What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 243 added, 357 removed, 878 unchanged (41% of the section changed)

3 unchanged sentences

Consolidated Balance Sheets

(In thousands) September 30, 2024 December 31, 2023

(In thousands) March 31, 2025 December 31, 2024

Fixed maturity securities available-for-sale, at fair value (amortized cost:

6 unchanged sentences

Total investments 1,417,200 1,391,228

Cash and cash equivalents 32,382 26,997

Cash and cash equivalents (restricted portion:

$ 1,554 in both 2025 and 2024)

18,355 29,271

Accrued investment income 17,257 17,546

8 unchanged sentences

See accompanying Notes to Consolidated Financial Statements.

September 30, 2024 | 10-Q 2

March 31, 2025 | 10-Q 2

CITIZENS, INC.

1 unchanged sentence

Consolidated Balance Sheets, Continued

(In thousands, except share amounts) September 30, 2024 December 31, 2023

(In thousands, except share amounts) March 31, 2025 December 31, 2024

Liabilities and Stockholders' Equity:

13 unchanged sentences

Commissions payable 3,726 4,546

Current federal income tax payable 58 —

Deferred federal income tax liability 4,009 3,442

Payable for securities in process of settlement 250 —

Other liabilities 41,486 48,857

12 unchanged sentences

See accompanying Notes to Consolidated Financial Statements.

September 30, 2024 | 10-Q 3

March 31, 2025 | 10-Q 3

CITIZENS, INC.

1 unchanged sentence

Consolidated Statements of Operations and Comprehensive Income (Loss)

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands, except per share amounts)

2024 2023 2024 2023

Life insurance $ 39,349 38,261

18 unchanged sentences

Total benefits and expenses 57,439 52,787

Income before federal income tax 3,037 4,641 11,264 17,400

Income (loss) before federal income tax

( 1,787 ) 4,925

Federal income tax expense (benefit)

Net income (loss)

( 1,623 ) 4,542

Net income 2,790 2,698 11,291 13,696

Per Share Amounts:

Basic earnings per share of Class A common stock

0.06 0.06 0.23 0.28

Diluted earnings per share of Class A common stock

Basic and diluted earnings (loss) per share of Class A common stock

( 0.03 ) 0.09

2 unchanged sentences

Unrealized holding gains (losses) arising during period 18,334 ( 13,416 )

Reclassification adjustment for losses (gains) included in net income ( 100 ) 419 547 481

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

Unrealized gains (losses) on fixed maturity securities, net 18,417 ( 12,968 )

4 unchanged sentences

See accompanying Notes to Consolidated Financial Statements.

September 30, 2024 | 10-Q 4

March 31, 2025 | 10-Q 4

CITIZENS, INC.

8 unchanged sentences

Comprehensive income (loss):

Net income (loss)

— — ( 1,623 ) — — ( 1,623 )

3 unchanged sentences

Balance at March 31, 2025 $ 270,315 3,184 55,439 ( 87,074 ) ( 23,725 ) 218,139

Comprehensive income (loss):

— — 3,959 — — 3,959

Other comprehensive income (loss) — — — ( 8,154 ) — ( 8,154 )

Total comprehensive income (loss) — — 3,959 ( 8,154 ) — ( 4,195 )

Stock-based compensation 481 — — — — 481

Balance at June 30, 2024 269,283 3,184 50,651 ( 107,924 ) ( 23,725 ) 191,469

Comprehensive income (loss):

— — 2,790 — — 2,790

Other comprehensive income (loss) — — — 13,241 — 13,241

Total comprehensive income (loss) — — 2,790 13,241 — 16,031

Stock-based compensation 73 — — — — 73

Balance at September 30, 2024 $ 269,356 3,184 53,441 ( 94,683 ) ( 23,725 ) 207,573

See accompanying Notes to Consolidated Financial Statements.

September 30, 2024 | 10-Q 5

CITIZENS, INC.

AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Stockholders' Equity, Continued

Common Stock Retained Earnings

Accumulated Other Comprehensive

Income (Loss)

Treasury Stock

Total Stockholders' Equity

(In thousands) Class A Class B

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

$ 268,147 3,184 16,309 ( 137,044 ) ( 22,806 ) 127,790

Comprehensive income (loss):

Net income (loss)

— — 4,542 — — 4,542

3 unchanged sentences

Balance at March 31, 2024 $ 268,802 3,184 46,692 ( 99,770 ) ( 23,725 ) 195,183

Comprehensive income (loss):

— — 6,126 — — 6,126

Other comprehensive income (loss) — — — ( 12,898 ) — ( 12,898 )

Total comprehensive income (loss) — — 6,126 ( 12,898 ) — ( 6,772 )

Acquisition of treasury stock — — — — ( 719 ) ( 719 )

Stock-based compensation 46 — — — — 46

Balance at June 30, 2023 268,243 3,184 27,307 ( 128,363 ) ( 23,525 ) 146,846

Comprehensive income (loss):

— — 2,698 — — 2,698

Other comprehensive income (loss) — — — 1,696 — 1,696

Total comprehensive income (loss) — — 2,698 1,696 — 4,394

Stock-based compensation 180 — — — — 180

— — 1,327 — — 1,327

Balance at September 30, 2023 $ 268,423 3,184 31,332 ( 126,667 ) ( 23,525 ) 152,747

1 See Note 11 - Income Taxes for details.

See accompanying Notes to Consolidated Financial Statements.

September 30, 2024 | 10-Q 6

March 31, 2025 | 10-Q 5

CITIZENS, INC.

