What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-13 compared with 2024-03-14 · 434 added, 620 removed, 1697 unchanged (38% of the section changed)

9 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management evaluated the design and operating effectiveness of internal control over financial reporting based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

Based on this evaluation, management concluded that our internal control over financial reporting as of December 31, 2023 was effective.

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CITIZENS, INC.

Organizations of the Treadway Commission ("COSO").

Based on this evaluation, management concluded that our internal control over financial reporting as of December 31, 2024 was effective.

Grant Thornton LLP, an independent registered public accounting firm, audited the effectiveness of our internal control over financial reporting as of December 31, 2024.

8 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control — Integrated Framework issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated financial statements of the Company as of and for the year ended December 31, 2023, and our report dated March 14, 2024, expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated financial statements of the Company as of and for the year ended December 31, 2024, and our report dated March 13, 2025, expressed an unqualified opinion on those financial statements.

Basis for Opinion

11 unchanged sentences

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may

and (3) provide reasonable

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become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

/s/ GRANT THORNTON LLP

13 unchanged sentences

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Item 10 of this Annual Report on Form 10-K incorporates by reference the information in the sections entitled "Corporate Governance," "Audit Matters," "Directors" and "Executive Officers" in our Proxy Statement.

Item 10 of this Annual Report on Form 10-K incorporates by reference the information in the sections entitled "Board of Directors", "Corporate Governance", "Executive Officers" and "Other Matters" in our Proxy Statement.

EXECUTIVE COMPENSATION

Item 11 of this Annual Report on Form 10-K incorporates by reference the information in the sections entitled "Directors - Director Compensation," "Executive Compensation" and "Board Matters - Compensation Committee Interlocks and Insider Participation" in our Proxy Statement.

Item 11 of this Annual Report on Form 10-K incorporates by reference the information in the sections entitled "Board of Directors - Director Compensation", "Corporate Governance - Board Processes - Compensation Committee Interlocks and Insider Participation" and "Executive Compensation" in our Proxy Statement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Item 12 of this Annual Report on Form 10-K incorporates by reference the information in the sections entitled "Security Ownership of Directors and Management" and "Security Ownership of Certain Beneficial Owners" in our Proxy Statement.

Item 12 of this Annual Report on Form 10-K incorporates by reference the information in the section entitled "Stock Ownership Information" in our Proxy Statement.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

7 unchanged sentences

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Item 13 of this Annual Report on Form 10-K incorporates by reference the information in the sections entitled "Board Matters - Director Independence" and "Board Matters - Certain Relationships and Related Party Transactions" in our Proxy Statement.

Item 13 of this Annual Report on Form 10-K incorporates by reference the information in the section entitled "Corporate Governance" in our Proxy Statement.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Item 14 of this Annual Report on Form 10-K incorporates by reference the information in the section entitled "Audit Matters" in our Proxy Statement.

Item 14 of this Annual Report on Form 10-K incorporates by reference the information in the section entitled "Audit Committee Matters" in our Proxy Statement.

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EXHIBITS, FINANCIAL STATEMENT SCHEDULES

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this Report

(1) and (2) Financial Statements and Schedules

The financial statements and schedules listed on the following index to financial statements and financial statement schedules are filed under Item 8 as part of this Form 10-K.

The financial statements and schedules listed on the following index to financial statements and financial statement schedules are filed under Part III.

Financial Statements and Supplementary Data as part of this Form 10-K.

Index to Consolidated Financial Statements and Financial Statement Schedules Page

6 unchanged sentences

Notes to Consolidated Financial Statements

Summary of Significant Accounting

Summary of Significant Accounting Policies

Fair Value Measurements

1 unchanged sentence

Policyholders' Liabilities

Policy Claim Liabilit y and Short Duration Contr acts

Commitment s and Contingencies

Policy Claim Liability

Commitments and Contingencies

Stockholders' Equity and Restrictions

Segment and Other Operating In formation

Segment and Other Operating Information

Other Comprehensive Income (Loss)

2 unchanged sentences

Related Party Transactions

Quarterly Fi nancial Informa t i on (Unaudited)

Quarterly Financial Information (Unaudited)

Subsequent Events

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Schedule III – Consolidated Supplementary Insurance Information

Schedule IV – Consolidated Statement of Reinsurance

Schedule IV – Consolidated Schedule of Reinsurance

All other schedules have been omitted because the required information is inapplicable or the information required is presented in the consolidated financial statements or the notes thereto filed elsewhere herein.

3 unchanged sentences

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

Board of Directors and Stockholders

Citizens, Inc.

1 unchanged sentence

We have audited the accompanying consolidated balance sheets of Citizens, Inc.

(a Colorado corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

(a Colorado corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 13, 2025 expressed an unqualified opinion.

Change in accounting principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for the liability for future policy benefits, deferred policy acquisition costs, and cost of insurance acquired for all periods presented due to the adoption of Accounting Standard Update No.

2018-12, Financial Services – Insurance (Topic 944) Targeted Improvements to the Accounting for Long-Duration Contracts.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

10 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Assumptions used in the Estimation of the Liability for Future Policy Benefit Reserves - Life Insurance

As described further in Notes 1 and 5 to the financial statements, the Company estimates a liability for future policy benefits which is calculated as the present value of estimated future policy benefits to be paid to or on behalf of policyholders of life insurance contracts, less the present value of estimated future net premiums to be collected from policyholders on those same life insurance contracts.

As described further in Notes 1 and 5 to the consolidated financial statements, the Company estimates a liability for future policy benefit reserves which is calculated as the present value of estimated future policy benefits to be paid to or on behalf of policyholders of life insurance contracts, less the present value of estimated future net premiums to be collected from policyholders on those same life insurance contracts.

Management’s estimate of the liability for future policy benefit reserves for life insurance was $1.17 billion as of December 31, 2024.

The liability is estimated using actuarial assumptions including mortality and lapse.

Changes to the mortality and lapse assumptions impact both the timing and amount of estimated future policy payments to be paid and future net premiums to be received on life insurance contracts.

These assumptions, which are updated annually, are based on judgements that consider the Company’s historical experience, industry data and other factors.

The liability is estimated using actuarial assumptions including those for mortality and lapse.

Changes to the mortality and lapse assumptions impact both the timing and amount of estimated future policy benefits to be paid and future net premiums to be collected from policyholders on life insurance contracts.

These assumptions, which are updated annually, are based

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on judgements that consider the Company’s historical experience, industry data and other factors.

We identified the updating of the mortality and lapse assumptions used in the estimation of the liability for future policy benefit reserves – life insurance as a critical audit matter.

The principal consideration for our determination that the updating of the mortality and lapse assumptions used in the estimation of the liability for future policy benefit reserves for life insurance contracts is a critical audit matter is that the updating of these assumptions requires management to make significant estimates regarding mortality and lapse based on historical experience, industry data and other factors.

As such, auditing the updating of such assumptions involved subjective and complex auditor judgment and the involvement of an actuarial specialist.

The principal considerations for our determination that the updating of the mortality and lapse assumptions used in the estimation of the liability for future policy benefit reserves for life insurance contracts is a critical audit matter is that the updating of these assumptions requires management to make significant assumptions regarding mortality and lapse based on historical experience, industry data and other factors.

As such, auditing the updating of such assumptions involved subjective and complex auditor judgment, including the involvement of an actuarial specialist to assess the reasonableness of these assumptions.

Our audit procedures related to the updating of the mortality and lapse assumptions used in the estimation of the liability for future policy benefit reserves - life insurance included the following, among others.

• We tested the design and operating effectiveness of management’s review controls over the mortality and lapse assumption updating and approval processes.

• We utilized an actuarial specialist in evaluating management’s methodologies and reasonableness of the assumptions of mortality and lapse, that were used in management’s calculation of future policy benefit reserves on life insurance contracts.

• We tested the design and operating effectiveness of management’s review control over the mortality and lapse assumption updating and approval processes.

• With the assistance of an actuarial specialist, we evaluated management’s methodologies and assessed the reasonableness of the assumptions for mortality and lapse used in management’s calculation of future policy benefit reserves on life insurance contracts.

/s/ GRANT THORNTON LLP

15 unchanged sentences

93,604 82,725

Short-term investments — 1,241

Total investments 1,391,228 1,402,347

Cash and cash equivalents 26,997 22,973

Cash and cash equivalents (restricted portion:

$ 1,554 and none in 2024 and 2023, respectively)

29,271 26,997

Accrued investment income 17,546 17,360

36 unchanged sentences

Common stock:

Class A, no par value, 100,000,000 shares authorized, 53,882,661 and 53,758,176 shares issued and outstanding as of December 31, 2023 and 2022, respectively, including shares in treasury of 4,327,810 and 3,935,581 as of December 31, 2023 and 2022

Class A, no par value, 100,000,000 shares authorized, 54,235,165 and 53,882,661 shares issued and outstanding as of December 31, 2024 and 2023, respectively, including shares in treasury of 4,327,810 in 2024 and 2023

269,799 268,675

Class B, no par value, 2,000,000 shares authorized, 1,001,714 shares issued and outstanding as of December 31, 2023 and 2022, including shares in treasury of 1,001,714 as of December 31, 2023 and 2022

Class B, no par value, 2,000,000 shares authorized, 1,001,714 shares issued and outstanding in 2024 and 2023, including shares in treasury of 1,001,714 in 2024 and 2023

Retained earnings

13 unchanged sentences

(In thousands, except share amounts)

2023 2022 2021

Life insurance $ 171,561 164,609

17 unchanged sentences

Amortization of cost of insurance acquired 597 604

Goodwill impairment — — 12,624

Total benefits and expenses 230,021 214,506

Income (loss) before federal income tax 26,174 27,377 30,505

Income before federal income tax

14,980 26,174

Federal income tax expense (benefit) 68 1,737

Net income (loss) 24,437 26,007 72,706

Basic Earnings Per Share:

Class A common stock $ 0.49 0.52 1.46

Class B common stock — — 0.73

Diluted Earnings Per Share:

Class A common stock 0.48 0.51 1.44

Class B common stock — — 0.72

14,912 24,437

Per Share Amounts:

Basic earnings per share Class A common stock $ 0.30 0.49

Diluted earnings per share Class A common stock 0.29 0.48

Other Comprehensive Income (Loss):

1 unchanged sentence

Unrealized holding gains (losses) arising during period ( 30,982 ) 50,894

Reclassification adjustment for losses (gains) included in net income (loss) 756 104 ( 243 )

Reclassification adjustment for losses (gains) included in net income

Unrealized gains (losses) on fixed maturity securities, net ( 30,283 ) 51,650

10 unchanged sentences

Common Stock Retained Earnings

Deficit) Accumulated

Comprehensive

3 unchanged sentences

Balance at December 31, 2022 $ 268,147 3,184 16,309 ( 137,044 ) ( 22,806 ) 127,790

Accounting Standards adopted January 1, 2021 (1)

— — ( 52 ) ( 316,825 ) — ( 316,877 )

Comprehensive income (loss):

4 unchanged sentences

Stock-based compensation 528 — — — — 528

Balance at December 31, 2021 265,561 3,184 ( 9,698 ) ( 138,989 ) ( 20,101 ) 99,957

Comprehensive income (loss):

Net income (loss) — — 26,007 — — 26,007

Other comprehensive income (loss) — — — 1,945 — 1,945

Total comprehensive income (loss) — — 26,007 1,945 — 27,952

Acquisition of treasury stock — — — — ( 2,705 ) ( 2,705 )

Issuance of common stock 2,244 — — — — 2,244

Stock-based compensation 342 — — — — 342

— — 1,404 — — 1,404

Balance at December 31, 2023 268,675 3,184 42,150 ( 118,155 ) ( 23,725 ) 172,129

3 unchanged sentences

Total comprehensive income (loss) — — 14,912 22,190 — 37,102

Acquisition of treasury stock

— — — — ( 919 ) ( 919 )

Stock-based compensation 1,124 — — — — 1,124

— — 1,404 — — 1,404

Balance at December 31, 2024 $ 269,799 3,184 57,062 ( 95,965 ) ( 23,725 ) 210,355

(1) See Note 1 and (2) see Note 11 in the Notes to Consolidated Financial Statements for more details.

