary investment objective is to maximize economic value while managing credit risk and interest rate sensitivity of invested assets[213]. Employee and Operational Risks - Citizens, Inc. employs over 400 individuals, with more than half working in the Home Service segment[22]. - The competitive market for qualified personnel poses a risk to the company's operational success, as losing key employees could adversely affect its business[181]. - The company faces risks related to the classification of independent contractors, which could lead to significant costs if reclassified as employees[130]. Financial Liabilities and Dividends - The company has never paid cash dividends on its Class A or B common stock and does not expect to do so in the foreseeable future[195]. - The estimated liability related to tax issues with the IRS is approximately $10.0 million, with a range of $7.4 million to $52.5 million net of tax[214]. Risk Management and Governance - The Audit Committee of the Board oversees major financial risk exposures and management's steps to monitor and control these risks[50]. - The company has implemented various controls to manage risks associated with its operations, but there is no assurance that these will be fully effective[165]. - Damage to the company's reputation could hinder its ability to compete effectively and raise new capital, adversely affecting its financial condition[166]. Market and Economic Risks - The company is exposed to risks from low interest rates, which may reduce net investment income and affect reserve calculations for insurance products[90][91]. - Approximately 51% of the company's fixed maturity bond portfolio is callable, with 17% callable within the next year, increasing reinvestment risk in a low interest rate environment[93]. - Unfavorable market conditions could challenge the company's ability to obtain financing, impacting liquidity and credit capacity[157]. - Political instability in operating countries could impact policyholder premium payments and the company's ability to sell policies, potentially leading to higher claims and lapses[81]. - Catastrophic events may cause substantial volatility in financial results and harm profitability, particularly in heavily populated areas[83].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2019 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to COMMISSION FILE NUMBER: 000-16509 CITIZENS, INC. (Exact name of registrant as specified in its charter) Colorado 84-0755371 (State or other jurisdiction of incorp ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2019 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to COMMISSION FILE NUMBER: 000-16509 | --- | --- | |------------------------------------------------------------------------------|--------------------------------------- ...

Insurance Premiums and Revenue - Insurance premiums for Q1 2019 totaled $42.5 million, a decrease of 3.6% from $44.0 million in Q1 2018, primarily due to fewer first year and renewal premiums in the Life Insurance segment [149]. - Premium revenue decreased by 4.5% to $30,914,000 for the three months ended March 31, 2019, compared to $32,360,000 in the same period in 2018, primarily due to a decline in first year and renewal international business [192]. - Direct premiums from the top five premium-producing countries in the international life insurance business totaled $29.726 million for the three months ended March 31, 2019, down from $31.240 million in 2018 [184]. - Direct premiums from Venezuela have declined due to ongoing political and economic instability, impacting overall premium collections [185]. - Home Service Insurance premiums slightly decreased to $11,550,000 for the three months ended March 31, 2019, compared to $11,669,000 in the same period in 2018 [216]. - Total revenue increased to $46,723,000 for the three months ended March 31, 2019, from $42,514,000 in the same period in 2018 [192]. Investment Income and Gains - Net investment income for Q1 2019 was $13.8 million, relatively flat compared to $13.8 million in Q1 2018, with an annualized yield of 4.08%, down from 4.31% in the same period last year [149][159]. - Investment income from debt securities accounted for approximately 87.5% of total investment income for Q1 2019 [162]. - Realized investment gains for the three months ended March 31, 2019, were $5.5 million from the sale of the former corporate headquarters, while realized losses were $104,000 related to fixed maturity securities [164]. - Net investment income increased to $10,169,000 for the three months ended March 31, 2019, compared to $10,130,000 in the same period in 2018, driven by growth in average invested assets [192]. - Realized investment gains were $5,457,000 for the three months ended March 31, 2019, compared to a loss of $185,000 in the same period in 2018, mainly due to the sale of the former corporate headquarters [192][198]. Claims and Expenses - Claims and surrenders expense increased by 8.9% in Q1 2019 compared to Q1 2018, driven by higher surrender benefits and matured endowments in the Life Insurance segment [149]. - Total claims and surrenders increased to $17,162,000 for the three months ended March 31, 2019, compared to $15,291,000 in the same period in 2018, with death claims rising to $1,848,000 [201]. - Death claims increased by 4.9% for the three months ended March 31, 2019, compared to the same period in 2018, while surrenders increased by 6.3% [167]. - Commissions for the three months ended March 31, 2019, were $7.884 million, down from $8.959 million in the same period of 2018 [166]. - Other general expenses increased significantly to $14.132 million for the three months ended March 31, 2019, compared to $6.507 million in the same period of 2018 [171]. Financial Position and Capital - The company maintains a risk-based capital level above 350% to comply with regulatory requirements [258]. - All U.S. insurance subsidiaries were above the RBC minimums as of March 31, 2019, with CICA Ltd. holding capital in excess of the BSCR requirements [261]. - The total fixed maturities portfolio had an amortized cost of $1,259.4 million and a fair value of $1,295.5 million, resulting in net unrealized gains of $36.2 million as of March 31, 2019 [269]. - The liquidity is primarily supported by funds from operations, with 92.1% of investments in marketable debt securities classified as available-for-sale [250]. - The company anticipates that available liquidity sources will be adequate to meet future cash flow needs [252]. Operational Changes and Strategy - The company is focusing on strategic modernization of its technology systems and operations, including a potential restructuring of its international business [146]. - The company aims to optimize its investment portfolio strategy as part of its ongoing assessment of business models and strategies [146]. - The company has established an estimated liability of $10.0 million related to a tax compliance matter as of March 31, 2019 [255]. - The company performs periodic projections of asset and liability cash flows to manage interest rate risk [271]. Market and Economic Conditions - The interest rate of the ten-year U.S. Treasury bond decreased to 2.41% during the three months ended March 31, 2019, down from 2.69% at December 31, 2018 [272]. - The annualized yield on average invested assets decreased to 4.05% as of March 31, 2019, down from 4.32% in the same period in 2018 [197]. - The percentage of total carrying value for corporate securities rose to 31.5% from 27.5% year-over-year [231].