1 unchanged sentence

Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Cash flows from operating activities:

Net income (loss)

$ ( 1,623 ) 4,542

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

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

Investment related (gains) losses on sale of investments and other assets, net 2,894 ( 963 )

14 unchanged sentences

Net cash provided by operating activities

21,092 15,444

Cash flows from investing activities:

2 unchanged sentences

Maturities and calls of fixed maturity securities, available-for-sale 8,402 12,366

Sales of equity securities

Principal payments on mortgage loans 2 3

3 unchanged sentences

Purchases of property and equipment ( 107 ) ( 58 )

Maturities of short-term investments — 750

Net cash used in investing activities

1 unchanged sentence

See accompanying Notes to Consolidated Financial Statements.

September 30, 2024 | 10-Q 7

March 31, 2025 | 10-Q 6

CITIZENS, INC.

1 unchanged sentence

Consolidated Statements of Cash Flows, Continued

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

2 unchanged sentences

Annuity withdrawals ( 2,385 ) ( 2,650 )

Acquisition of treasury stock — ( 719 )

Other ( 371 ) ( 57 )

Other share repurchases

( 57 ) ( 27 )

Net cash used in financing activities

1 unchanged sentence

Net increase (decrease) in cash and cash equivalents ( 10,916 ) ( 3,755 )

5,385 ( 6,188 )

Cash and cash equivalents at beginning of year 29,271 26,997

1 unchanged sentence

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:

During the nine months ended September 30, 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 had $ 0.3 million of net unsettled security trades at September 30, 2023 and none at September 30, 2024.

The Company recognized $ 36 thousand right-of-use assets in exchange for new operating lease liabilities during the nine months ended September 30, 2023 and none during the nine months ended September 30, 2024.

During the three months ended March 31, 2025, various fixed maturity issuers exchanged securities with book values of $ 5.7 million for securities of equal value and none during the three months ended March 31, 2024.

The Company had $ 0.3 million and $ 1.4 million of net unsettled security trades at March 31, 2025 and March 31, 2024, respectively.

See accompanying Notes to Consolidated Financial Statements.

September 30, 2024 | 10-Q 8

March 31, 2025 | 10-Q 7

CITIZENS, INC .

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

("CICA Bermuda"), Security Plan Life Insurance Company ("SPLIC"), 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").

1 unchanged sentence

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

The consolidated balance sheet as of September 30, 2024, the consolidated statements of operations and comprehensive income (loss) and stockholders' equity for the three and nine months ended September 30, 2024 and September 30, 2023 and the consolidated statements of cash flows for the nine months ended September 30, 2024 and September 30, 2023 have been prepared by the Company without audit and are not subject to audit.

In the opinion of management, all normal and recurring adjustments to present fairly the financial position, results of operations, and changes in cash flows at September 30, 2024 and for comparative periods have been made.

The consolidated balance sheet as of March 31, 2025, the consolidated statements of operations and comprehensive income (loss) and stockholders' equity for the three months ended March 31, 2025 and March 31, 2024 and the consolidated statements of cash flows for the three months ended March 31, 2025 and March 31, 2024 have been prepared by the Company without audit and are not subject to audit.

In the opinion of management, all normal and recurring adjustments to present fairly the financial position, results of operations, and changes in cash flows at March 31, 2025 and for comparative periods have been made.

The consolidated financial statements have been prepared in accordance with U.S.

3 unchanged sentences

Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

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

Our Life Insurance segment operates through our subsidiaries 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 ordinary 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 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 ordinary whole life insurance.

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.

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 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.

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, we ceased all operations for SPFIC.

September 30, 2024 | 10-Q 9

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CTI provides data processing systems and services to the Company.

NES provides services to policyholders of CICA International.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

March 31, 2025 | 10-Q 8

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ materially from these estimates.

6 unchanged sentences

ACCOUNTING STANDARDS NOT YET ADOPTED

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

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

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.

As the ASU only requires additional disclosures about the Company's operating segments, the impact to the consolidated financial statements will be minimal.

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

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which is intended to enhance the transparency, decision usefulness and effectiveness of income tax disclosures.

The amendments in this ASU require a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories.

A public entity is also required to provide a qualitative description of the state and local jurisdictions that make up the majority of the effect of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state and foreign taxes and also disaggregated by individual jurisdictions.

The amendments also remove certain disclosures that are no longer considered cost beneficial.

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.

In November 2024, the FASB issued ASU No.

ASU 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.

ASU 2024-03 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.

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

September 30, 2024 | 10-Q 10

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3) INVESTMENTS

The Company invests primarily in fixed maturity securities, which totaled 86.2 % of total cash and invested assets at September 30, 2024, as shown below.

The Company invests primarily in fixed maturity securities as shown below.

Carrying Value

(In thousands, except for %)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Amount % Amount %

6 unchanged sentences

Total cash and invested assets $ 1,435,555 100.0 % 1,420,499 100.0 %

March 31, 2025 | 10-Q 9

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

September 30, 2024

March 31, 2025

(In thousands)

Fixed maturity securities:

Available-for-sale:

Treasury securities $ 5,927 98 87 5,938

6 unchanged sentences

Communications 70,722 205 8,830 62,097

71,071 293 7,500 63,864

All other 126,765 472 16,315 110,922

3 unchanged sentences

Total fixed maturity securities $ 1,409,351 7,371 169,294 1,247,428

September 30, 2024 | 10-Q 11

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

1 unchanged sentence

Fixed maturity securities:

Available-for-sale:

Treasury securities $ 5,939 85 115 5,909

6 unchanged sentences

Communications 70,896 111 9,910 61,097

74,029 309 8,892 65,446

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

3 unchanged sentences

Total fixed maturity securities $ 1,401,301 5,401 185,741 1,220,961

March 31, 2025 | 10-Q 10

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(In thousands)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Equity securities:

6 unchanged sentences

Available-for-sale ("AFS") fixed maturity securities are reported in the consolidated financial statements at fair value.