(1) See Note 11 in the Notes to Consolidated Financial Statements for more details.

See accompanying Notes to Consolidated Financial Statements.

3 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows, Continued

Years Ended December 31,

(In thousands)

2023 2022 2021

Cash Flows from Operating Activities:

Net income (loss) $ 24,437 26,007 72,706

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Investment related (gains) losses, net on sales of investments and other assets ( 760 ) 10,291 ( 10,991 )

$ 14,912 24,437

Adjustments to reconcile net income to net cash provided by operating activities:

Investment related (gains) losses on sales of investments and other assets, net

2,626 ( 760 )

Net deferred policy acquisition costs ( 23,867 ) ( 12,841 )

4 unchanged sentences

Deferred federal income tax expense (benefit) ( 1,800 ) 860

Goodwill Impairment

Accrued investment income ( 186 ) ( 229 )

6 unchanged sentences

Other, net ( 1,414 ) ( 1,616 )

Net cash provided by (used in) operating activities 22,056 56,920 40,455

Net cash provided by operating activities 31,918 22,056

Cash Flows from Investing Activities:

4 unchanged sentences

Principal payments on mortgage loans 9 7

Funding of mortgage loans — — ( 1,000 )

Change in policy loans, net 3,414 1,534 3,011

Sales of other long-term investments and real estate 5,394 5,033 24,238

(Increase) decrease in policy loans, net

Sales of other long-term investments

Purchases of other long-term investments ( 16,210 ) ( 17,318 )

Purchases of property and equipment ( 663 ) ( 442 )

Sales of property and equipment — — 14

Maturities of short-term investments — 750

Sales of short-term investments

Purchases of short-term investments — ( 1,250 ) —

Net cash provided by (used in) investing activities ( 14,496 ) ( 60,742 ) ( 41,077 )

Net cash used in investing activities ( 27,173 ) ( 14,496 )

See accompanying Notes to Consolidated Financial Statements.

3 unchanged sentences

AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows, Continued

Years Ended December 31,

(In thousands)

2023 2022 2021

Cash Flows from Financing Activities:

1 unchanged sentence

Annuity withdrawals ( 9,578 ) ( 9,686 )

Issuance of common stock — 2,244 2,255

Acquisition of treasury stock — ( 919 )

Other ( 60 ) ( 118 ) ( 456 )

Other share repurchases

( 393 ) ( 60 )

Net cash used in financing activities ( 2,471 ) ( 3,536 )

3 unchanged sentences

SUPPLEMENTAL DISCLOSURE OF OPERATING ACTIVITIES:

Cash paid for income taxes during 2023, 2022 and 2021 was $ 1.8 million, $ 0.3 million and $ 1.2 million, respectively.

Cash paid for income taxes during 2024 and 2023 was $ 0.5 million and $ 1.8 million, respectively.

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:

During 2023, 2022 and 2021, various fixed maturity issuers exchanged securities with book values of $ 5.4 million, $ 6.9 million and $ 12.1 million, respectively, for securities of equal value.

The Company recognized right-of-use assets of $ 0.1 million and $ 0.4 million in exchange for new operating lease liabilities during 2023 and 2022, respectively, and none during 2021.

During 2024 and 2023, various fixed maturity issuers exchanged securities with book values of $ 3.7 million and $ 5.4 million, respectively, for securities of equal value.

The Company recognized right-of-use assets of $ 0.1 million in exchange for new operating lease liabilities during 2023 and none during 2024.

See accompanying Notes to Consolidated Financial Statements.

9 unchanged sentences

("Citizens" or the "Company"), a Colorado corporation, and its wholly-owned subsidiaries, CICA Life Insurance Company of America ("CICA Domestic"), CICA Life Ltd.

("CICA Bermuda"), CICA Life, A.I., a Puerto Rico company ("CICA International"), Citizens National Life Insurance Company ("CNLIC"), Security Plan Life Insurance Company ("SPLIC"), Security Plan Fire Insurance Company ("SPFIC"), Magnolia Guaranty Life Insurance Company ("MGLIC"), Computing Technology, Inc.

("CTI"), Nexo Global Services LLC, a Puerto Rico holding company ("Nexo") and Nexo Enrollment Services LLC, a Puerto Rico service company ("NES").

("CICA Bermuda"), Security Plan Life Insurance Company ("SPLIC"), Security Plan Fire Insurance Company ("SPFIC"), Magnolia Guaranty Life Insurance Company ("MGLIC"), Computing Technology, Inc.

("CTI"), Nexo Global Services LLC, a Puerto Rico holding company ("Nexo") and its wholly-owned subsidiaries, CICA Life A.I., a Puerto Rico company ("CICA International") and Nexo Enrollment Services LLC, a Puerto Rico service company ("NES").

All significant inter-company accounts and transactions have been eliminated.

Citizens and its wholly-owned subsidiaries are collectively referred to as the "Company," "we," "it," "us," or "our".

Our Life Insurance segment operates through CICA International and CICA Domestic.

Our Life Insurance segment operates through CICA Domestic and CICA International.

CICA Domestic.

Prior to July 1, 2023, our domestic life insurance business operated through CICA Domestic and Citizens National Life Insurance Company ("CNLIC").

CNLIC merged into CICA Domestic on July 1, 2023.

CICA Domestic issues primarily whole life, final expense and life products with living benefits throughout the U.S.

CICA International.

Until December 31, 2022, our international life insurance business operated through CICA Bermuda.

Beginning January 1, 2023, all new international policies are issued by CICA International.

These companies provide U.S.

dollar-denominated endowment contracts internationally, which are principally accumulation contracts that incorporate an element of life insurance protection and ordinary whole life insurance in U.S.

dollar-denominated amounts sold to non-U.S.

Beginning January 1, 2023, all new international policies are issued by CICA International and on August 31, 2023, CICA Bermuda transferred all of its insurance in force business to CICA International.

CICA International offers U.S.

dollar-denominated products to non-U.S.

residents/citizens internationally, including endowment products, which are principally accumulation contracts that incorporate an element of life insurance protection and whole life insurance.

These contracts are designed to provide a fixed amount of insurance coverage over the life of the insured and may utilize rider benefits to provide additional increasing or decreasing coverage and annuity benefits to enhance accumulations.

On August 31, 2023, CICA Bermuda transferred all of its insurance in force business to CICA International.

Prior to July 1, 2023, our domestic life insurance business operated through CICA Domestic and CNLIC.

CICA Domestic issues ordinary whole life, final expense, life products with living benefits, critical illness and credit life and disability policies throughout the U.S.

and CNLIC issued ordinary whole life and critical illness policies through June 30, 2023.

CNLIC merged into CICA Domestic on July 1, 2023.

Our Home Service Insurance segment operates through our subsidiaries SPLIC, MGLIC and SPFIC, and focuses on the life insurance needs of the middle- and lower-income markets, primarily in Louisiana, Mississippi and Arkansas.

Our products in this segment consist primarily of small face amount ordinary whole life, industrial life and pre-need policies, which are designed to fund final expenses for the insured, primarily consisting of funeral and burial costs as well as critical illness and property insurance policies, which cover dwelling and contents.

As of June 30, 2023, the Company ceased all operations for SPFIC.

NES provides services to policyholders of CICA International.

Our Home Service Insurance segment operates through our subsidiaries SPLIC and MGLIC, and focuses on the life insurance needs of the middle- and lower-income markets, primarily in Louisiana, Mississippi and Arkansas.

Our products in this segment consist primarily of small face amount whole life, industrial life and pre-need policies, which are designed to fund final expenses for the insured, primarily consisting of funeral and burial costs.

SPLIC also issues critical illness policies.

Prior to June 30, 2023, SPFIC issued dwelling and contents property insurance policies.

As of June 30, 2023, the Company ceased all operations for SPFIC and SPFIC was dissolved in 2024.

CTI provides data processing systems and services to the Company.

7 unchanged sentences

The Company does not classify any fixed maturity securities as trading or as HTM.

Equity securities are measured at fair value with the change in fair value recorded through net income (loss).

Unrealized gains (losses) of fixed maturity securities held as AFS are shown as a separate component of stockholders' equity, net of tax, and is a separate component of other comprehensive income (loss).

The Company assesses AFS fixed maturity securities in an unrealized loss position for expected credit losses.

First, we assess whether we intend to sell, or it is more likely than not that we will be required to sell, the security

Equity securities are measured at fair value with the change in fair value recorded through the consolidated statements of operations and comprehensive income (loss).

December 31, 2024 | 10-K 67

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

before recovery of its amortized cost.

The Company assesses AFS fixed maturity securities in an unrealized loss position for expected credit losses.

First, we assess whether we intend to sell, or it is more likely than not that we will be required to sell, the security before recovery of its amortized cost.

If either of the criteria is met, the security's amortized cost is written down to its fair value.

21 unchanged sentences

Mortgage loans on real estate are reported at unpaid principal balances.

The Company had cash equivalents and fixed maturity securities with an aggregate fair value of $ 8.6 million and $ 9.8 million at December 31, 2023 and 2022, respectively, on deposit with various state regulatory authorities to fulfill statutory requirements.

The Company had restricted cash equivalents and fixed maturity securities with an aggregate fair value of $ 7.9 million and $ 8.6 million at December 31, 2024 and 2023, respectively, on deposit with various state regulatory authorities to fulfill statutory requirements.

SHORT-TERM INVESTMENTS

4 unchanged sentences

Cash equivalents consists of securities whose duration does not exceed 90 days at the date of acquisition.

Restricted cash represents amounts

December 31, 2024 | 10-K 68

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

on deposit with state regulatory authorities noted above and our appeal bond discussed in Note 8 .

Commitments and Contingencies .

REINSURANCE RECOVERABLE

30 unchanged sentences

These annual recoverability tests are based initially on an estimate of the available premium (gross premium less the benefit and expense portion of premium) for the next 50 years.

Management believes that our COIA is recoverable for the years ended December 31, 2023 and 2022.

This belief is based upon the analysis performed on estimated future results of the block and our annual recoverability testing.

December 31, 2024 | 10-K 69

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

believes that our COIA is recoverable for the years ended December 31, 2024 and 2023.

This belief is based upon the analysis performed on estimated future results of the block and our annual recoverability testing.

The value of COIA resulting from our various acquisitions was determined based on the present value of future profits discounted at annual rates ranging from 3.7 % to 8.5 %.

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill is the difference between the purchase price in a business combination and the fair value of assets and liabilities acquired and is not amortized.

Other intangible assets include various state insurance licenses, which have been determined to have indefinite useful lives and, therefore, are not amortized.

Both goodwill and other intangible assets with indefinite useful lives are subject to annual impairment analysis.

Goodwill is tested for impairment on an annual basis or more frequently if indicators of potential impairment exist.

The goodwill testing requires us to compare the estimated fair value of a reporting unit to its carrying value.

If the carrying value of the reporting unit is lower than its estimated fair value, no further evaluation is required.

If the carrying value of the reporting unit exceeds its estimated fair value, an impairment charge is recorded for that excess, limited to the total amount of goodwill allocated to that reporting unit.

We have the option of performing an assessment of certain qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value or proceeding directly to a quantitative impairment test.

We elected to apply the quantitative assessment for the goodwill in our reporting units within the Life Insurance segment as of December 31, 2021.

We recorded an impairment of $ 12.6 million in 2021 in our Life Insurance segment caused by increases in our carrying value of the segment due to recognition of a $ 43.8 million uncertain tax position in the fourth quarter of 2021, following the expiration of the statute of limitations on the tax year ended December 31, 2017.

This impairment is recorded on the consolidated statements of operations and comprehensive income (loss).

The Company has no remaining goodwill as of December 31, 2021.

PROPERTY AND EQUIPMENT

17 unchanged sentences

As premium revenue is recognized, a liability for future policy benefits, which is the present value of estimated future policy benefits to be paid to or on behalf of policyholders less the present value of estimated future net premiums to be collected from policyholders, is accrued.

The liability is estimated using current assumptions that include

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CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

discount rate, mortality and lapses.

The liability is estimated using current assumptions that include discount rate, mortality and lapses.

These current assumptions are based on judgements that consider the Company’s historical experience, industry data, and other factors.

