Citizens(CIA) - 2025 Q2 - Quarterly Results

Executive Summary 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 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] - 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] 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 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 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][7] - 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] Detailed Financial Results 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 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] Benefits and Expenses 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] - 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] Profitability and Earnings Per Share 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] - 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] Balance Sheet Highlights 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] 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 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 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 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] Upcoming Conference 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 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] - 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] About Citizens, Inc. 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 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] - 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] - Products are offered in English, Spanish, Portuguese, and Mandarin, catering to evolving customer needs[17] Explanatory Notes on Use of Non-GAAP Measures 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 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] - Adjusted Revenues exclude investment related gains (losses) to evaluate revenues generated by core business activities[19] - 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][21][22][23] Selected Consolidated Financial Data Consolidated financial data for Q2 2025 shows increases in total assets, stockholders' equity, revenues, net income, and book value per share Consolidated Financial Performance 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 Citizens, Inc. operates two primary insurance segments: Life Insurance and Home Service Insurance, offering diverse products across various markets Segment Overview 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] - 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] Selected Segment Financial Data Selected segment financial data highlights performance for Life Insurance and Home Service Insurance, detailing asset, revenue, and profitability trends Life Insurance Segment Performance 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 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 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 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 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 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 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 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 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] - 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] - 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] Investor Relations Contacts Contact information for Citizens, Inc. Investor Relations, handled by Darrow Associates, is provided Contact Information 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] - Contact can be made via email at CIA@darrowir.com or by phone at 703-297-6917 (Jeff) and 214-597-8200 (Matt)[39]