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

The Company recognized net investment related gains of $ 0.4 million for both the three and nine months ended September 30, 2024, respectively, on equity securities held.

The Company recognized net investment related losses of $ 0.4 million and $ 0.3 million for the three and nine months ended September 30, 2023, respectively.

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

The Company recognized net investment related gains of $ 47 thousand and $ 0.1 million for the three months ended March 31, 2025 and 2024, respectively, on equity securities held.

The Company considers several factors in its review and evaluation of individual investments, using the process described in Part IV, Item 15, Note 2.

Investments in the notes to the consolidated financial statements of our Form 10-K to determine whether a credit valuation loss exists.

For the three and nine months ended September 30, 2024 and 2023, the Company recorded no credit valuation losses on fixed maturity securities.

September 30, 2024 | 10-Q 12

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For fixed maturity security investments that have unrealized losses as of September 30, 2024 and December 31, 2023, the gross unrealized losses and related fair values that have been in a continuous unrealized loss position by timeframe are as follows.

September 30, 2024 Less than 12 months Greater than 12 months Total

For the three months ended March 31, 2025 and 2024, the Company recorded no credit valuation losses on fixed maturity securities.

For fixed maturity security investments that have unrealized losses as of March 31, 2025 and December 31, 2024, the gross unrealized losses and related fair values that have been in a continuous unrealized loss position by timeframe are as follows.

March 31, 2025 Less than 12 months Greater than 12 months Total

(In thousands, except for # of securities) Fair

5 unchanged sentences

Fixed maturity securities:

Available-for-sale securities:

Treasury securities $ 855 31 3 444 56 5 1,299 87 8

5 unchanged sentences

Communications 4,628 93 7 49,759 8,737 61 54,387 8,830 68

2,749 34 4 50,790 7,466 60 53,539 7,500 64

All Other 25,067 840 36 72,295 15,475 90 97,362 16,315 126

3 unchanged sentences

Total fixed maturity securities $ 158,045 4,683 254 832,403 164,611 1,047 990,448 169,294 1,301

March 31, 2025 | 10-Q 11

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 Less than 12 months Greater than 12 months Total

6 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

4 unchanged sentences

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

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

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

1 unchanged sentence

Total fixed maturity securities $ 184,082 7,201 327 821,516 178,540 1,045 1,005,598 185,741 1,372

September 30, 2024 | 10-Q 13

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In each category of our fixed maturity securities described above, we do not intend to sell our investments, and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

As of September 30, 2024 and December 31, 2023, 99.2 % and 99.4 % of the fair value of our fixed maturity securities portfolio, respectively, were rated investment grade.

As of March 31, 2025 and December 31, 2024, 99.2 % of the fair value of our fixed maturity securities portfolio, respectively, were rated investment grade.

While the losses are currently unrealized, we continue to monitor all fixed maturity securities on an on-going basis as future information may become available which could result in an allowance being recorded.

These unrealized losses on fixed maturity securities are due to noncredit-related factors, including change in credit spreads and rising interest rates since purchase, which have little bearing on the recoverability of our investments, hence they are not recognized as credit losses.

These unrealized losses on fixed maturity securities are due to noncredit-related factors, including changes in credit spreads and rising interest rates since purchase, which have little bearing on the recoverability of our investments, hence they are not recognized as credit losses.

The fair value is expected to recover as the securities approach maturity or if market yields for such investments decline.

The amortized cost and fair value of fixed maturity securities at September 30, 2024 by contractual maturity are shown in the table below.

The amortized cost and fair value of fixed maturity securities at March 31, 2025 by contractual maturity are shown in the table below.

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Securities not due at a single maturity date have been reflected based upon final stated maturity.

September 30, 2024 Amortized

March 31, 2025 Amortized

(In thousands)

5 unchanged sentences

Total fixed maturity securities $ 1,409,351 1,247,428

March 31, 2025 | 10-Q 12

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company uses the specific identification method of the individual security to determine the cost basis used in the calculation of realized gains and losses related to security sales.

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands) 2025 2024

3 unchanged sentences

Gross realized losses $ 4 49

Real estate held-for-sale consists of former Home Service Insurance segment district offices in Baton Rouge and Bogalusa, Louisiana.

It was determined during the quarter that these properties met the held-for-sale criteria.

As a result, these properties were reclassified from property, plant and equipment, net to real estate held-for-sale and is included in other long-term investments on the consolidated balance sheets.

These investments are listed at carrying value and are no longer being depreciated.

(4) FAIR VALUE MEASUREMENTS

4 unchanged sentences

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information.

We utilize valuation techniques that maximize the use of

September 30, 2024 | 10-Q 14

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

observable inputs and minimize the use of unobservable inputs.

We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

All assets and liabilities carried at fair value are required to be classified and disclosed in one of the following three categories.

12 unchanged sentences

Level 3 is comprised of financial instruments whose fair value is estimated based on non-binding broker prices utilizing significant inputs not based on or corroborated by readily available market information.

We have no investments in this category.

Real estate held-

March 31, 2025 | 10-Q 13

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

for-sale is included in this category.

There were no securities in this category as of or during the periods ended March 31, 2025 and December 31, 2024.

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

September 30, 2024 Level 1 Level 2 Level 3 Total

March 31, 2025 Level 1 Level 2 Level 3 Total

(In thousands)

Financial assets:

Fixed maturity securities, available-for-sale:

Fixed maturity securities:

Treasury and U.S.

5 unchanged sentences

Asset-backed — 54,433 — 54,433

Total fixed maturity securities, available-for-sale

Total fixed maturity securities

5,980 1,241,448 — 1,247,428

9 unchanged sentences

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.