9 unchanged sentences

In subsequent periods, the revised net premiums are used to measure the liability for future policy benefits, subject to future revisions.

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CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For traditional and limited-payment contracts, the current discount rate assumption is a yield curve that equals the yield of an upper-medium grade fixed income instrument, based on A-quality corporate bonds.

The Company selects fixed-income instruments that have been A rated by one of the major credit rating agencies, such as Moody’s, Standard & Poor’s, or Fitch.

The Company selects fixed-income instruments that have been A rated by one of the major credit rating agencies, such as Moody’s or Standard & Poor’s.

The current discount rate assumption is updated quarterly and used to remeasure the liability at the reporting date, with the resulting change reflected in other comprehensive income.

6 unchanged sentences

Expenses include interest credited to contract account balances and benefits paid in excess of contract account balances.

Unpaid claims on accident and health and specialty property insurance policies represent the estimated liability for benefit expenses, both reported but not paid and incurred but not reported to the Company.

The liability for incurred but not reported claims includes estimates for additional claim amounts due related to reported claims.

Unpaid claims on accident and health policies represent the estimated liability for benefit expenses, both reported but not paid and incurred but not reported to the Company.

The liability for incurred but not reported claims includes estimates for additional unreported claim amounts due derived from previously reported claims.

Liabilities for unpaid claims are estimated using individual case basis valuations and statistical analysis.

10 unchanged sentences

The Company reviews and updates its estimates of cash flows for the DPL at the same time as the estimates of cash flows for the liability for future policy benefit life reserves.

The DPL is updated each quarter based on the current period's actual experience relative to

December 31, 2023 | 10-K 72

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

expected experience with the changes recorded within the increase (decrease) in future policy benefit reserves in the consolidated statements of operations and comprehensive income (loss).

The DPL is updated each quarter based on the current period's actual experience relative to expected experience with the changes recorded within the increase (decrease) in future policy benefit reserves in the consolidated statements of operations and comprehensive income (loss).

On the consolidated balance sheets, DPL is recorded as a component of the liability for future policy benefit life reserves.

3 unchanged sentences

Policyholder dividends are accrued over the premium paying periods of the insurance contract.

December 31, 2024 | 10-K 71

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONTINGENCIES

6 unchanged sentences

If no amount within the range is a better estimate than any other amount, the minimum amount in the range is accrued.

A gain contingency is an uncertain situation that will be resolved in the future, possibly resulting in a gain.

We do not allow the recognition of a gain contingency prior to settlement of the underlying event.

There were none as of December 31, 2023 and 2022.

PREMIUM REVENUE AND RELATED EXPENSES

7 unchanged sentences

The annuity products issued do not include fees or other such charges.

There is also a block of annuity products accounted for as FAS97 insurance products.

Reserves are set up for surrenders and death benefits.

Acquisition costs and premium loads are capitalized and amortized.

STOCK COMPENSATION

The Company accounts for stock compensation arrangements using a fair-value based method.

The Company determines the fair value of performance-based and restricted stock unit awards on the date of grant.

The fair value of time-based awards is recognized over the period during which an award holder is required to provide services in exchange for the award, know as the requisite service period, which is typically the vesting period using the straight-line method.

The Company records forfeitures and adjusts compensation expense on stock-based awards in the period they occur.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

3 unchanged sentences

In addition, the Company must record a tax valuation allowance with respect to deferred tax assets if it is more likely than not that the tax benefit will not be realized.

December 31, 2023 | 10-K 73

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company releases stranded tax effects in accumulated other comprehensive income on an aggregate portfolio basis.

1 unchanged sentence

Basic earnings per share are computed by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding during each period.

Diluted earnings per share are computed under the if-converted method for convertible securities and the treasury stock method for warrants, giving effect to all potential dilutive common stock, including options, warrants and convertible/redeemable preferred stock.

Diluted earnings per share are

December 31, 2024 | 10-K 72

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

computed under the if-converted method for convertible securities and the treasury stock method for warrants, giving effect to all potential dilutive common stock, including options, warrants and convertible/redeemable preferred stock.

The basic and diluted earnings per share of Class B common stock are one half the earnings per share of the Class A common stock.

4 unchanged sentences

Actual results could differ materially from these estimates.

Significant estimates include those used in the evaluation of credit losses on fixed maturity securities, actuarially determined assets and liabilities and assumptions, valuation allowance on deferred tax assets, valuation of uncertain tax positions and contingencies relating to litigation and regulatory matters.

Significant estimates include those used in the evaluation of credit losses on fixed maturity securities, actuarially determined assets and liabilities and assumptions, valuation allowance on deferred tax assets and contingencies relating to litigation and regulatory matters.

Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the consolidated financial statements.

RECLASSIFICATIONS

1 unchanged sentence

ACCOUNTING PRONOUNCEMENTS

ACCOUNTING STANDARDS RECENTLY ADOPTED

Impacts at Transition Date

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.

2018-12, Financial Services-Insurance (Topic 944):

Targeted Improvements to the Accounting for Long-Duration Contracts.

The Company adopted ASU 2018-12 for the liability for future policy benefits, DAC and COIA on a modified retrospective basis such that those balances were adjusted to conform to ASU 2018-12 effective January 1, 2021.

December 31, 2023 | 10-K 74

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the balance of and changes in the liability for future policy benefits, annuity reserves, DAC and COIA due to the adoption of ASU 2018-12.

(In thousands) Life Insurance

Home Service Insurance

Liability for Future Policy Benefits

Pre-adoption liability as of 12/31/2020 $ 987,373 255,513 1,242,886

Change in discount rate assumptions 261,823 108,468 370,291

Effect of reserve changes 6 96 102

Post-adoption liability as of 1/1/2021 $ 1,249,202 364,077 1,613,279

Fixed Annuity Liability

Pre-adoption liability as of 12/31/2020 $ 60,027 18,277 78,304

Adjustments for the removal of shadow adjustments — 3,426 3,426

Post-adoption liability as of 1/1/2021 $ 60,027 21,703 81,730

Deferred Acquisition Costs

Pre-adoption balance as of 12/31/2020 $ 94,771 10,142 104,913

Adjustments for the removal of shadow adjustments 8,270 29,905 38,175

Impact of flooring cohorts at zero 23 12 35

Post adoption balance as of 1/1/2021 $ 103,064 40,059 143,123

Cost of Insurance Acquired

Pre-adoption balance as of 12/31/2020 $ 1,734 9,807 11,541

Adjustments for the removal of shadow adjustments — 484 484

Post adoption balance as of 1/1/2021 $ 1,734 10,291 12,025

At transition, the Company recorded a charge of $ 0.1 million to retained earnings, net of tax, primarily from capping net premium ratios for certain policyholder benefit cohorts at 100%, increasing reserves for certain non-premium paying cohorts and flooring certain DAC cohorts at zero.

Other comprehensive income (loss) ("OCI") was reduced by $ 316.8 million primarily due to the difference in the discount rate used prior to transition and the discount rate at January 1, 2021.

The Company also removed shadow adjustments previously recorded in OCI for the impact of unrealized gains and losses on annuity products that previously amortized unearned revenue, DAC and COIA over expected future gross profits.

December 31, 2023 | 10-K 75

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impacts to Previously Reported Results

Adoption of the standard impacted our previously reported consolidated financial results as follows:

As of December 31, 2022

(In thousands)

As Previously Reported Adoption of New Standard Post Adoption

Consolidated Balance Sheet

Deferred policy acquisition costs $ 140,167 22,760 162,927

Cost of insurance acquired 10,260 387 10,647

Deferred tax asset, net 2,414 ( 2,414 ) —

Total assets 1,569,970 20,733 1,590,703

Future policy benefit reserves:

Life insurance 1,305,506 ( 106,859 ) 1,198,647

Annuities 91,234 ( 91,234 ) —

Policyholders' funds:

Annuities — 121,422 121,422

Other policyholders' funds 40,497 ( 32,996 ) 7,501

Deferred federal income tax liability, net

— 3,653 3,653

Total liabilities 1,568,927 ( 106,014 ) 1,462,913

Retained earnings (accumulated deficit) ( 52,203 ) 68,512 16,309

Accumulated other comprehensive income (loss) ( 195,279 ) 58,235 ( 137,044 )

Total stockholders' equity 1,043 126,747 127,790

December 31, 2022

December 31, 2021

(In thousands, except per share amounts)

As Previously Reported Adoption of New Standard Post Adoption As Previously Reported Adoption of New Standard Post Adoption

Consolidated Statements of Operations

Increase (decrease) in future policy benefit reserves $ 29,640 ( 24,836 ) 4,804 36,444 ( 26,671 ) 9,773

Policyholder liability remeasurement (gain) loss — 2,884 2,884 — 1,434 1,434

Amortization of deferred policy acquisition costs 26,529 ( 12,139 ) 14,390 24,952 ( 11,507 ) 13,445

Amortization of cost of insurance acquired 974 ( 353 ) 621 1,206 ( 449 ) 757

Federal income tax expense (benefit) ( 429 ) 1,799 1,370 ( 43,475 ) 1,274 ( 42,201 )

Net income (loss) ( 6,638 ) 32,645 26,007 36,787 35,919 72,706

Basic earnings (losses) per share of Class A common stock ( 0.13 ) 0.65 0.52 0.74 0.72 1.46

Basic earnings (losses) per share of Class B common stock

— — — 0.37 0.36 0.73

Diluted earnings (losses) per share of Class A common stock ( 0.13 ) 0.64 0.51 0.73 0.71 1.44

Diluted earnings (losses) per share of Class B common stock — — — 0.36 0.36 0.72

December 31, 2023 | 10-K 76

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022

December 31, 2021

(In thousands)

As Previously Reported Adoption of New Standard Post Adoption As Previously Reported Adoption of New Standard Post Adoption

Consolidated Statement of Comprehensive Income (Loss)

Unrealized holding gains (losses) arising during period $ ( 330,765 ) 2,196 ( 328,569 ) ( 5,298 ) ( 36,068 ) ( 41,366 )

Change in current discount rate for liability for future policy benefits — 337,776 337,776 — 92,396 92,396

Income tax expense (benefit) on other comprehensive income items ( 17,994 ) 25,256 7,262 5,465 ( 4,016 ) 1,449

Other comprehensive income (loss) ( 312,771 ) 314,716 1,945 ( 10,763 ) 60,344 49,581

Total comprehensive income (loss) ( 319,409 ) 347,361 27,952 26,024 96,263 122,287

On June 30, 2022, the FASB issued ASU No.

2022-03, Fair Value Measurement (Topic 820:

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.

This standard clarifies that contractual restrictions on equity security sales are not considered part of the security unit of account and, therefore, are not considered in measuring fair value.

In addition, the amendments clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction.

Disclosures on such restrictions are also required.

The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and are required to be applied prospectively, with any adjustments from the adoption recognized in earnings and disclosed.

Early adoption is available.

Citizens' elected to adopt this standard as of December 31, 2023 as adoption of this standard has no impact on our consolidated financial statements.

ACCOUNTING STANDARDS NOT YET ADOPTED

ACCOUNTING STANDARDS ADOPTED

On November 27, 2023, the FASB issued ASU No.

2 unchanged sentences

This amendment expands a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker, clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures.

The amendments are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is available.

Although the ASU only requires additional disclosures about the Company's operating segments, the Company is currently evaluating the effects of adopting this guidance on the consolidated financial statements.

The amendments became effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

As this ASU only requires additional disclosures about the Company's operating segments, there was no material impact to the consolidated financial statements.

On December 14, 2023, the FASB issued ASU No.

5 unchanged sentences

The amendments are effective prospectively for annual periods beginning after December 15, 2024 and early adoption and retrospective application are permitted.

The Company is currently evaluating the impact of adopting this pronouncement on the consolidated financial statements.

No other new accounting pronouncement issued or effective during 2023 had, or is expected to have, a material impact on our consolidated financial statements.

The Company adopted this pronouncement at December 31, 2024 using the retrospective approach.

As this ASU only requires additional disclosures about the Company's taxes, there was no material impact to the consolidated financial statements.