Financial Performance - Revenues increased by 6% from $230.2 million in 2014 to $244.0 million in 2018, but declined approximately 3% in 2018 compared to 2017[17] - Net income declined 85% from a net loss of $6.0 million in 2014 to a net loss of $11.1 million in 2018, impacted by non-recurring tax items[17] - Discretionary dividends on existing international policies decreased from $10.7 million in 2015 to $6.3 million in 2018[25] Assets and Investments - Assets grew 14% from $1.4 billion to $1.6 billion from 2014 to 2018[17] - The company recorded premiums from the Brazilian portion of its business of $10.0 million, representing 7.2% of total international premiums as of December 31, 2018[20] - The total fixed maturities held by the company amounted to $1,223,747 thousand, with a fair value of $1,231,039 thousand, compared to $1,169,938 thousand and $1,215,986 thousand in the previous year[500] Premiums and Market Segmentation - International direct premiums comprised approximately 96% of total direct premiums in the Life segment and 72% of total direct premiums as of December 31, 2018[33] - Domestic direct premiums comprised approximately 4% of total direct premiums in the Life segment in 2018[43] - The Domestic Home Service segment generated $47.5 million in direct premiums, accounting for 25% of the total premiums in 2018[48] Product Development and Strategy - The company plans to introduce newly enhanced products in 2019 to better align with market demands[25] - The company emphasizes personal service to compete in the home service insurance market, aiming for premium growth through direct sales[49] - The company is exploring alternatives to its current business model in response to compliance risks associated with foreign insurance laws[83] Technology and Operations - The company implemented a new Oracle ERP application in 2018, resulting in a decrease in reserves of $10.2 million and a decrease in DAC of $4.3 million, before tax[24] - The company is reviewing technology options to transition from its legacy administration system to a modernized platform for future policy administration needs[53] - The company hired a third-party investment manager in May 2018 to enhance its portfolio and investment strategies[26] Risk Management and Compliance - The enterprise risk management function analyzes risks and ensures they remain within the company's risk appetite, supporting strategic priorities[56] - Risk-based capital (RBC) requirements are imposed on the company, with actions required if the adjusted statutory capital falls below 200% of the control level[70] - CICA Ltd., the Bermuda subsidiary, is registered as a Class E insurer with total assets exceeding $500 million, subject to the Bermuda Monetary Authority's regulations[75] Investment Portfolio - Approximately 94.5% of the company's cash and investment portfolio is comprised of fixed maturity investments, policy loans, and mortgage loans on real estate[501] - The company's equity investments portfolio represented only 1.1% of total investments as of December 31, 2018, with 97.4% invested in diversified equity and bond mutual funds[509] - The company has no investments classified as trading instruments, with 100% of fixed maturities held in available-for-sale[508] Interest Rate Impact - The interest rate of the ten-year U.S. Treasury bond increased to 2.69% at December 31, 2018, from 2.40% at December 31, 2017[502] - The company performed an analysis indicating that a 100 basis point increase in interest rates would decrease the fair value of its fixed maturity investment portfolio by approximately $7.4 million[503] - The company’s fixed maturity portfolio is exposed to call risk, which may increase in a decreasing interest rate environment[505] - Net unrealized gains on fixed maturity securities decreased to $7.3 million at December 31, 2018, from $46.0 million at December 31, 2017, due to changes in bond interest rates[502]