September 30, 2024 | 10-Q 15

March 31, 2025 | 10-Q 14

CITIZENS, INC .

3 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

Total fixed maturity securities

5,951 1,215,010 — 1,220,961

12 unchanged sentences

Fixed maturity securities, available-for-sale.

At September 30, 2024, fixed maturity securities, valued using a third-party pricing source, totaled $ 1.3 billion for Level 2 assets and comprised 92.3 % of total reported fair value of our financial assets.

At March 31, 2025, fixed maturity securities, valued using a third-party pricing source, totaled $ 1.2 billion for Level 2 assets and comprised 92.2 % of total reported fair value of our financial assets.

The Level 1 and Level 2 valuations are reviewed and updated quarterly through testing by comparisons to separate pricing models, other third-party pricing services, and back tested to recent trades.

In addition, we obtain information annually relative to the third-party pricing models and review model parameters for reasonableness.

There were no Level 3 assets at September 30, 2024.

As of September 30, 2024, there were no material changes to the valuation methods or assumptions used to determine fair values, and no broker or third-party prices were changed from the values received.

There were no Level 3 assets at March 31, 2025.

As of March 31, 2025, there were no material changes to the valuation methods or assumptions used to determine fair values, and no broker or third-party prices were changed from the values received.

Equity securities.

4 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 $ 0.5 million and $ 1.8 million for the three and nine months ended September 30, 2024, respectively, and losses of $ 0.1 million and gains of $ 0.2 million on limited partnerships

September 30, 2024 | 10-Q 16

The Company recognized net investment related losses of $ 1.5 million for the three months ended March 31, 2025, and

March 31, 2025 | 10-Q 15

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

held for the three and nine months ended September 30, 2023, respectively.

gains of $ 1.3 million on limited partnerships held for the three months ended March 31, 2024.

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In thousands, except for years)

7 unchanged sentences

Infrastructure Investments in environmental infrastructure and related technology, focusing on renewable power generation and distribution 15,637 5,364 8 to 10

16,733 9,576 10

18,575 5,637 9 to 10

Total limited partnerships $ 93,036 12,522 $ 93,337 15,431

6 unchanged sentences

The carrying amount and fair value for the financial assets and liabilities on the consolidated financial statements not otherwise disclosed for the periods indicated were as follows:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(In thousands) Carrying

7 unchanged sentences

Policy loans.

Policy loans had a weighted average annual interest rate of 7.7 % at both September 30, 2024 and December 31, 2023 and no specified maturity dates.

Policy loans had a weighted average annual interest rate of 7.7 % at both March 31, 2025 and December 31, 2024 and no specified maturity dates.

The aggregate fair value of policy loans approximates the

September 30, 2024 | 10-Q 17

March 31, 2025 | 10-Q 16

CITIZENS, INC .

5 unchanged sentences

This mortgage loan is secured by a residential property.

The interest rate for this loan was 7.0 % at both September 30, 2024 and December 31, 2023.

At September 30, 2024, the remaining loan matures in four years .

Management estimated the fair value using an annual interest rate of 6.25 % at both September 30, 2024 and December 31, 2023.

The interest rate for this loan was 7.0 % at both March 31, 2025 and December 31, 2024.

At March 31, 2025, the remaining loan matures in three years .

Management estimated the fair value using an annual interest rate of 6.25 % at both March 31, 2025 and December 31, 2024.

Our mortgage loan is considered a Level 3 asset in the fair value hierarchy and is included in other long-term investments on the consolidated balance sheets.

Cash and cash equivalents.

The fair value of cash and cash equivalents approximates 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.

The fair value of the Company's liabilities under annuity contracts, which are considered Level 3 liabilities, was estimated at September 30, 2024 and December 31, 2023 using discounted cash flows based upon spot rates adjusted for various risk adjustments ranging from 3.40 % to 4.40 % and 3.80 % to 4.50 %, respectively.

The fair value of the Company's liabilities under annuity contracts, which are considered Level 3 liabilities, was estimated at March 31, 2025 and December 31, 2024 using discounted cash flows based upon spot rates adjusted for various risk adjustments ranging from 3.80 % to 4.92 % and 3.96 % to 4.96 %, respectively.

The fair value of liabilities under all insurance contracts are taken into consideration in the overall management of interest rate risk, which seeks to minimize exposure to changing interest rates through the matching of investment maturities with amounts due under insurance contracts.

4 unchanged sentences

(In thousands )

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Other long-term investments:

2 unchanged sentences

Mortgage loans 31 33

Real estate held-for-sale

All other investments 21 22

3 unchanged sentences

(5) DEFERRED POLICY ACQUISITION COSTS AND COST OF INSURANCE ACQUIRED

The following tables roll forward the DAC and COIA balances for the nine months ended September 30, 2024 and 2023 by reporting cohort.

Our reporting cohorts are Permanent, which summarizes insurance policies with premiums payable over the lifetime of the policy, and Permanent Limited Pay, which summarizes insurance policies

September 30, 2024 | 10-Q 18

The following tables roll forward the DAC and COIA balances for the three months ended March 31, 2025 and 2024 by reporting cohort.

Our reporting cohorts are Permanent, which summarizes insurance policies with premiums payable over the lifetime of the policy, and Permanent Limited Pay, which summarizes insurance policies with

March 31, 2025 | 10-Q 17

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

with premiums payable for a limited time after which the policy is fully paid up.

premiums payable for a limited time after which the policy is fully paid up.

Both reporting cohorts include whole life and endowment policies.

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

(In thousands)

15 unchanged sentences

Balance, end of period $ 173,826 28,249 1,762 203,837

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

(In thousands)

15 unchanged sentences

Balance, end of period $ 152,352 25,344 2,365 180,061

DAC capitalization increased for the nine months ended September 30, 2024, compared to the same prior year period mainly from increased commissions from higher first year sales in our Life Insurance segment.