ACCOUNTING STANDARDS NOT YET ADOPTED

In November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which is intended to enhance expense disclosures by requiring additional disaggregation of certain costs and expenses, on an interim and annual basis, within the footnotes to the financial statements.

This ASU is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted and the amendments may be applied either prospectively or retrospectively.

While this ASU will impact only our disclosures and not our financial condition and results of operations, we are currently evaluating the impact of adopting this pronouncement on the consolidated financial statements.

December 31, 2024 | 10-K 73

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

No other new accounting pronouncement issued or effective during 2024 had, or is expected to have, a material impact on our consolidated financial statements.

(2) INVESTMENTS

8 unchanged sentences

Other long-term investments 93,604 6.6 82,725 5.8

Short-term investments — — 1,241 0.1

Cash and cash equivalents 29,271 2.0 26,997 1.8

Total cash and invested assets $ 1,420,499 100.0 % $ 1,429,344 100.0 %

The following table represents the amortized cost, gross unrealized gains and losses and fair value of fixed maturity securities as of December 31, 2023 and 2022.

The following tables represents the amortized cost, gross unrealized gains and losses and fair value of fixed maturity securities as of the dates indicated.

December 31, 2024

1 unchanged sentence

Fixed maturity securities:

Available-for-sale:

Treasury securities $ 5,939 85 115 5,909

5 unchanged sentences

Energy 79,247 40 9,959 69,328

Communications 70,896 111 9,910 61,097

All other 117,387 315 16,368 101,334

9 unchanged sentences

Fixed maturity securities:

Available-for-sale:

Treasury securities $ 5,983 127 48 6,062

5 unchanged sentences

Energy 73,808 64 8,049 65,823

Communications 74,029 309 8,892 65,446

All other 111,124 647 12,439 99,332

2 unchanged sentences

Asset-backed 58,360 290 1,516 57,134

Foreign governments 100 1 — 101

Total fixed maturity securities $ 1,389,038 8,682 158,739 1,238,981

Most of the Company's equity securities are invested in a non-redeemable preferred stock fund at December 31, 2023.

The Company's investments in equity securities are shown below.

Fair Value as of December 31,

1 unchanged sentence

Equity securities:

Stock mutual funds $ — 2,615

Bond mutual funds $ 739 740

6 unchanged sentences

Equity securities are measured at fair value with the change in fair value recorded through net income (loss).

The Company recognized net investment related losses of $ 0.2 million and $ 2.7 million on equity securities held for the years ended December 31, 2023 and 2022, respectively and net investment related gains of $ 0.4 million for the year ended December 31, 2021.

The Company recognized net investment related gains of $ 0.2 million on equity securities held for the year ended December 31, 2024 and losses of $ 0.2 million on equity securities held for the year ended December 31, 2023.

The Company monitors all AFS fixed maturity securities on an on-going basis relative to changes in credit ratings, market prices, earnings trends and financial performance, in addition to specific region or industry reviews.

5 unchanged sentences

The Company's best estimate of expected future cash flows used to determine the credit loss amount is a quantitative and qualitative process.

Quantitative review includes information received from third-party sources such as financial statements,

Quantitative review includes information received from third-party sources such as financial statements, pricing and rating changes, liquidity and other statistical information.

Qualitative factors include judgments related to business strategies, economic impacts on the issuer, overall judgment related to estimates and industry factors as well as the Company's intent to sell the security, or if it is more likely than not that the Company would be required to sell a security before recovery of its amortized cost.

December 31, 2024 | 10-K 75

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

pricing and rating changes, liquidity and other statistical information.

The Company's best estimate of future cash flows involves assumptions including, but not limited to, various performance indicators, such as historical and projected default and recovery rates, credit ratings, and current delinquency rates.

12 unchanged sentences

Fixed maturity securities:

Available-for-sale securities:

Treasury securities $ 835 51 3 435 64 5 1,270 115 8

Government-sponsored enterprises 221 1 1 — — — 221 1 1

States and political subdivisions 42,583 1,484 63 147,534 32,058 177 190,117 33,542 240

3 unchanged sentences

Energy 11,654 438 29 52,537 9,521 65 64,191 9,959 94

Communications 9,973 250 11 48,462 9,660 60 58,435 9,910 71

All Other 25,208 1,237 38 68,756 15,131 87 93,964 16,368 125

Commercial mortgage-backed 100 — 1 89 5 1 189 5 2

Residential mortgage-backed 160 2 11 93,231 13,024 84 93,391 13,026 95

12 unchanged sentences

Fixed maturity securities:

Available-for-sale securities:

Treasury securities $ 1,203 40 5 65 8 2 1,268 48 7

5 unchanged sentences

Energy 3,291 57 1 59,392 7,992 76 62,683 8,049 77

Communications 5,784 153 5 56,108 8,739 69 61,892 8,892 74

All Other 2,080 32 5 85,757 12,407 100 87,837 12,439 105

Commercial mortgage-backed 168 2 2 — — — 168 2 2

Residential mortgage-backed 849 38 5 95,806 10,022 86 96,655 10,060 91

23 unchanged sentences

(In thousands)

2023 2022 2021

Gross investment income:

10 unchanged sentences

(In thousands)

2023 2022 2021

Fixed maturity securities, available-for-sale:

Proceeds $ 29,883 33,914 8,238

Gross realized gains 53 120 189

Gross realized losses 602 112 1

Equity securities:

Fixed maturity securities:

Proceeds $ 15,161 29,883

1 unchanged sentence

Gross realized losses $ 225 602

Investment related gains (losses) are as follows:

Investment related gains and losses are as follows:

Years ended December 31,

(In thousands)

2023 2022 2021

Investment related gains (losses):

2 unchanged sentences

Equity securities — 513

Real estate — — 981

Property and equipment — — 13

Other long-term investments ( 788 ) 342

Investment related gains (losses)

99 2,278 2,977

Change in fair value of equity securities 164 ( 190 )

2 unchanged sentences

Net investment related gains (losses) $ ( 2,626 ) 760

December 31, 2023 | 10-K 82

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company sold its former training facility near Austin, Texas during 2021 for a gross sale price of $ 3.8 million, resulting in a gain on the sale of $ 1.0 million.

The facility was owned by Citizens and was held in Other Non-Insurance Enterprises.

(3) FAIR VALUE MEASUREMENTS

2 unchanged sentences

We also report our equity securities and certain other long-term investments at fair value with changes in fair value reported through the consolidated statements of operations and comprehensive income (loss).

December 31, 2024 | 10-K 78

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair value measurements are generally based upon observable and unobservable inputs.

15 unchanged sentences

We have no investments in this category.

December 31, 2023 | 10-K 83

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables set forth our assets that are measured at fair value on a recurring basis.

The following tables set forth our assets that are measured at fair value on a recurring basis as of the dates indicated.

December 31, 2024

2 unchanged sentences

Financial assets:

Fixed maturity securities, available-for-sale:

Fixed maturity securities:

Treasury and U.S.

5 unchanged sentences

Asset-backed — 54,504 — 54,504

Total fixed maturity securities available-for-sale 6,105 1,232,876 — 1,238,981

Total fixed maturity securities

5,951 1,215,010 — 1,220,961

Equity securities:

15 unchanged sentences

Financial assets:

Fixed maturity securities, available-for-sale:

Fixed maturity securities:

Treasury and U.S.

5 unchanged sentences

Asset-backed — 57,134 — 57,134

Foreign governments — 101 — 101

Total fixed maturity securities available-for-sale 9,611 1,170,008 — 1,179,619

Total fixed maturity securities

6,105 1,232,876 — 1,238,981

Equity securities:

Stock mutual funds 2,615 — — 2,615

Bond mutual funds 740 — — 740

21 unchanged sentences

For these investments, which are measured at fair value on a recurring basis, we use the NAV per share to measure fair value.

The Company recognized net investment related gains of $ 0.9 million and $ 7.5 million on limited partnerships held for the years ended December 31, 2023 and 2021, respectively, and losses of $ 9.7 million for the year ended

The Company recognized net investment related losses of $ 1.0 million on limited partnerships held for the year ended

December 31, 2024 | 10-K 80

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022.

December 31, 2024 and gains of $ 0.9 million for the year ended December 31, 2023.

These investments are included in other long-term investments on the consolidated balance sheets.

2 unchanged sentences

Fair Value Using NAV Per Share Unfunded Commit-

(In years) Fair Value Using NAV Per Share Unfunded Commit-

Fair Value Using NAV Per Share Unfunded Commit-

Limited partnerships:

31 unchanged sentences

The interest rate for this loan was 7.0 % at December 31, 2024 and 2023.

At December 31, 2023, the remaining loan matures in five years .

At December 31, 2024, the remaining loan matures in four years .

Management estimated the fair value using an annual interest rate of 6.25 % at both December 31, 2024 and 2023.

1 unchanged sentence

Cash and cash equivalents.

The fair value of cash and cash equivalents approximate carrying value and are characterized as Level 1 assets in the fair value hierarchy.

The fair value of cash and cash equivalents approximates carrying value and these assets are characterized as Level 1 assets in the fair value hierarchy.

Annuity liabilities.

2 unchanged sentences

Other long-term investments.

The following table summarizes the carrying amounts of other long-term investments.

Financial instruments included in other long-term investments are classified in various levels of the fair value hierarchy.

The following table summarizes the carrying amounts of these investments.

As of December 31,

6 unchanged sentences

Total other long-term investments $ 93,604 82,725

We carried no limited partnership investments at cost at December 31, 2023 and $ 2.4 million were carried at cost at December 31, 2022.

We carried no limited partnership investments at cost at either December 31, 2024 or December 31, 2023.

We are a member of the FHLB of Dallas and such membership requires members to own stock in the FHLB.

8 unchanged sentences

Year Ended December 31, 2024

(In thousands) Permanent Permanent Limited Pay Other Business Total

(In thousands)

Permanent Permanent Limited Pay Other Business Total

Life Insurance:

17 unchanged sentences

Year Ended December 31, 2023

(In thousands) Permanent Permanent Limited Pay Other Business Total

(In thousands)

Permanent Permanent Limited Pay Other Business Total

Life Insurance:

16 unchanged sentences

$ 148,832 24,639 2,297 175,768

DAC capitalization increased for the year ended December 31, 2023, compared to the same prior year period mainly from increased commissions from higher first year sales across our business segments.

DAC capitalization increased for the year ended December 31, 2024, compared to the same prior year period mainly from increased commissions from higher first year sales in our Life Insurance segment.

December 31, 2024 | 10-K 83

2 unchanged sentences

Year Ended December 31, 2024

(In thousands) Permanent Permanent Limited Pay Other Business Total

(In thousands)

Permanent Permanent Limited Pay Other Business Total

Life Insurance:

14 unchanged sentences

Year Ended December 31, 2023

(In thousands) Permanent Permanent Limited Pay Other Business Total

(In thousands)

Permanent Permanent Limited Pay Other Business Total

Life Insurance:

25 unchanged sentences

The following tables summarize balances of and changes in the liability for future policy benefits for our reporting cohorts:

Permanent, which summarizes insurance policies with premiums payable over the lifetime of the policy, and Permanent Limited Pay, which summarizes insurance policies with premiums payable for a limited time after which the policy is fully paid up.

Both reporting cohorts include whole life and endowment policies.

Permanent, which summarizes insurance policies with premiums payable over the lifetime of the policy,

December 31, 2024 | 10-K 85

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and Permanent Limited Pay, which summarizes insurance policies with premiums payable for a limited time after which the policy is fully paid up.

Both reporting cohorts include whole life and endowment policies.

December 31, 2024

32 unchanged sentences

Net liability for future policy benefits $ 696,638 172,104 868,742 104,351 97,761 202,112

Flooring impact 2 — 2 — — —

Reinsurance recoverable 1,639 — 1,639 — — —

Net liability for future policy benefits, after reinsurance recoverable $ 695,001 172,104 867,105 104,351 97,761 202,112

The Company performed its annual review of policy benefit reserves assumptions in the third quarter of 2024 and recorded the effects of changes in its cash flow assumptions, which resulted in a net increase in future policy benefit reserves, primarily from mortality and lapse assumptions that better reflect emerging experience for the new CICA Domestic block of business.