September 30, 2024 | 10-Q 19

DAC capitalization increased for the three months ended March 31, 2025, compared to the same prior year period mainly from increased commissions from higher first year sales in our Life Insurance segment.

March 31, 2025 | 10-Q 18

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

(In thousands)

12 unchanged sentences

Balance, end of period $ 7,325 796 1,227 9,348

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

(In thousands)

16 unchanged sentences

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

September 30, 2024 | 10-Q 20

March 31, 2025 | 10-Q 19

CITIZENS, INC .

2 unchanged sentences

Both reporting cohorts include whole life and endowment policies.

September 30, 2024

March 31, 2025

(In thousands)

5 unchanged sentences

Beginning balance at original discount rate 310,919 15,180 326,099 101,026 14,732 115,758

Effect of changes in cash flow assumptions 17,731 274 18,005 ( 462 ) 21 ( 441 )

Effect of actual variances from expected experience

11 unchanged sentences

Beginning balance at original discount rate 1,051,493 201,797 1,253,290 218,555 123,016 341,571

Effect of changes in cash flow assumptions 18,320 734 19,054 ( 502 ) ( 1,078 ) ( 1,580 )

Effect of actual variances from expected experience

11 unchanged sentences

Net liability for future policy benefits, after reinsurance recoverable $ 695,661 171,705 867,366 105,192 98,180 203,372

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

September 30, 2024 | 10-Q 21

March 31, 2025 | 10-Q 20

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

reserves, primarily driven by mortality and lapse assumptions that better reflect emerging experience for the new CICA Domestic block of business.

For the nine months ended September 30, 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 little impact to the Home Service Insurance segment resulting from actual to expected experience for the nine months ended September 30, 2024 and 2023.

September 30, 2023

March 31, 2024

(In thousands)

4 unchanged sentences

Beginning balance at original discount rate 252,426 13,533 265,959 102,045 15,512 117,557

Effect of changes in cash flow assumptions ( 210 ) 38 ( 172 ) ( 343 ) 85 ( 258 )

Effect of actual variances from expected experience

11 unchanged sentences

Beginning balance at original discount rate 995,962 202,755 1,198,717 217,524 123,941 341,465

Effect of changes in cash flow assumptions ( 389 ) ( 702 ) ( 1,091 ) ( 257 ) 331 74

Effect of actual variances from expected experience

9 unchanged sentences

Net liability for future policy benefits $ 709,598 176,347 885,945 107,648 102,403 210,051

September 30, 2024 | 10-Q 22

March 31, 2025 | 10-Q 21

CITIZENS, INC .

1 unchanged sentence

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.

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

(In thousands) Life

13 unchanged sentences

The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefit payments for long-term duration contracts.

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

(In thousands) Life

13 unchanged sentences

Expected future benefit payments 187,004 112,185 189,844 116,909

September 30, 2024 | 10-Q 23

March 31, 2025 | 10-Q 22

CITIZENS, INC .

1 unchanged sentence

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

Three Months Ended September 30,

Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(In thousands)

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

Gross Premiums Interest Expense Gross Premiums Interest Expense

Life Insurance Segment:

21 unchanged sentences

The following table provides the weighted-average durations of the liability for future policy benefits.

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

(In years) Life

7 unchanged sentences

Duration at current discount rate 7.6 13.3 7.8 14.5

September 30, 2024 | 10-Q 24

March 31, 2025 | 10-Q 23

CITIZENS, INC .

1 unchanged sentence

The following table provides the weighted-average interest rates for the liability for future policy benefits.

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Insurance Home Service

9 unchanged sentences

At Guaranteed Minimum 1 Basis Point-50 Basis Points Above 51 Basis Points-150 Basis Points Above Greater Than 150 Basis Points Above Total

September 30, 2024

March 31, 2025

(In thousands)

10 unchanged sentences

At Guaranteed Minimum 1 Basis Point-50 Basis Points Above 51 Basis Points-150 Basis Points Above Greater Than 150 Basis Points Above Total

September 30, 2023

March 31, 2024

(In thousands)

9 unchanged sentences

Total $ 155,474 662 9,566 46,013 211,715

September 30, 2024 | 10-Q 25

March 31, 2025 | 10-Q 24

CITIZENS, INC .

1 unchanged sentence

The following tables summarize balances of and changes in policyholders' account balances.

September 30, 2024

March 31, 2025

(In thousands, except for %)

10 unchanged sentences

Cash surrender value $ 67,838 88,708 48,593 29,973

September 30, 2023

March 31, 2024

(In thousands, except for %)

5 unchanged sentences

Interest credited 474 663 472 431

Other 1 — — —

Surrenders and withdrawals — 2,572 1,168 1,989

3 unchanged sentences

Cash surrender value $ 48,670 86,804 45,760 30,481

September 30, 2024 | 10-Q 26

March 31, 2025 | 10-Q 25

CITIZENS, INC .

1 unchanged sentence

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

As of September 30,

As of March 31,

(In thousands)

13 unchanged sentences

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

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.

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

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

We obtain reinsurance from multiple reinsurers.

We monitor our reinsurance concentration as well as the financial strength ratings of our reinsurers.

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)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Insurance in force:

Direct life insurance in force $ 5,282,585 5,227,506

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

1 unchanged sentence

Net life insurance in force $ 4,447,555 4,409,718

September 30, 2024 | 10-Q 27

March 31, 2025 | 10-Q 26

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's reinsurance recoverable on ceded reinsurance was $ 7.3 million and $ 4.0 million as of September 30, 2024 and December 31, 2023, respectively.