December 31, 2024 | 10-K 86

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2024, the Life Insurance segment increased reserves compared to the same period in 2023 due to the unfavorable impact of actual versus expected experience related to mortality and lapses.

There was minimal impact to the Home Service Insurance segment resulting from actual to expected experience for the years ended December 31, 2024 and 2023.

December 31, 2023

31 unchanged sentences

Net liability for future policy benefits $ 728,433 181,862 910,295 113,115 107,858 220,973

Flooring impact 1 — 1 — — —

Net liability for future policy benefits, after flooring impact $ 712,188 185,403 897,591 106,843 103,101 209,944

Net premiums collected is defined as the transactional gross premiums collected in the current period times the net premium ratio.

Issuances are calculated as the present value, using the locked-in discount rate, of the expected net premiums or the expected future policy benefits related to new policies issued during the years ended December 31, 2023 and 2022.

Interest accrual is the interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the locked-in discount rate.

Benefit payments are the transactional benefits (death, lapse, surrenders and maturities) paid in the current period.

Derecognition refers to a subset of the issuances or the present value of future premiums released on new issues that lapsed during the years ended December 31, 2023 and 2022 as well as other reconciling items.

The effects of actual variances from expected experience lines are primarily impacted by the actual policy cash flows during the period

December 31, 2024 | 10-K 87

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

compared to that which was expected in the reserve assumptions.

If the net of the two lines is a positive number, the implication is an unfavorable result with policy cash flows less favorable than assumed while a negative number implies a favorable result compared to assumptions.

Our policy experience will vary from actual experience in any one period, either favorably or unfavorably.

The following table reconciles the net liability for future policy benefits shown above to the liability for future policy benefits reported in the consolidated balance sheets.

35 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following tables summarize the amount of revenue and interest related to long-term duration contracts recognized in the consolidated statements of operations and comprehensive income (loss):

Years Ended December 31,

2023 2022 2021

The following tables summarize the amount of revenue and interest related to long-term duration contracts recognized in the consolidated statements of operations and comprehensive income (loss) as of the dates indicated.

For the Years Ended

(In thousands)

Gross Premiums Interest Expense Gross Premiums Interest Expense Gross Premiums Interest Expense

December 31, 2024 December 31, 2023

Gross Premiums Interest Expense Gross Premiums Interest Expense

Life Insurance Segment:

109 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table reconciles policyholders' account balances shown above to the policyholders' account balances liability in the consolidated balance sheets.

The following table reconciles policyholders' account balances shown above to the policyholders' account balance liability in the consolidated balance sheets.

As of December 31,

8 unchanged sentences

Total premiums paid in advance $ 31,182 32,446

(6) POLICY CLAIM LIABILITY AND SHORT DURATION CONTRACTS

The following table presents information on changes in the liability for life, accident and health and property policy and contract claims.

(6) POLICY CLAIM LIABILITY

The following table presents information on changes in the liability for policy and contract claims.

Years ended December 31,

(In thousands)

2023 2022 2021

Policy claims payable:

17 unchanged sentences

Our claim assumptions will vary from actual experience in any one period, either favorably or unfavorably.

SHORT DURATION CONTRACTS

The Company's short duration contracts consist of credit life and credit disability in the Life Insurance segment and property insurance in the Home Service Insurance segment.

The credit insurance lines are an immaterial part of

December 31, 2023 | 10-K 97

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

short duration contracts so the following disclosures cover only the property insurance line of business in the Home Service Insurance segment.

Special Property Insurance (Allied and Fire)

The following table presents incurred claims development as of December 31, 2023, net of reinsurance, as well as cumulative claim frequency and the total of incurred-but-not-reported liabilities plus expected development on reported claims included within the net incurred claims amounts.

This information is presented for the last five years as these claims rarely pay out over a longer period of time.

As of December 31, 2023

Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims

Cumulative Number of Reported Claims

For the Years Ended December 31,

($ In thousands) 2019 2020 2021 2022 2023

Accident Year:

2019 $ 1,549 1,150 1,161 1,106 1,105 — 610

2020 2,598 2,670 2,577 2,694 — 2,415

2021 2,087 1,644 1,312 2 2,397

2022 1,213 1,262 4 362

2023 776 27 191

Total $ 7,149

The following table presents paid claims development as of December 31, 2023, net of reinsurance.

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Years Ended December 31,

(In thousands) 2019 2020 2021 2022 2023

Accident Year:

2019 $ 1,166 1,071 1,091 1,105 1,105

2020 1,997 2,639 2,576 2,694

2021 1,435 1,638 1,311

2022 1,011 1,259

Total $ 7,124

All outstanding liabilities before 2019, net of reinsurance

Liabilities for claims and claim adjustment expenses, net of reinsurance $ 33

(7) REINSURANCE

In the normal course of business, the Company reinsures portions of certain policies that we underwrite to mitigate exposure to potential losses and/or to provide additional capacity for growth.

In our international business, we generally retain $ 100,000 on any one individual life insurance policy and reinsure the death benefit amount above $ 100,000 .

We also reinsure 100 % of our accidental death benefit rider coverage.

In the second quarter of 2024, CICA Domestic entered into a coinsurance agreement with RGA Reinsurance Company ("RGA").

Under this agreement, CICA Domestic initially elected for RGA to reinsure 50 % of its newly written final expense business.

December 31, 2024 | 10-K 92

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated balance sheets are as follows:

As of December 31,

(In thousands)

Net outstanding liabilities:

Special property $ 33 263

Other short duration insurance lines 151 158

Liabilities for unpaid claims and claim adjustment expenses, net of reinsurance 184 421

Reinsurance recoverable on unpaid claims:

Special property 1,220 1,275

Other short duration insurance lines 78 798

Total reinsurance recoverable on unpaid claims 1,298 2,073

Insurance lines other than short duration 5,155 7,390

Total gross liability for unpaid claims and claim adjustment expense $ 6,637 9,884

The following is supplementary information to the consolidated financial statements about average historical claims duration as of December 31, 2023.

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance

Years 1 2 3 4 5

Special property 93 % 13 % ( 8 ) % 3 % — %

(7) REINSURANCE

In the normal course of business, the Company reinsures portions of certain policies that we underwrite to limit disproportionate risks.

During 2023 and 2022, we generally retained $ 100,000 on any one individual life insurance policy.

The Company also reinsures 100 % of our accidental death benefit rider coverage.

The Company maintained catastrophe reinsurance with the net retention on any one loss of $ 30,000 , which is the maximum policy limit on any single risk.

During 2023, this reinsurance provided $ 11.0 million of coverage with the Company retaining $ 2.4 million of the risk.

In 2022, this reinsurance provided $ 11.0 million of coverage once the Company paid a $ 1.4 million deductible.

In consideration for a reinstatement premium, second event coverage was provided under the same terms for both years.

The Company remains contingently liable in the event that any of the reinsurers are unable to meet their obligations under any reinsurance agreement.

Company remains contingently liable in the event that any of the reinsurers are unable to meet their obligations under any reinsurance agreement.

Prior to 2024, the Company maintained catastrophic reinsurance for its Louisiana property and casualty business operated through Security Plan Fire Insurance Company.

This reinsurance had a net retention on any one loss of $ 30,000 , which was the maximum policy limit on any single risk.

The Company ceased this business in June 2023 and thus did not renew this reinsurance.

Our amounts recoverable from reinsurers represent receivables from and reserves ceded to reinsurers.

We obtain reinsurance from multiple reinsurers, and we monitor concentration as well as financial strength ratings of our principal reinsurers.

The ratings by A.M.

We obtain reinsurance from multiple reinsurers and monitor our reinsurance concentration as well as the financial strength ratings of our reinsurers.

Their ratings by A.M.

Best Company range from A- (Excellent) to A+ (Superior).

Assumed and ceded life reinsurance activity is summarized as follows:

A summary of insurance in force, along with assumed and ceded life reinsurance activity, is summarized below as of the periods indicated.

(In thousands)

Insurance in force:

Direct life insurance in force $ 5,227,506 4,922,254

Aggregate assumed life insurance in force 3,427 3,772

1 unchanged sentence

Net life insurance in force $ 4,409,718 4,306,429

December 31, 2023 | 10-K 99

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's reinsurance recoverable on ceded reinsurance was $ 6.9 million and $ 4.0 million in 2024 and 2023, respectively.

Premiums and claims and surrenders assumed and ceded for all lines of business for these years are summarized as follows:

Premiums, claims and surrenders assumed and ceded and expenses ceded for all lines of business are summarized for the periods indicated below.

Years ended December 31,

(In thousands)

2023 2022 2021

Premiums from short duration contracts:

Direct $ 1,837 4,425

Assumed — — —

Ceded ( 16 ) ( 1,792 )

9 unchanged sentences

$ ( 2,341 ) ( 936 )

During the third quarter of 2021, SPFIC was impacted by Hurricane Ida, the second-most damaging and intense hurricane in Louisiana on record, behind Hurricane Katrina in 2005.

The Company has a reinsurance agreement that covers catastrophic events such as Hurricane Ida.

We paid the $ 0.5 million retention in claim amounts for Ida and do not expect to exceed the maximum reinsurance coverage.

Commissions assumed and (ceded)

$ ( 5,539 ) 35

Other general expenses ceded $ ( 960 ) —

(8) COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

From time to time, we are subject to legal and regulatory actions relating to our business.

We defend all claims vigorously.

As a result, we incur defense costs, including attorneys' fees, other direct litigation costs and the expenditure of management time that otherwise would be devoted to our business.

If we suffer an adverse judgment as a result of litigation claims or if a regulator fines us, it could have a material adverse effect on our business, results of operations and financial condition.

We may incur defense costs, including attorneys' fees, and other direct litigation costs associated with defending claims.

If we suffer an adverse judgment as a result of litigation claims, it could have a material adverse effect on our business, results of

December 31, 2024 | 10-K 93

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

operations and financial condition.

The Company's policy is to accrue for defense costs as those services are provided.

Trade Secret Lawsuit

In the first quarter of 2024, a jury trial was held in the “trade secret lawsuit”.

The trade secret lawsuit was filed in 2018 by Citizens, CICA Life Ltd.

(Bermuda) and CICA Life Insurance Company of America (collectively, the “Citizens Companies,” “we,” "us" or "our") against certain former employees and independent consultants who we alleged unlawfully took Citizens’ confidential information in order to unfairly compete with us.

Our claims against these parties included various unfair competition, tortious interference, breach of contract and other related claims.

As previously disclosed, the jury found that Citizens should pay Alexis Delgado and Carlos Nalsen Landa, former independent consultants, approximately $ 1.3 million for “money had and received”, an equitable theory that claimed that the Citizens Companies would be unjustly enriched if they didn’t pay past and future commissions to Delgado and Landa.

Additionally, the trial court awarded defendants Michael P.

Buchweitz and Randall Riley approximately $ 3.5 million of their legal fees incurred during the trade secret lawsuit.

On August 16, 2024, the judge signed a Final Judgment reflecting the jury decision and the court award of the legal fees.

We do not believe the jury properly found that Delgado or Landa were entitled to any prior or future commissions as there was no evidence that we actually held any amount of commissions that they claim they should have received.

We also do not believe that Riley or Buchweitz are entitled to legal fees because they were found to have breached the contracts whose fee shifting provisions they sought to invoke.

Both of these judgments have been accrued pending the result of our appeal.

On September 17, 2024, we filed an appeal bond with the trial court in order to stay any execution of the judgment against us.

We have appealed the judgment against us and the appeal is currently pending in the Court of Appeals, Third District of Texas.

CREDIT FACILITY

On May 5, 2021 , the Company entered into a $ 20 million senior secured revolving credit facility (the “Credit Facility”) with Regions Bank ("Regions").

On May 3, 2024 , the Company renewed its $ 20 million senior secured revolving credit facility (the “Credit Facility”) with Regions Bank ("Regions").

The Credit Facility has a three-year term, maturing on May 5, 2027 , and allows the Company to borrow up to $ 20 million for working capital purposes, capital expenditures and other corporate purposes.

Revolving loans may be requested by the Company in aggregate minimum principal amounts of $ 0.5 million per loan.

At the Company's election, the revolving loans may either bear a base rate, which is 1.75 % plus a base rate (a fluctuating rate per annum) equal to the greatest of (a) Regions' prime rate, (b) the federal funds rate plus 0.50 %, or (c) 0.75 %.

At the Company's election, the revolving loans may either bear a rate (a fluctuating rate per annum) equal to the greatest of (a) Regions' prime rate, (b) the federal funds rate plus 0.50 %, (c) the index rate plus 1.00 % or (d) 0.75 %.

The Company is required to pay Regions a quarterly commitment fee of 0.375 % of the unused portion of the Credit Facility, which the Company expenses as it is incurred.

Obligations under the Credit Facility are secured by substantially all of the assets of the Company other than the equity interests in all of the regulated insurance subsidiaries, real estate owned by the Company, and other limited exceptions.

Obligations under the Credit Facility are secured by substantially all of the assets of the Company other than the equity interests its subsidiaries, real estate owned by the Company, and other limited exceptions.

The Credit Facility contains customary events of default and financial, affirmative and negative covenants, including but not limited to restrictions on indebtedness, liens, investments, asset dispositions and restricted payments.

As of December 31, 2024, the Company had no t borrowed any funds against the Credit Facility and was not in violation of any covenants.

December 31, 2023 | 10-K 100

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONTRACTUAL OBLIGATIONS

4 unchanged sentences

Our operating lease liabilities had a weighted-average lease term of 5.8 years remaining as of December 31, 2024.

December 31, 2024 | 10-K 94

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Maturities of our remaining operating lease liabilities as of December 31, 2024 are as follows.

6 unchanged sentences

We record the lease right-of-use asset in Property and Equipment, Net and the lease liability in Other Liabilities using a weighted average discount rate of 2.71 %.

Cash payments related to the operating lease liabilities were $ 1.4 million for both of the years ended December 31, 2023 and 2022 and were reported in operating cash flows.

Cash payments related to the operating lease liabilities were $ 1.5 million and $ 1.4 million for the years ended December 31, 2024 and 2023, respectively, and were reported in operating cash flows.

The Company does not engage in lease agreements among related parties.

4 unchanged sentences

and (b) the holders of the Class B common stock have the exclusive right to elect a simple majority of the Board of Directors of Citizens.

In April 2021, we repurchased all of the outstanding Class B common stock and it is now classified as treasury stock.

As a result, all of the directors are elected by the holders of the Class A common stock.

Citizens has never issued any preferred stock.

December 31, 2023 | 10-K 101

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the change in the number of shares of Class A and Class B common stock and treasury stock issued is as follows:

Citizens currently has no outstanding preferred stock or Class B common stock other than that held in treasury.

A summary of the change in the number of shares of Class A common stock and treasury stock issued is as follows:

(In thousands) Common Stock Treasury

Class A Class B Stock

Balance at December 31, 2020

52,654 1,002 3,136

Stock issued under stock investment plan 404 — —

Stock issued for compensation 112 — —

Acquisition of Class B shares — — 1,002

Class A Stock

Balance at December 31, 2022

53,170 1,002 4,138

Stock issued under stock investment plan 475 — —

Stock issued for compensation 125 —

Acquisition of Class A shares — 393

Other share issuance 22 — —

Balance at December 31, 2023

53,758 1,002 4,937

Stock issued for compensation 352 —

Acquisition of Class A shares — — 393

Balance at December 31, 2024

53,883 1,002 5,330

December 31, 2024 | 10-K 95

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EARNINGS PER SHARE

2 unchanged sentences

(In thousands, except per share amounts)

Basic and diluted earnings per share:

$ 14,912 24,437

Net income (loss) $ 24,437 26,007 72,706

Numerator for Basic Earnings Per Share:

Net income (loss) allocated to Class A common stock $ 24,437 26,007 72,481

Net income (loss) allocated to Class B common stock — — 225

Net income (loss) $ 24,437 26,007 72,706

Denominator for Basic Earnings Per Share:

Weighted average shares of Class A outstanding 49,696 50,139 49,664

Weighted average shares of Class B outstanding — — 308

Total weighted average shares outstanding 49,696 50,139 49,972

Basic earnings (loss) per share of Class A common stock $ 0.49 0.52 1.46

Basic earnings (loss) per share of Class B common stock — — 0.73

Numerator for Diluted Earnings Per Share:

Net income (loss) allocated to Class A common stock $ 24,437 26,007 72,484

Net income (loss) allocated to Class B common stock — — 222

Net income (loss) $ 24,437 26,007 72,706

Denominator for Diluted Earnings Per Share:

Weighted average shares of Class A outstanding 50,681 50,867 50,337

Weighted average shares of Class B outstanding — — 308

Total weighted average shares outstanding 50,681 50,867 50,645

Diluted earnings (loss) per share of Class A common stock $ 0.48 0.51 1.44

Diluted earnings (loss) per share of Class B common stock — — 0.72

December 31, 2023 | 10-K 102

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net income allocated to Class A common stock

$ 14,912 24,437

Weighted average shares of Class A outstanding - basic

49,738 49,696

Weighted average shares of Class A outstanding - diluted

50,748 50,681

Basic earnings per share of Class A common stock

Diluted earnings per share of Class A common stock

STATUTORY CAPITAL AND SURPLUS

1 unchanged sentence

All other domestic subsidiaries are owned by CICA Domestic.

SPFIC, our property insurance subsidiary, was dissolved during 2024.

As of December 31,

6 unchanged sentences

(In thousands)

2023 2022 2021

Combined statutory net income (loss):

6 unchanged sentences

Payments of dividends in excess of such amounts would generally require approval by regulatory authorities.

Our domestic insurance subsidiaries have calculated their risk-based capital ("RBC") in accordance with the National Association of Insurance Commissioners' ("NAIC") Model Rule and the RBC rules as adopted by their respective states of domicile.

As part of the novation transaction with CICA Bermuda, the Company agreed to infuse capital into CICA Domestic as required by the Colorado Department of Insurance to maintain CICA Domestic's RBC above 350% in any future calendar year-end periods.

All domestic insurance subsidiaries exceeded RBC minimum levels at December 31, 2023.

December 31, 2024 | 10-K 96

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

respective states of domicile.

All domestic insurance subsidiaries exceeded the minimum capital requirements at December 31, 2024.

On March 27, 2024, Citizens and the Colorado Division of Insurance entered into a capital maintenance agreement that specifies that Citizens will infuse capital as needed to ensure that CICA Domestic's RBC remains above 350%.

As CICA Domestic's RBC exceeded 350% at December 31, 2024, no capital contribution was necessary.

CICA International is a Puerto Rico domiciled company.

2 unchanged sentences

CICA International began issuing new business as of January 1, 2023 and received the transfer of all of CICA Bermuda's in force insurance business as of August 31, 2023.

On that date, Citizens entered into a Keep Well Agreement with CICA International to replace the Keep Well Agreement that had been in place between Citizens and CICA Bermuda.

The Keep Well Agreement requires Citizens to contribute up to $ 10 million in capital to CICA International as necessary to ensure that CICA International maintains at least either (i) 112 % of its required ratio of premiums to capital and surplus, or (ii) 200 % of the minimum capital and surplus requirement, whichever is higher.

The initial term of the Keep Well Agreement is 12 months.

Since CICA International's capital exceeds both of the metrics, Citizens is not required to make a capital contribution.

Any capital that Citizens is required to contribute could negatively impact the Company's capital resources and liquidity.

December 31, 2023 | 10-K 103

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CICA International's capital exceeds both of the required minimum capital and related ratio.

As of December 31,

(In thousands)

CICA Bermuda capital and surplus

CICA International capital and surplus

CICA Bermuda requested a modification as permitted under Section 6C (1) of the Bermuda Insurance Act 1978 (the "Insurance Act") to remove the impact of unrealized gains or losses from the Minimum Margin of Solvency requirement.

On January 19, 2023, the Bermuda Monetary Authority granted CICA Bermuda a permitted practice, effective December 31, 2022, pursuant to Section 6C (1) of the Insurance Act to report its fixed income maturity securities at amortized cost in its unconsolidated statutory financial statements.

$ 91,513 66,619

Years ended December 31,

(In thousands)

2023 2022 2021

CICA Bermuda net income (loss)

CICA International net income

$ 18,871 27,484

CICA International net income (loss)

As stated above, CICA International exceeded both of the capital and surplus metrics established by the OIC.

1 unchanged sentence

(10) SEGMENT AND OTHER OPERATING INFORMATION

The Company's segments are defined by management's reporting structure and operating activities.

The chief operating decision maker ("CODM"), our President and Chief Executive Officer, reviews and analyzes income statement information by segment to make decisions, assess financial performance and allocate resources across the Company in order to meet the overall strategic objectives of the Company.

The Company has two reportable segments:

Life Insurance and Home Service Insurance.

Our Life Insurance segment issues endowment contracts, which are principally accumulation contracts that incorporate an element of life insurance protection, and ordinary whole life insurance to non-U.S.

Our Life Insurance segment issues endowment contracts, which are principally accumulation contracts that incorporate an element of life insurance protection, and whole life insurance to non-U.S.

residents through CICA International.

These contracts are designed to provide a fixed amount of insurance coverage over the life of the insured and may utilize rider benefits to provide additional coverage and annuity benefits to enhance accumulations.

CICA Domestic issues ordinary whole life, final expense, life products with living benefits, critical illness and credit life and credit disability policies throughout the U.S.

CICA Domestic issues whole life, final expense and life products with living benefits throughout the U.S.

Our Home Service Insurance segment operates through our subsidiaries SPLIC and MGLIC, and focuses on the life insurance needs of the lower-income markets, primarily in Louisiana, Mississippi and Arkansas.

SPLIC also issues critical illness policies.

Our policies are sold and serviced through funeral homes and independent agents who sell policies, collect premiums and service policyholders.

Our Home Service Insurance segment also sold property insurance policies in Louisiana and Arkansas until operations were ceased effective June 30, 2023.

SPFIC sold property insurance policies in Louisiana and Arkansas until operations were ceased effective June 30, 2023.

SPFIC was dissolved during 2024.

The Life Insurance and Home Service Insurance portions of the Company constitute separate businesses.

2 unchanged sentences

GAAP and are the same as those described in the summary of significant accounting policies.

The Company evaluates profit and loss performance based on U.S.

The CODM evaluates profit and loss performance based on U.S.

GAAP net income (loss) before federal income taxes for its two reportable segments.

62 unchanged sentences

Income (loss) before federal income tax $ 28,621 3,013 ( 5,460 ) 26,174

The Company categorizes premiums in two categories - first year premiums are premiums received within the first 12 months of a policy's issuance and any premiums received thereafter are renewal premiums.

A summary of the direct premiums for the Life Insurance segment is detailed below.

Years ended December 31,

(In thousands)

Life Insurance Segment

Direct premiums:

First year $ 27,796 13,479

Renewal 107,861 110,372

Total direct premiums 135,657 123,851

( 5,468 ) ( 1,706 )

Total premiums $ 130,189 122,145

December 31, 2024 | 10-K 99

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2021

Since the property casualty business was dissolved during 2024, a summary of the Home Service Insurance segment direct life and A&H premium breakout is detailed below.

Years ended December 31,

(In thousands)

Insurance Home

Service Insurance Other

Non-Insurance

Enterprises Consolidated

Life insurance $ 125,558 44,243 — 169,801

Accident and health insurance 500 750 — 1,250

Property insurance — 3,677 — 3,677

Net investment income (loss) 47,216 13,224 1,055 61,495

Investment related gains (losses), net 9,176 618 1,197 10,991

Other income (loss) 3,362 7 ( 37 ) 3,332

Total revenue 185,812 62,519 2,215 250,546

Benefits and expenses:

Insurance benefits paid or provided:

Claims and surrenders 91,390 28,345 — 119,735

Increase in future policy benefit reserves 7,822 1,951 — 9,773

Policyholder liability remeasurement (gain) loss

829 605 — 1,434

Policyholders' dividends 6,140 40 — 6,180

Total insurance benefits paid or provided 106,181 30,941 — 137,122

Commissions 18,747 16,716 — 35,463

Other general expenses 20,846 14,739 7,785 43,370

Capitalization of deferred policy acquisition costs ( 16,174 ) ( 6,566 ) — ( 22,740 )

Amortization of deferred policy acquisition costs 11,536 1,909 — 13,445

Amortization of cost of insurance acquired 150 607 — 757

Goodwill impairment

Home Service Insurance Segment

Direct life and A&H premiums:

First year $ 5,226 5,810

Renewal 37,958 38,316

Total direct life and A&H premiums

$ 43,184 44,126

Total benefits and expenses 153,910 58,346 7,785 220,041

Income (loss) before federal income tax $ 31,902 4,173 ( 5,570 ) 30,505

The table below summarizes assets by segment.