Premiums, claims and surrenders assumed and ceded and expenses ceded for all lines of business for the three and nine months ended September 30, 2024 and 2023 are summarized as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

The Company's reinsurance recoverable on ceded reinsurance was $ 7.9 million and $ 6.9 million as of March 31, 2025 and December 31, 2024, respectively.

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

Three Months Ended

(In thousands) 2025 2024

20 unchanged sentences

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

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.

In March 2024, the jury found that (i) Defendant Carlos Nalsen Landa (“Landa”), a former independent consultant, misappropriated the Citizens’ Companies' policyholder information, (ii) Citizens’ former chief underwriter, Michael P.

Buchweitz (“Buchweitz”) and Randall Riley (“Riley”), a former Citizens executive and son of Citizens’ founder Harold E.

Riley, failed to comply with their Citizens’ confidentiality agreements, and (iii) both Buchweitz and Riley intentionally interfered with former Chief Actuary Jonathan Pollio’s ("Pollio") Citizens’ confidentiality agreement.

For Buchweitz, the jury also found that he did not have a good faith belief that he was acting in the bona fide exercise of his own rights when he interfered with Pollio’s Citizens’ confidentiality agreement.

Despite these findings, the jury did not believe that the above-mentioned actions damaged the Citizens Companies economically and thus did not assess any monetary damages against any of the above parties.

Additionally, the jury found that Citizens should

September 30, 2024 | 10-Q 28

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

pay Alexis Delgado (“Delgado”, a former independent consultant) and Landa 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.

We accrued this expense at December 31, 2023.

On April 30, 2024, Defendants Riley (through his estate), Buchweitz and Delgado filed a motion against the Citizens Companies seeking payment of legal fees and a hearing was held on these matters on May 21, 2024.

On July 26, 2024, the trial court awarded Riley and Buchweitz approximately $ 3.5 million of their legal fees.

We accrued this expense in the quarter ended June 30, 2024.

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.

We have not paid any amounts to Delgado, Landa, Riley, Buchweitz or any of their attorneys and intend to appeal the judgment against us.

We purchased and filed an appeal bond in September 2024 to supercede enforcement of the judgment during the appeal process.

If we aren't successful in our appeal, we may have to pay approximately $ 5 million as a result of the trade secret lawsuit.

The accrued amounts are reflected as "other liabilities" on our balance sheet.

Additionally, $ 1.3 million that is reported in cash and cash equivalents on our balance sheet is restricted while the appeal bond remains in place.

Legal Proceedings and Part IV.

Commitments and Contingencies of our 2024 consolidated financial statements and notes thereto included in the Form 10-K includes a discussion of our legal proceedings.

There have been no material developments in the three months ended March 31, 2025 from the legal proceedings described in our 2024 consolidated financial statements and notes thereto included in the Form 10-K .

CONTRACTUAL OBLIGATIONS

As of September 30, 2024, CICA International is committed to fund investments up to $ 18.1 million related to limited partnerships previously described.

As of March 31, 2025, CICA International is committed to fund investments up to $ 12.5 million related to limited partnerships previously described.

CREDIT FACILITY

2 unchanged sentences

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 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 %.

At the Company's election, the revolving loans may either bear a rate (a fluctuating rate per annum) equal to

March 31, 2025 | 10-Q 27

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 an annual commitment fee of 0.375 % of the unused portion of the Credit Facility in quarterly installments, which the Company expenses as it is incurred.

1 unchanged sentence

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 September 30, 2024, the Company had no t borrowed any funds against the Credit Facility and was not in violation of any covenants.

As of March 31, 2025, the Company had no t borrowed any funds against the Credit Facility and was not in violation of any covenants.

(9) STOCKHOLDERS' EQUITY AND RESTRICTIONS

Our Restated and Amended Articles of Incorporation authorize the issuance of 127,000,000 shares, of which 100,000,000 shares shall be Class A common stock, 2,000,000 shares shall be Class B common stock, and 25,000,000 shall be preferred stock.

Both authorized classes of common stock are equal in all respects, except (a)

September 30, 2024 | 10-Q 29

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

each share of Class A common stock is entitled to receive twice the cash dividends paid on a per share basis to the Class B common stock, if any;

Both authorized classes of common stock are equal in all respects, except (a) each share of Class A common stock is entitled to receive twice the cash dividends paid on a per share basis to the Class B common stock, if any;

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.

1 unchanged sentence

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

Nine Months Ended September 30, 2024 2023

Three Months Ended March 31, 2025 2024

(In thousands)

4 unchanged sentences

Stock issued for compensation 1 — 17 —

Acquisition of Class A shares — — — 325

Balance at end of period 54,236 5,330 53,900 5,330

1 unchanged sentence

The following table sets forth the computation of basic and diluted earnings per share.

Three Months Ended September 30, 2024 2023

Three Months Ended March 31, 2025 2024

(In thousands, except per share amounts)

Basic and diluted earnings per share:

Net income (loss)

$ ( 1,623 ) 4,542

Net income allocated to Class A common stock

Net income (loss) allocated to Class A common stock

$ ( 1,623 ) 4,542

1 unchanged sentence

Weighted average shares of Class A outstanding - diluted (1)

Basic earnings per share of Class A common stock $ 0.06 0.06

Diluted earnings per share of Class A common stock

Nine Months Ended September 30, 2024 2023

(In thousands, except per share amounts)

Basic and diluted earnings per share:

50,912 50,561

Net income allocated to Class A common stock

Basic and diluted earnings (loss) per share of Class A common stock

$ ( 0.03 ) 0.09

Weighted average shares of Class A outstanding - basic 49,687 49,739

Weighted average shares of Class A outstanding - diluted 50,519 50,647

Basic earnings per share of Class A common stock $ 0.23 0.28

Diluted earnings per share of Class A common stock

September 30, 2024 | 10-Q 30

(1) Because the Company reported a net loss for the three months ended March 31, 2025, the effect of all potentially dilutive securities was excluded from the calculation of diluted earnings per share as it would be anti-dilutive.