6 unchanged sentences

Total assets $ 1,685,325 1,668,928

December 31, 2023 | 10-K 107

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GEOGRAPHIC INFORMATION

The following table sets forth, by country, the Company's annual total of earned premiums from geographic area for the years indicated:

The following table sets forth the Company's annual total of earned premiums by country of policyholder residence for the years indicated.

Years ended December 31,

(In thousands)

2023 2022 2021

United States $ 58,468 50,594

5 unchanged sentences

Other foreign countries 39,317 38,943

Net reinsurance ( 3,518 ) ( 3,259 ) ( 4,077 )

Reinsurance and change in premium accruals ( 4,657 ) ( 3,766 )

Total premiums $ 173,328 167,039

(11) INCOME TAXES

CICA International and CICA Bermuda, wholly-owned subsidiaries of Citizens, are considered controlled foreign corporations for federal income tax purposes.

CICA International and CICA Bermuda are considered controlled foreign corporations for federal income tax purposes.

As a result, the insurance activity of CICA International and CICA Bermuda are subject to Subpart F of the Internal Revenue Code ("IRC") and are included in Citizens’ taxable income.

Due to the 0 % enacted tax rate in Bermuda, there are no deferred taxes recorded for CICA Bermuda's temporary differences.

CICA International has applied for a tax exemption decree from the Government of Puerto Rico which will freeze the income tax rate at 4% on any taxable earnings in excess of $1.2 million.

For the year ended December 31, 2023, the Subpart F income inclusion generated $ 1.6 million of federal income tax expense and $ 2.1 million of federal income tax expense for the years ended December 31, 2022 and 2021.

In connection with the transfer of CICA Bermuda’s business from a zero tax jurisdiction to CICA International’s 4 % tax jurisdiction in Puerto Rico, certain opening tax assets and liabilities, mainly related to investments, DAC and reserves, were established.

The net deferred tax asset of $ 1.4 million was recorded to retained earnings during 2023 in accordance with ASC Topic 805.

Due to the 0 % enacted tax rate in Bermuda for all periods prior to the transfer of CICA Bermuda's insurance in force business to CICA International, there are no deferred taxes recorded for CICA Bermuda's temporary differences.

The Government of Puerto Rico

December 31, 2024 | 10-K 100

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

approved a tax exemption decree for CICA International which freezes the income tax rate at 0 % on taxable earnings up to $ 1.2 million and 4 % on any taxable earnings in excess of $ 1.2 million for a minimum of 15 years.

Since the transfer was between companies under common control, the $ 4.4 million reduction in the deferred federal income tax liability was recorded as a credit to equity, $ 1.4 million of which increased retained earnings and $ 3.0 million of which reduced accumulated other comprehensive income (loss), based on the nature of the components during 2023 in accordance with ASC Topic 805.

A summary of the income (loss) before federal income tax expense, by jurisdiction, is as follows:

Years ended December 31,

(In thousands)

Income (loss) before federal income tax:

United States $ ( 4,317 ) ( 214 )

Puerto Rico 19,297 11,514

Bermuda — 14,874

Total income before federal income tax

$ 14,980 26,174

Federal income tax expense (benefit) consists of:

Years ended December 31,

(In thousands)

Current income tax expense (benefit) related to:

United States - normal operations

United States - UTP impact

Total current income tax expense

Deferred income tax expense (benefit) related to:

United States

( 892 ) ( 108 )

Total deferred income tax expense (benefit)

( 1,800 ) 860

Total federal income tax expense (benefit)

December 31, 2024 | 10-K 101

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation between the U.S.

3 unchanged sentences

2024 % 2023 %

Expected tax expense (benefit) $ 5,497 21.0 % $ 5,749 21.0 % $ 6,406 21.0 %

Change in valuation allowance — — 1 — — — %

Foreign income tax rate differential ( 5,029 ) ( 19.2 ) ( 5,260 ) ( 19.2 ) ( 9,427 ) ( 30.9 )

Tax-exempt interest and dividends-received deduction ( 35 ) ( 0.1 ) ( 63 ) ( 0.2 ) ( 114 ) ( 0.4 )

Adjustment of prior year taxes — — — — ( 83 ) ( 0.3 )

Effect of uncertain tax position ( 971 ) ( 3.7 ) ( 1,185 ) ( 4.3 ) ( 43,834 ) ( 143.7 )

Nondeductible costs to remediate tax compliance issue — — — — ( 176 ) ( 0.6 )

Compensation limitation under 162(m) and 280(g) 80 0.3 67 0.2 ( 21 ) ( 0.1 )

Subpart F income 1,595 6.1 2,053 7.5 2,102 6.9

Expected federal income tax expense (benefit):

$ 3,146 21.0 % $ 5,497 21.0 %

Foreign tax effects:

Statutory tax rate difference between Puerto Rico

and United States ( 3,280 ) ( 21.9 ) ( 5,029 ) ( 19.2 )

Income tax exclusion

( 48 ) ( 0.3 ) ( 48 ) ( 0.2 )

Other ( 35 ) ( 0.2 ) — —

Effect of cross-border tax laws:

Subpart F inclusions

( 524 ) ( 3.5 ) 1,595 6.1

PFIC QEF inclusions

800 5.3 570 2.2

Puerto Rico income tax exclusion

Other 2 — — —

Nontaxable or nondeductible items:

Tax-exempt interest and dividends-received deduction ( 23 ) ( 0.1 ) ( 35 ) ( 0.1 )

Compensation limitation under Section 162(m) & 280(g)

( 2 ) — 80 0.3

Rate differential on net operating loss carryback claim — — — — 290 1.0

Goodwill impairment — — — — 2,651 8.7

Changes in unrecognized tax benefits

— — ( 971 ) ( 3.7 )

Other ( 20 ) ( 0.1 ) 78 0.2

Total federal income tax expense (benefit) $ 68 0.5 % $ 1,737 6.6 %

Income tax expense (benefit) consists of:

A summary of the total federal income tax payments made and refunds received by jurisdiction is as follows:

Years ended December 31,

(In thousands)

2023 2022 2021

Income tax expense (benefit):

Current - normal operations $ 1,848 632 ( 68 )

Current - UTP release impact ( 971 ) ( 1,185 ) ( 43,834 )

Deferred 860 1,923 1,701

Total income tax expense (benefit) $ 1,737 1,370 ( 42,201 )

Tax payments (refunds)

United States $ ( 828 ) 1,798

Puerto Rico 1,300 1

Total tax payments

December 31, 2024 | 10-K 102

7 unchanged sentences

Accrued policyholder dividends and expenses 200 218

Investments — 113

Deferred intercompany loss 1,721 1,780

Unrealized losses on investments available-for-sale

15,816 12,786

Accrued compensation 745 379

7 unchanged sentences

Future policy benefit reserves ( 4,363 ) —

Unrealized gains on investments available-for-sale ( 322 ) —

( 316 ) ( 322 )

Tax reserves transition liability ( 747 ) ( 1,494 )

3 unchanged sentences

Net deferred tax liability $ ( 3,442 ) ( 1,102 )

A summary of the changes in the components of deferred federal and state income taxes is as follows:

A summary of changes in the components of deferred federal and state income taxes is as follows:

(In thousands)

7 unchanged sentences

Balance December 31, $ ( 3,442 ) ( 1,102 )

The Company and our subsidiaries have no net operating loss carryforwards at December 31, 2023.

The Company and our subsidiaries have capital loss carryforwards of $ 1.6 million at December 31, 2023, which begin expiring in 2026.

The Company and our subsidiaries have $ 6.3 million in net operating loss carryforwards in the U.S.

at December 31, 2024.

The Company and our subsidiaries have capital loss carryforwards of $ 2.0 million in the U.S.

and $ 0.5 million in Puerto Rico at December 31, 2024, which begin expiring in 2026 and 2031, respectively.

December 31, 2024 | 10-K 103

2 unchanged sentences

At December 31, 2024 and 2023, we determined it was more likely than not that a portion of our capital deferred tax assets would not be realized in their entirety.

Thus, the Company holds valuation allowances of $ 4.5 million and $ 4.2 million in other comprehensive income (loss) at December 31, 2023 and 2022.

Thus, the Company holds valuation allowances of $ 5.1 million and $ 4.5 million in other comprehensive income (loss) at December 31, 2024 and 2023, respectively.

The Company recognizes only the impact of tax positions that, based on their technical merits, are more likely than not to be sustained upon an audit by the taxing authority.

2 unchanged sentences

(In thousands)

2023 2022 2021

Balance January 1,

$ 971 2,156 45,990

Reductions for tax positions of prior years — ( 971 )

Balance December 31, $ — —

This unrecognized tax benefit was reported in the balance of current federal income tax payable on the consolidated balance sheets.

Included in these amounts are interest expense of $ 0.2 million and $ 0.4 million with respect to unrecognized tax benefits as of December 31, 2022 and 2021, respectively.

There are no unrecognized tax benefits remaining as of December 31, 2023.

The Company accrued an uncertain tax position of $ 1.0 million and $ 2.2 million at December 31, 2022 and 2021, respectively, which would have affected the effective tax rate if recognized.

The Company accrued an uncertain tax position of $ 1.0 million at December 31, 2022 which would have affected the effective tax rate if recognized.

However, the Company released all of the remaining uncertain tax positions, including interest, during the fourth quarter of 2023 following the expiration of the statute of limitations on the tax year ended December 31, 2019.

The Company has no uncertain tax positions as of December 31, 2024.

The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense.

In the consolidated statements of operations and comprehensive income (loss), the amount of interest income recorded was $ 0.2 million, $ 0.2 million and $ 9.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

In the consolidated statements of operations and comprehensive income (loss), we recorded no interest income for the year ended December 31, 2024 and $ 0.2 million for the year ended December 31, 2023.

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020 in response to the COVID-19 pandemic.

2 unchanged sentences

As of December 31, 2024, the Company has an accrued tax refund remaining of $ 0.7 million.

The American Rescue Plan Act of 2021 was enacted March 11, 2021 and the Inflation Reduction Act was enacted on August 16, 2022.

The American Rescue Plan Act of 2021 was enacted on March 11, 2021 and the Inflation Reduction Act was enacted on August 16, 2022.

These Acts did not have a material impact on the Company's financial statements.

13 unchanged sentences

tax authorities for tax years ending after December 31, 2021.

The Company's Puerto Rico subsidiaries are subject to examination by Puerto Rico tax authorities for tax years ending after December 31, 2022.

December 31, 2024 | 10-K 104

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Other comprehensive income (loss) $ 16,860 2,029 18,889

Year ended December 31, 2021:

Unrealized gains (losses):

Unrealized holding gains (losses) arising during the period $ ( 41,123 ) 3,084 ( 38,039 )

Reclassification adjustment for (gains) losses included in net income (loss)

( 243 ) 51 ( 192 )

Unrealized holding gains (losses), net

( 41,366 ) 3,135 ( 38,231 )

Change in current discount rate for liability for future policy benefits

92,396 ( 4,584 ) 87,812

Other comprehensive income (loss) $ 51,030 ( 1,449 ) 49,581

(13) STOCK COMPENSATION

In 2023, 2022 and 2021, the Company's Board of Directors approved awards of restricted stock units ("RSUs") under the Citizens, Inc.

Omnibus Incentive Plan for non-employee directors and the executive management team.

The RSUs granted to the directors vest one year from the date of the annual shareholders meeting, subject to continued service on the Board.

RSUs granted to the executive management team are subject to achieving performance goals and once the goals are met, RSUs are awarded.

These awarded RSUs have a time-based vesting component of three years , subject to continued employment.