March 31, 2025 | 10-Q 28

CITIZENS, INC .

3 unchanged sentences

National Association of Insurance Commissioners ("NAIC").

All domestic insurance subsidiaries exceeded the minimum capital requirements at September 30, 2024.

All domestic insurance subsidiaries exceeded the minimum capital requirements at March 31, 2025.

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 September 30, 2024, no capital contribution was necessary.

As CICA Domestic's RBC exceeded 350% at March 31, 2025, no capital contribution was necessary.

CICA International is a Puerto Rico domiciled company.

1 unchanged sentence

CICA International is required to maintain a minimum of $750,000 in capital and maintain a premium to surplus ratio of 7 to 1 .

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.

At September 30, 2024, CICA International exceeded the required minimum capital and related ratio.

At March 31, 2025, CICA International's capital exceeds both of the required minimum capital and related ratio.

(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 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 middle- and lower-income markets in Louisiana, Mississippi and Arkansas.

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.

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

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 in our Form 10-K .

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

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

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

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

The Company's Other Non-Insurance Enterprises represents the only reportable difference between segments and consolidated operations.

September 30, 2024 | 10-Q 31

March 31, 2025 | 10-Q 29

CITIZENS, INC .

1 unchanged sentence

Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated

Three Months Ended September 30, 2024

Three Months Ended March 31, 2025

(In thousands)

Premiums $ 32,201 10,696 — 42,897

Life insurance $ 28,967 10,382 — 39,349

Accident and health insurance 187 261 — 448

Net investment income 13,512 3,678 187 17,377

16 unchanged sentences

Income (loss) before federal income tax $ 243 120 ( 2,150 ) ( 1,787 )

September 30, 2024 | 10-Q 32

March 31, 2025 | 10-Q 30

CITIZENS, INC .

1 unchanged sentence

Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2024

(In thousands)

Premiums $ 91,667 32,462 — 124,129

Life insurance $ 27,698 10,563 — 38,261

Accident and health insurance 163 251 — 414

Property insurance — ( 2 ) — ( 2 )

Net investment income 13,686 3,537 264 17,487

16 unchanged sentences

Income (loss) before federal income tax $ 5,800 623 ( 1,498 ) 4,925

September 30, 2024 | 10-Q 33

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 premiums for the Life Insurance segment is detailed below.

(In thousands)

Three Months Ended March 31,

Life Insurance Segment:

Direct premiums:

First year $ 7,604 4,584

Renewal 24,091 23,650

Total direct premiums 31,695 28,234

( 2,541 ) ( 373 )

Total premiums $ 29,154 27,861

March 31, 2025 | 10-Q 31

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated

Three Months Ended September 30, 2023

A summary of the Home Service Insurance segment life and A&H premium breakout is detailed below.

(In thousands)

Premiums $ 31,148 10,878 — 42,026

Net investment income 13,661 3,459 252 17,372

Investment related gains (losses), net ( 424 ) ( 370 ) ( 98 ) ( 892 )

Other income 884 — — 884

Total revenues 45,269 13,967 154 59,390

Benefits and expenses:

Insurance benefits paid or provided:

Claims and surrenders 32,419 5,304 — 37,723

Increase (decrease) in future policy benefit reserves ( 5,587 ) 1,707 — ( 3,880 )

Policyholder liability remeasurement (gain) loss 840 184 — 1,024

Policyholders' dividends 1,405 9 — 1,414

Total insurance benefits paid or provided 29,077 7,204 — 36,281

Commissions 5,406 4,038 — 9,444

Other general expenses 6,036 4,293 1,620 11,949

Capitalization of deferred policy acquisition costs ( 5,141 ) ( 1,991 ) — ( 7,132 )

Amortization of deferred policy acquisition costs 3,313 743 — 4,056

Amortization of cost of insurance acquired 28 123 — 151

Total benefits and expenses 38,719 14,410 1,620 54,749

Income (loss) before federal income tax $ 6,550 ( 443 ) ( 1,466 ) 4,641

September 30, 2024 | 10-Q 34

Three Months Ended March 31,

Home Service Insurance Segment:

Direct life and A&H premiums:

First year $ 1,213 1,347

Renewal 9,442 9,479

Total direct life and A&H premiums 10,655 10,826

Reinsurance ( 12 ) ( 12 )

Total life and A&H premiums

$ 10,643 10,814

The table below summarizes assets by segment.

As of March 31,

(In thousands)

Life Insurance $ 1,303,166 1,270,247

Home Service Insurance 364,038 359,740

Total Segments

1,667,204 1,629,987

Other Non-Insurance Enterprises 35,000 35,676

Total assets $ 1,702,204 1,665,663

GEOGRAPHIC INFORMATION

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

Three Months Ended March 31,

(In thousands)

United States $ 16,500 13,151

Colombia 6,554 5,983

Taiwan 3,886 4,542

Venezuela 3,350 3,315

Ecuador 3,200 3,044

Argentina 2,096 2,098

Other foreign countries 9,702 8,815

Reinsurance and change in premium accruals ( 5,491 ) ( 2,275 )

Total premiums $ 39,797 38,673

March 31, 2025 | 10-Q 32

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated

Nine Months Ended September 30, 2023

(In thousands)

Premiums $ 86,128 33,873 — 120,001

Net investment income 40,470 10,379 838 51,687

Investment related gains (losses), net ( 123 ) ( 283 ) ( 71 ) ( 477 )

Other income 2,619 1 — 2,620

Total revenues 129,094 43,970 767 173,831

Benefits and expenses:

Insurance benefits paid or provided:

Claims and surrenders 83,826 16,972 — 100,798

Increase (decrease) in future policy benefit reserves ( 9,270 ) 3,468 — ( 5,802 )

Policyholder liability remeasurement (gain) loss 2,541 319 — 2,860

Policyholders' dividends 3,761 22 — 3,783

Total insurance benefits paid or provided 80,858 20,781 — 101,639

Commissions 14,930 12,410 — 27,340

Other general expenses 17,141 13,060 5,276 35,477

Capitalization of deferred policy acquisition costs ( 13,958 ) ( 6,076 ) — ( 20,034 )

Amortization of deferred policy acquisition costs 9,642 1,902 — 11,544

Amortization of cost of insurance acquired 86 379 — 465

Total benefits and expenses 108,699 42,456 5,276 156,431

Income (loss) before federal income tax $ 20,395 1,514 ( 4,509 ) 17,400

(11) INCOME TAXES

The effective tax rate is the ratio of tax expense or tax benefit over pre-tax income.

The effective tax rate was 8.1 % and ( 0.2 )% for the three and nine months ended September 30, 2024, compared to 41.9 % and 21.3 % for the same periods in 2023, respectively.

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

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

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 tax benefit effective rate was 9.2 % for the three months ended March 31, 2025, compared to effective tax rate of 7.8 % for the same period in 2024.

CICA International is considered a controlled foreign corporation for federal income tax purposes.

As a result, the insurance activity of CICA International is subject to Subpart F of the Internal Revenue Code and is included in Citizens’ taxable income.

The Government of Puerto Rico 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 taxable earnings in excess of $ 1.2 million for a minimum of 15 years.

The effective tax rate varies from the prevailing corporate federal income tax rate of 21.0% mainly due to the impact of Subpart F and uncertain tax positions.

As a result of the August 31, 2023 transfer of CICA Bermuda's in force business to CICA International, the Company's consolidated deferred federal income tax liability was reduced by $ 4.3 million due to the difference in the tax rates in the jurisdictions in which the companies operate.

Since the transfer was between companies under common control, the $ 4.3 million reduction in the deferred federal income tax liability was recorded as a credit to equity, $ 1.3 million of which increased retained earnings and $ 3.0 million of which reduced accumulated other comprehensive income (loss), based on the nature of the tax components.

September 30, 2024 | 10-Q 35

CITIZENS, INC .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At September 30, 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.

The Company recorded valuation allowances of $ 3.8 million and $ 6.2 million, respectively, through Other Comprehensive Income (Loss).

(12) OTHER COMPREHENSIVE INCOME (LOSS)

The changes in the components of other comprehensive income (loss) are reported net of the effects of income taxes of 21% for domestic entities and 4 % for Puerto Rican entities for the three and nine months ended September 30, 2024 and 2023, as indicated below.

Three Months Ended September 30, 2024 2023

(In thousands) Amount Tax Effect Total Amount Tax Effect Total

Unrealized gains (losses):

Unrealized holding gains (losses) arising during the period $ 59,101 ( 4,360 ) 54,741 ( 59,817 ) 8,717 ( 51,100 )

Reclassification adjustment for losses (gains) included in net income (loss) ( 100 ) 21 ( 79 ) 419 ( 88 ) 331

Unrealized holding gains (losses), net 59,001 ( 4,339 ) 54,662 ( 59,398 ) 8,629 ( 50,769 )

Change in current discount rate for liability for future policy benefits ( 45,404 ) 3,983 ( 41,421 ) 60,054 ( 7,589 ) 52,465

The effective tax rate varies from the prevailing corporate federal income tax rate of 21% mainly due to the impact of Subpart F and the reduced Puerto Rico income tax rate.

At March 31, 2025 and 2024, we determined it was more likely than not that a portion of our capital deferred tax assets would not be realized in their entirety.

The Company recorded valuation allowances of $ 4.7 million and $ 4.6 million at March 31, 2025 and 2024, respectively, through Other Comprehensive Income (Loss).

(12) OTHER COMPREHENSIVE INCOME (LOSS)

Nine Months Ended September 30, 2024 2023

The changes in the components of other comprehensive income (loss) are reported net of the effects of income taxes of 21% for domestic entities and 4 % for Puerto Rican entities for the three months ended March 31, 2025 and 2024, as indicated below.

Three Months Ended March 31, 2025 2024

(In thousands) Amount Tax Effect Total Amount Tax Effect Total

1 unchanged sentence

Unrealized holding gains (losses) arising during the period $ 18,334 ( 1,362 ) 16,972 ( 13,416 ) 1,198 ( 12,218 )

Reclassification adjustment for losses (gains) included in net income

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

83 ( 17 ) 66 448 ( 94 ) 354

4 unchanged sentences

The Company has various routine related party transactions in conjunction with our holding company structure, such as management service agreements related to costs incurred, a tax sharing agreement between entities, and inter-company dividends and capital contributions.

There were no changes related to these relationships during the nine months ended September 30, 2024 except as described in Note 1.

Financial Statements under Basis of Presentation and Consolidation.

There were no changes related to these relationships during the three months ended March 31, 2025.

See our Form 10-K for a comprehensive discussion of related party transactions.

1 unchanged sentence

The Company has evaluated the impact of subsequent events as defined by the accounting guidance through the date this report was issued and determined that no other significant subsequent events need to be recognized or disclosed at this time.

September 30, 2024 | 10-Q 36

March 31, 2025 | 10-Q 33

CITIZENS, INC.

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-Q

Item 1. Financial Statements