In addition, the Board also approved an allotment of RSUs for other employees with a delegation to the Chief Executive Officer to determine the participants and number of RSUs to be awarded.

There were three million shares originally authorized to be granted under the plan.

Citizens grants stock-based compensation in the form of restricted stock units ("RSUs") and beginning in 2024, performance share units ("PSUs").

All stock awards are granted pursuant to the Citizens, Inc.

Omnibus Incentive Plan (the "Plan"), which was approved by our shareholders in 2017.

There were 3,000,000 shares authorized to be granted under the Plan.

Awards may be granted under the Plan until June 05, 2027 .

Restricted Stock Units.

RSUs consist of time-vested grants and give the grantee the right to receive one share of our Class A common stock in the future for each RSU granted, subject to certain restrictions and a risk of forfeiture.

For non-employee directors, RSUs are granted annually on the date of the annual shareholders meeting and vest one year from the date of grant, subject to continued service on the Board.

Employee RSU grants vest over three years , subject to continued employment (except in the case of retirement, death or disability).

December 31, 2024 | 10-K 105

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a rollforward of restricted stock activity.

Restricted Stock Units Units Weighted Average Grant Price Weighted Average Remaining Contractual Life Aggregate Fair Value (1)

(In thousands) (In years) (In thousands)

The following table provides a rollforward of RSU activity for the two-year period ended December 31, 2024.

Restricted Stock Units Units Weighted Average Grant Date Fair Value

(In thousands)

Outstanding at December 31, 2022 266 $ 4.65

190 $ 6.03 0.88 $ 1,142

Granted 464 3.03

6 unchanged sentences

Outstanding at December 31, 2024 1,016 $ 2.70

In 2024, we recognized $ 1.5 million of expense for RSUs granted on or prior to December 31, 2024, while $ 1.8 million was unrecognized and is expected to be amortized up to two years .

We also recognized compensation expenses of $ 1.4 million and $ 0.6 million in 2024 and 2023, respectively, related to RSU awards that vested during these periods.

The aggregate intrinsic value of RSUs vested during the years ended December 31, 2024 and 2023 was $ 1.2 million and $ 0.4 million, respectively.

Performance Share Units.

In 2024, the Board of Directors granted PSUs to a limited number of senior executives.

PSUs have a three-year performance period and and give the grantee the right to receive one share of our Class A common stock in the future for each PSU granted, subject to subject to certain restrictions and a risk of forfeiture.

While the PSU grant specifies a stated target number of shares, the grantees can earn up to 200 % of the target PSUs awarded based on the achievement of the Board approved metric over the performance period.

PSUs are not settled in shares until the Board certifies that the approved performance metrics have been met.

Employees must continue to be employed during the performance period in order to receive shares, except in the case of death or disability, change in control, retirement (settled pro-rata) or certain involuntary terminations (settled pro-rata).

The following table provides a rollforward of PSU activity for the period beginning on the first date of grant and ending on December 31, 2024.

Performance Stock Units Units

Weighted Average Grant Date Fair Value

(In thousands)

Outstanding at March 28, 2024

Granted 333 2.14

Vested 148 4.56 673

Forfeited 83 2.14

Outstanding at December 31, 2024 250 (1)

(1) Fair value per share of restricted stock units was equal to Grant Date fair value per share, which was calculated based on the closing price of the Company's Class A common stock on the NYSE on the grant date, in accordance with ASC Topic 718.

As of December 31, 2023, we recognized $ 0.9 million of expense, while $ 1.3 million was unrecognized and is expected to be amortized up to two years .

Restricted stock unit awards give the participant the right to receive common stock in the future, subject to certain restrictions and a risk of forfeiture.

Forfeitures are recognized in the period they occur.

Compensation expense of $ 0.6 million, $ 0.5 million and $ 0.6 million was recognized in 2023, 2022 and 2021, respectively, related to these awards.

(1) The number of PSUs represents the base number of PSUs that may vest.

The actual number of PSUs that vest will be between 0 and 500,000 , depending on the Company's achievement of certain performance goals.

December 31, 2024 | 10-K 106

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In 2024, for the PSU grants, we recognized $ 0.1 million of expense, while $ 0.2 million was unrecognized and is expected to be amortized over the next two years .

As of December 31, 2024, management estimates that the probability of achieving the performance targets was 50 %.

(14) BENEFIT PLANS

6 unchanged sentences

Voluntary contributions are made by employees and the Company provides a matching contribution based upon the employee's level of contribution.

The Company's expense was $ 0.8 million in 2023 and $ 0.7 million in both 2022 and 2021.

The Company is primarily self-insured for employee health benefits.

The Company records its self-insurance liability based on an estimate of claims incurred but not yet reported.

There is stop-loss coverage for amounts in excess of $ 80,000 per individual per year.

If more claims are made than were estimated or if the costs of actual claims increase beyond what was anticipated, reserves recorded may not be sufficient and additional accruals may be required in future periods.

December 31, 2023 | 10-K 113

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's expense was $ 0.8 million in both 2024 and 2023.

Until December 31, 2024, the Company was primarily self-insured for employee health benefits.

The Company recorded its self-insurance liability based on an estimate of claims incurred but not yet reported.

Through December 31, 2024, we also had stop-loss coverage for amounts in excess of $ 80,000 per individual per year.

(15) RELATED PARTY TRANSACTIONS

12 unchanged sentences

Federal income tax expense (benefit) 95 247 ( 657 ) 383

Net income (loss) 10,741 2,698 6,126 4,872

Net income (loss) available to common shareholders 10,741 2,698 6,126 4,872

Basic earnings (losses) per share of Class A common stock 0.21 0.06 0.12 0.10

Diluted earnings (losses) per share of Class A common stock 0.21 0.05 0.12 0.10

Net income 3,621 2,790 3,959 4,542

Net income available to common shareholders 3,621 2,790 3,959 4,542

Basic earnings per share of Class A common stock 0.07 0.06 0.08 0.09

Diluted earnings per share of Class A common stock

0.07 0.05 0.08 0.09

Revenues $ 66,849 59,390 58,527 55,914

1 unchanged sentence

Federal income tax expense (benefit) ( 1,967 ) 1,943 ( 82 ) 1,843

Net income (loss) 13,659 3,407 2,492 6,449

Net income (loss) available to common shareholders 13,659 3,407 2,492 6,449

Basic earnings (losses) per share of Class A common stock 0.27 0.07 0.05 0.13

Diluted earnings (losses) per share of Class A common stock 0.27 0.06 0.05 0.13

10,741 2,698 6,126 4,872

Net income available to common shareholders

10,741 2,698 6,126 4,872

Basic earnings per share of Class A common stock

0.21 0.06 0.12 0.10

Diluted earnings per share of Class A common stock

0.21 0.05 0.12 0.10

December 31, 2024 | 10-K 107

CITIZENS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(17) SUBSEQUENT EVENTS

11 unchanged sentences

Fixed maturity securities, available-for-sale, at fair value

16,331 21,190

Equity securities, at fair value 21 23

Short-term investments — 1,241

Cash 3,905 2,163

Cash (restricted portion:

$ 1,554 and none in 2024 and 2023, respectively)

Accrued investment income 197 230

30 unchanged sentences

(In thousands)

2023 2022 2021

Comprehensive Income (Loss):

2 unchanged sentences

Investment income 4,900 1,083

Other 6 6 ( 37 )

Investment related gains (losses), net ( 17 ) ( 63 )

6 unchanged sentences

Income (loss) before equity in income (loss) of consolidated subsidiaries ( 1,084 ) ( 3,178 )

Equity in income (loss) of consolidated subsidiaries 27,615 23,156 73,686

Net income (loss) 24,437 26,007 72,706

Equity in income of consolidated subsidiaries

15,996 27,615

14,912 24,437

Other comprehensive income (loss) 22,190 18,889

15 unchanged sentences

(In thousands)

2023 2022 2021

Cash flows from operating activities:

Net income (loss) $ 24,437 26,007 72,706

$ 14,912 24,437

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Investment related gains (losses), net 17 63

Equity in loss (income) of consolidated subsidiaries ( 27,615 ) ( 23,156 ) ( 73,686 )

Equity in income of consolidated subsidiaries

( 15,996 ) ( 27,615 )

Change in accrued expenses and other liabilities 4,303 ( 1,398 )

Change in federal income tax payable 828 —

Deferred federal income tax expense (benefit) — — 227

Amortization of premiums and discounts on investments 81 107

9 unchanged sentences

Sales of fixed maturity securities, available-for-sale — 2,580

Sales of property and equipment — 2 14

Sale of equity securities — 770

Sale of other long-term investments — — 8,790

Sale of real estate — — 3,552

Funding of mortgage loans — — ( 1,000 )

Principal payments on mortgage loans — 1,000 —

Purchases of property and equipment ( 106 ) ( 130 )

Purchases of short-term investments — ( 1,250 ) —

Maturities of short-term investments — 750

2 unchanged sentences

Cash flows from financing activities:

Issuance of common stock — 2,244 2,255

Acquisition of treasury stock — ( 919 )

Capital contribution to subsidiary ( 10,010 ) ( 4,850 )

Other ( 60 ) ( 118 ) ( 456 )

Other share repurchases

( 393 ) ( 60 )

Net cash provided by (used in) financing activities ( 10,403 ) ( 5,829 )

30 unchanged sentences

FINANCIAL SCHEDULES

For the Company's short duration contracts (property), written premium is not materially different from earned premium, therefore only earned premiums are detailed in Schedule IV.

T he Company's written premium is not materially different from earned premium, therefore only earned premiums are detailed in Schedule IV.

Consolidated Statement of Reinsurance

15 unchanged sentences

Total premiums $ 170,557 3,586 68 167,039 — %

Year ended December 31, 2021:

Life insurance in force $ 4,627,509 465,954 4,366 4,165,921 0.1 %

Life insurance $ 171,567 1,850 84 169,801

Accident and health insurance 1,255 5 — 1,250

Property insurance 5,984 2,307 — 3,677

Total premiums $ 178,806 4,162 84 174,728 — %

December 31, 2024 | 10-K 113

10 unchanged sentences

Form of Citizens, Inc.

E xecutive O fficer Performance Share Unit Agreemen t

Form of Citizens, Inc.

Non-employee Director Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.7 to the Registrant's Annual Report on Form 10-K filed on March 29, 2018)

5 unchanged sentences

Shields, effective as of January 1, 2024 (incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on November 15, 2023)

Executive Employment Agreement by and between Citizens, Inc.

and Jon Stenberg, e ntered into as of March 18, 2024 (incorporated by reference to Exhibit 10.1 to the Registra nt's Current Report on Form 8-K filed on Ma rch 18 , 2024)

Credit Agreement between the Company and Regions Bank dated May 5 , 202 1 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 4 , 202 1 )

1 unchanged sentence

as obligor, and Regions Bank, as lender (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on August 4, 2021)

First Amendment to Credit Agreement between the Company and Regions Bank dated May 3, 2024 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on August 6 , 202 4 )

Form of Executive Change in Leadership Agreement entered into on November 3, 2023, by and between the Company and each of the following Named Executive Officers:

2 unchanged sentences

Waite (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed on November 6, 2023)

C ompensation Recovery P olicy

Compensation Recovery Policy (incorporated by reference to Exhibit 10.11 to the Registrant's Annual Report for the Year Ended December 31, 2023 on Form 10-K filed on March 14, 2024)

December 31, 2024 | 10-K 114

Services Agreement between Citizens, Inc.

and Robert M.

Mauldin III effective August 2, 2024 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 7, 2024)

Citizens, Inc.

Insider Trading Policy

Subsidiaries of the Registrant

3 unchanged sentences

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

December 31, 2023 | 10-K 120

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act

14 unchanged sentences

March 13, 2025 By:

/s/ Gerald W.

/s/ Jon Stenberg

Jon Stenberg,

Chief Executive Officer and President

4 unchanged sentences

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gerald W.

Shields and Jeffery P.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jon Stenberg and Jeffery P.

Conklin jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

11 unchanged sentences

Maness, Director Mary Taylor, Director

/s/ Francis A.

Keating II /s/ J.

Keating II, Director J.

Keith Morgan, Director

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures