Item 1. Financial Statements
Item 1. FINANCIAL STATEMENTS
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
(In thousands) June 30, 2025 December 31, 2024
(Unaudited)
Assets:
Investments:
Fixed maturity securities available-for-sale, at fair value (amortized cost: $ 1,403,782 and $ 1,401,301 in 2025 and 2024, respectively)
$ 1,242,271 1,220,961
Equity securities, at fair value 5,478 5,447
Policy loans 69,648 71,216
Other long-term investments (portion measured at fair value $ 96,142 and $ 93,337 in 2025 and 2024, respectively)
96,424 93,604
Total investments 1,413,821 1,391,228
Cash and cash equivalents (restricted portion: $ 1,554 in both 2025 and 2024)
22,671 29,271
Accrued investment income 17,523 17,546
Reinsurance recoverable 9,388 6,941
Deferred policy acquisition costs 208,944 199,635
Cost of insurance acquired 9,269 9,446
Current federal income tax receivable 1,143 148
Property and equipment, net 9,845 10,574
Due premiums 10,735 11,721
Other assets (less allowance for losses of $ 743 and $ 516 in 2025 and 2024, respectively)
9,161 8,815
Total assets $ 1,712,500 1,685,325
See accompanying Notes to Consolidated Financial Statements.
June 30, 2025 | 10-Q 2
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets, Continued
(In thousands, except share amounts) June 30, 2025 December 31, 2024
(Unaudited)
Liabilities and Stockholders' Equity:
Liabilities:
Policy liabilities:
Future policy benefit reserves:
Life insurance $ 1,170,116 1,172,034
Accident and health insurance 1,240 1,071
Total future policy benefit reserves 1,171,356 1,173,105
Policyholders' funds:
Annuities 158,652 149,977
Dividend accumulations 49,281 47,768
Premiums paid in advance 31,063 31,182
Policy claims payable 8,411 8,822
Other policyholders' funds 8,372 7,271
Total policyholders' funds 255,779 245,020
Total policy liabilities 1,427,135 1,418,125
Commissions payable 4,010 4,546
Deferred federal income tax liability 4,999 3,442
Other liabilities 47,330 48,857
Total liabilities 1,483,474 1,474,970
Commitments and contingencies ( Notes 7 and 8 )
Stockholders' Equity:
Common stock:
Class A, no par value, 100,000,000 shares authorized, 54,565,526 and 54,235,165 shares issued and outstanding in 2025 and 2024, respectively, including shares in treasury of 4,327,810 in 2025 and 2024
271,324 269,799
Class B, no par value, 2,000,000 shares authorized, 1,001,714 shares issued and outstanding in 2025 and 2024, including shares in treasury of 1,001,714 in 2025 and 2024
3,184 3,184
Retained earnings 61,898 57,062
Accumulated other comprehensive income (loss) ( 83,655 ) ( 95,965 )
Treasury stock, at cost ( 23,725 ) ( 23,725 )
Total stockholders' equity 229,026 210,355
Total liabilities and stockholders' equity $ 1,712,500 1,685,325
See accompanying Notes to Consolidated Financial Statements.
June 30, 2025 | 10-Q 3
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per share amounts)
2025 2024 2025 2024
Revenues:
Premiums:
Life insurance $ 42,937 42,101 82,286 80,362
Accident and health insurance 451 458 899 872
Property insurance — — — ( 2 )
Net investment income 17,169 17,540 34,546 35,027
Investment related gains (losses), net 2,408 ( 253 ) ( 486 ) 710
Other income 2,121 2,238 3,493 2,827
Total revenues 65,086 62,084 120,738 119,796
Benefits and Expenses:
Insurance benefits paid or provided:
Claims and surrenders 40,220 34,530 80,318 67,643
Increase (decrease) in future policy benefit reserves ( 4,554 ) ( 1,052 ) ( 8,200 ) ( 601 )
Policyholder liability remeasurement (gain) loss 1,351 1,360 1,179 1,679
Policyholders' dividends 1,315 1,191 2,610 2,428
Total insurance benefits paid or provided 38,332 36,029 75,907 71,149
Commissions 11,409 12,232 22,684 22,682
Other general expenses 13,459 16,639 26,152 27,977
Capitalization of deferred policy acquisition costs ( 9,720 ) ( 10,543 ) ( 18,569 ) ( 18,874 )
Amortization of deferred policy acquisition costs 4,613 4,273 9,260 8,311
Amortization of cost of insurance acquired 79 152 177 324
Total benefits and expenses 58,172 58,782 115,611 111,569
Income (loss) before federal income tax
6,914 3,302 5,127 8,227
Federal income tax expense (benefit)
455 ( 657 ) 291 ( 274 )
Net income (loss)
6,459 3,959 4,836 8,501
Per Share Amounts:
Basic and diluted earnings (loss) per share of Class A common stock
0.13 0.08 0.10 0.17
Other Comprehensive Income (Loss):
Unrealized gains (losses) on fixed maturity securities:
Unrealized holding gains (losses) arising during period 243 ( 14,258 ) 18,577 ( 27,674 )
Reclassification adjustment for (gains) losses included in net income (loss)
168 199 251 647
Unrealized gains (losses) on fixed maturity securities, net 411 ( 14,059 ) 18,828 ( 27,027 )
Change in current discount rate for liability for future policy benefits 4,003 5,522 ( 4,586 ) 39,517
Income tax expense (benefit) on other comprehensive income items 995 ( 383 ) 1,932 2,259
Other comprehensive income (loss) 3,419 ( 8,154 ) 12,310 10,231
Total comprehensive income (loss) $ 9,878 ( 4,195 ) 17,146 18,732
See accompanying Notes to Consolidated Financial Statements.
June 30, 2025 | 10-Q 4
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(Unaudited)
Common Stock Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Treasury Stock
Total Stockholders' Equity
(In thousands) Class A Class B
Balance at December 31, 2024 $ 269,799 3,184 57,062 ( 95,965 ) ( 23,725 ) 210,355
Comprehensive income (loss):
Net income (loss)
— — ( 1,623 ) — — ( 1,623 )
Other comprehensive income (loss) — — — 8,891 — 8,891
Total comprehensive income (loss) — — ( 1,623 ) 8,891 — 7,268
Stock-based compensation 516 — — — — 516
Balance at March 31, 2025 270,315 3,184 55,439 ( 87,074 ) ( 23,725 ) 218,139
Comprehensive income (loss):
Net income (loss)
— — 6,459 — — 6,459
Other comprehensive income (loss) — — — 3,419 — 3,419
Total comprehensive income (loss) — — 6,459 3,419 — 9,878
Stock-based compensation 1,009 — — — — 1,009
Balance at June 30, 2025 $ 271,324 3,184 61,898 ( 83,655 ) ( 23,725 ) 229,026
Balance at December 31, 2023 $ 268,675 3,184 42,150 ( 118,155 ) ( 23,725 ) 172,129
Comprehensive income (loss):
Net income (loss)
— — 4,542 — — 4,542
Other comprehensive income (loss) — — — 18,385 — 18,385
Total comprehensive income (loss) — — 4,542 18,385 — 22,927
Stock-based compensation 127 — — — — 127
Balance at March 31, 2024 268,802 3,184 46,692 ( 99,770 ) ( 23,725 ) 195,183
Comprehensive income (loss):
Net 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
See accompanying Notes to Consolidated Financial Statements.
June 30, 2025 | 10-Q 5
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30,
(In thousands)
2025 2024
Cash flows from operating activities:
Net income (loss)
$ 4,836 8,501
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 486 ( 710 )
Net deferred policy acquisition costs ( 9,309 ) ( 10,563 )
Amortization of cost of insurance acquired 177 324
Depreciation 343 291
Amortization of premiums and discounts on investments 2,379 2,516
Stock-based compensation 1,797 640
Deferred federal income tax expense (benefit) ( 375 ) ( 944 )
Change in:
Accrued investment income 23 ( 229 )
Reinsurance recoverable ( 2,447 ) ( 1,226 )
Due premiums 986 318
Future policy benefit reserves ( 6,335 ) ( 36 )
Other policyholders' liabilities 14,670 12,942
Federal income tax payable ( 995 ) 543
Commissions payable and other liabilities ( 1,417 ) 1,147
Other, net ( 601 ) ( 2,138 )
Net cash provided by operating activities
4,218 11,376
Cash flows from investing activities:
Purchases of fixed maturity securities, available-for-sale ( 34,375 ) ( 35,650 )
Sales of fixed maturity securities, available-for-sale 14,569 4,659
Maturities and calls of fixed maturity securities, available-for-sale 14,723 27,197
Principal payments on mortgage loans 4 5
Change in policy loans 1,568 1,897
Sales of other long-term investments 2,031 130
Purchases of other long-term investments ( 4,872 ) ( 8,250 )
Purchases of property and equipment ( 283 ) ( 189 )
Net cash used in investing activities
( 6,635 ) ( 10,201 )
See accompanying Notes to Consolidated Financial Statements.
June 30, 2025 | 10-Q 6
Table of Contents
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(Unaudited)
Six Months Ended June 30,
(In thousands)
2025 2024
Cash flows from financing activities:
Annuity deposits $ 4,434 3,222
Annuity withdrawals ( 8,345 ) ( 5,017 )
Other share repurchases
( 272 ) ( 33 )
Net cash used in financing activities
( 4,183 ) ( 1,828 )
Net increase (decrease) in cash and cash equivalents ( 6,600 ) ( 653 )
Cash and cash equivalents at beginning of year 29,271 26,997
Cash and cash equivalents at end of period $ 22,671 26,344
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
During the six months ended June 30, 2025, various fixed maturity issuers exchanged securities with book values of $ 6.5 million for securities of equal value and $ 3.7 million during the six months ended June 30, 2024.
The Company had $ 0.8 million of net unsettled security trades at June 30, 2024 and none at June 30, 2025.
See accompanying Notes to Consolidated Financial Statements.
June 30, 2025 | 10-Q 7
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
(1) FINANCIAL STATEMENTS
BASIS OF PRESENTATION AND CONSOLIDATION
The consolidated financial statements include the accounts and operations of Citizens, Inc. ("Citizens" or the "Company"), a Colorado corporation, and its wholly-owned subsidiaries, CICA Life Insurance Company of America ("CICA Domestic"), CICA Life Ltd., 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"). All significant inter-company accounts and transactions have been eliminated. Citizens and its wholly-owned subsidiaries are collectively referred to as the "Company," "it," "we," "us" or "our".
The consolidated balance sheet as of June 30, 2025, the consolidated statements of operations and comprehensive income (loss) and stockholders' equity for the three and six months ended June 30, 2025 and June 30, 2024 and the consolidated statements of cash flows for the six months ended June 30, 2025 and June 30, 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 June 30, 2025 and for comparative periods have been made. The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission ("SEC"). Accordingly, the consolidated financial statements do not include all the information and footnotes required for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024 ("Form 10-K"). 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 our subsidiaries CICA Domestic and CICA International.
CICA Domestic. CICA Domestic issues primarily ordinary whole life, final expense and life products with living benefits throughout the U.S.
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.
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 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.
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
June 30, 2025 | 10-Q 8
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
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.
Significant estimates include those used in the evaluation of credit losses on fixed maturity securities, valuation allowances on deferred tax assets, actuarially determined assets and liabilities, and assumptions and contingencies related 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.
SIGNIFICANT ACCOUNTING POLICIES
For a description of all significant accounting policies, see Part IV, Item 15, Note 1. Summary of Significant Accounting Policies in the notes to our consolidated financial statements included in our Form 10-K , which should be read in conjunction with these accompanying consolidated financial statements.
(2) ACCOUNTING PRONOUNCEMENTS
ACCOUNTING STANDARDS NOT YET ADOPTED
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.
(3) INVESTMENTS
The Company invests primarily in fixed maturity securities as shown below.
Carrying Value
(In thousands, except for %)
June 30, 2025 December 31, 2024
Amount % Amount %
Cash and invested assets:
Fixed maturity securities $ 1,242,271 86.5 % 1,220,961 86.0 %
Equity securities 5,478 0.4 5,447 0.4
Policy loans 69,648 4.8 71,216 5.0
Other long-term investments 96,424 6.7 93,604 6.6
Cash and cash equivalents 22,671 1.6 29,271 2.0
Total cash and invested assets $ 1,436,492 100.0 % 1,420,499 100.0 %
June 30, 2025 | 10-Q 9
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
The following tables represent the amortized cost, gross unrealized gains and losses and fair value of fixed maturity securities as of the dates indicated.
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value
June 30, 2025
(In thousands)
Fixed maturity securities:
U.S. Treasury securities $ 5,916 91 101 5,906
U.S. Government-sponsored enterprises 3,137 230 — 3,367
States and political subdivisions 301,135 1,312 31,098 271,349
Corporate:
Financial 268,869 2,924 29,506 242,287
Consumer 260,529 1,394 42,932 218,991
Utilities 127,904 458 21,479 106,883
Energy 80,167 156 9,141 71,182
Communications 66,572 235 8,488 58,319
All other 130,035 1,032 16,951 114,116
Commercial mortgage-backed 310 4 3 311
Residential mortgage-backed 105,617 6 9,787 95,836
Asset-backed 53,591 889 756 53,724
Total fixed maturity securities $ 1,403,782 8,731 170,242 1,242,271
Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value
December 31, 2024
(In thousands)
Fixed maturity securities:
U.S. Treasury securities $ 5,939 85 115 5,909
U.S. Government-sponsored enterprises 3,152 152 — 3,304
States and political subdivisions 300,757 1,087 33,542 268,302
Corporate:
Financial 272,925 1,593 33,285 241,233
Consumer 263,242 899 45,955 218,186
Utilities 126,361 220 22,770 103,811
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
Commercial mortgage-backed 315 1 5 311
Residential mortgage-backed 106,661 7 13,026 93,642
Asset-backed 54,419 891 806 54,504
Total fixed maturity securities $ 1,401,301 5,401 185,741 1,220,961
June 30, 2025 | 10-Q 10
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
The Company's investments in equity securities are shown below.
Fair Value
(In thousands)
June 30, 2025 December 31, 2024
Equity securities:
Bond mutual funds $ 742 739
Common stocks
973 810
Non-redeemable preferred stock 7 7
Non-redeemable preferred stock fund 3,756 3,891
Total equity securities $ 5,478 5,447
VALUATION OF INVESTMENTS
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 (loss). The Company recognized net investment related losses of $ 16 thousand and gains of $ 31 thousand for the three and six months ended June 30, 2025, compared to losses of $ 0.1 million and gains of $ 0.1 million for the same periods in 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 six months ended June 30, 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 June 30, 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.
June 30, 2025 Less than 12 months Greater than 12 months Total
(In thousands, except for # of securities) Fair
Value Unrealized
Losses # of
Securities Fair
Value Unrealized
Losses # of
Securities Fair
Value Unrealized
Losses # of
Securities
Fixed maturity securities:
U.S. Treasury securities $ 850 38 3 437 63 5 1,287 101 8
States and political subdivisions 27,435 959 43 149,245 30,139 178 176,680 31,098 221
Corporate:
Financial 18,395 376 22 150,166 29,130 188 168,561 29,506 210
Consumer 34,176 1,626 40 156,503 41,306 213 190,679 42,932 253
Utilities 12,326 469 35 80,571 21,010 144 92,897 21,479 179
Energy 11,520 357 27 51,619 8,784 62 63,139 9,141 89
Communications 2,995 98 6 45,995 8,390 58 48,990 8,488 64
All Other 19,993 661 34 70,856 16,290 89 90,849 16,951 123
Commercial mortgage-backed — — — 86 3 1 86 3 1
Residential mortgage-backed 58 1 2 95,514 9,786 83 95,572 9,787 85
Asset-backed 6,519 270 10 14,338 486 15 20,857 756 25
Total fixed maturity securities $ 134,267 4,855 222 815,330 165,387 1,036 949,597 170,242 1,258
June 30, 2025 | 10-Q 11
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
December 31, 2024 Less than 12 months Greater than 12 months Total
(In thousands, except for # of securities) Fair
Value Unrealized
Losses # of
Securities Fair
Value Unrealized
Losses # of
Securities Fair
Value Unrealized
Losses # of
Securities
Fixed maturity securities:
U.S. Treasury securities $ 835 51 3 435 64 5 1,270 115 8
States and political subdivisions 42,583 1,484 63 147,534 32,058 177 190,117 33,542 240
Corporate:
Financial 29,258 756 53 154,448 32,529 192 183,706 33,285 245
Consumer 37,231 2,053 57 161,795 43,902 216 199,026 45,955 273
Utilities 16,750 687 47 79,488 22,083 142 96,238 22,770 189
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
Asset-backed 10,330 243 14 14,741 563 16 25,071 806 30
Total fixed maturity securities $ 184,082 7,201 327 821,516 178,540 1,045 1,005,598 185,741 1,372
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 June 30, 2025 and December 31, 2024, 98.6 % and 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 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 June 30, 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.
June 30, 2025 Amortized
Cost Fair
Value
(In thousands)
Fixed maturity securities:
Due in one year or less $ 21,110 21,118
Due after one year through five years 140,153 140,533
Due after five years through ten years 268,987 267,875
Due after ten years 973,532 812,745
Total fixed maturity securities $ 1,403,782 1,242,271
June 30, 2025 | 10-Q 12
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
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 Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Fixed maturity securities, available-for-sale:
Proceeds $ 14,504 2,151 14,569 4,659
Gross realized gains $ 91 90 92 91
Gross realized losses $ 438 147 442 196
During the first quarter of 2025, real estate, formerly utilized as district offices in our Home Service Insurance segment in Baton Rouge and Bogalusa, Louisiana, was reclassified from net property, plant and equipment 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.
During the three months ended June 30, 2025, the Company accepted a tender offer by Discovery Communications, Inc. after considering the outlook of the issuer. As a result, the Company recognized a realized loss of $ 0.4 million, which is recorded a net realized investment loss for the period.
(4) FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We hold AFS fixed maturity securities, which are carried at fair value with changes in fair value reported through other comprehensive income (loss). 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).
Fair value measurements are generally based upon observable and unobservable inputs. 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 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.
• Level 1 - Quoted prices for identical instruments in active markets.
• Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs or whose significant value drivers are observable.
• Level 3 - Instruments whose significant value drivers are unobservable.
Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as U.S. Treasury securities and actively traded mutual fund and stock investments.
Level 2 includes those financial instruments that are valued by independent pricing services or broker quotes. These pricing models are primarily industry-standard models that consider various inputs, such as interest rates, credit spreads and foreign exchange rates for the underlying financial instruments. All significant inputs are observable or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace. Financial instruments in this category primarily include corporate securities, U.S. Government-sponsored enterprise securities, securities issued by states and political subdivisions and certain mortgage and asset-backed securities.
June 30, 2025 | 10-Q 13
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
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. Real estate held-for-sale is included in this category. There were no securities in this category as of or during the periods ended June 30, 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.
June 30, 2025 Level 1 Level 2 Level 3 Total
Fair Value
(In thousands)
Financial assets:
Fixed maturity securities:
U.S. Treasury and U.S. Government-sponsored enterprises $ 5,906 3,367 — 9,273
States and political subdivisions — 271,349 — 271,349
Corporate 41 811,737 — 811,778
Commercial mortgage-backed — 311 — 311
Residential mortgage-backed — 95,836 — 95,836
Asset-backed — 53,724 — 53,724
Total fixed maturity securities
5,947 1,236,324 — 1,242,271
Equity securities:
Bond mutual funds 742 — — 742
Common stocks
973 — — 973
Non-redeemable preferred stock 7 — — 7
Non-redeemable preferred stock fund 3,756 — — 3,756
Total equity securities 5,478 — — 5,478
Other long-term investments (1)
— — — 96,142
Total financial assets $ 11,425 1,236,324 — 1,343,891
(1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy. 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.
June 30, 2025 | 10-Q 14
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
December 31, 2024 Level 1 Level 2 Level 3 Total
Fair Value
(In thousands)
Financial assets:
Fixed maturity securities:
U.S. Treasury and U.S. Government-sponsored enterprises $ 5,909 3,304 — 9,213
States and political subdivisions — 268,302 — 268,302
Corporate 42 794,947 — 794,989
Commercial mortgage-backed — 311 — 311
Residential mortgage-backed — 93,642 — 93,642
Asset-backed — 54,504 — 54,504
Total fixed maturity securities
5,951 1,215,010 — 1,220,961
Equity securities:
Bond mutual funds 739 — — 739
Common stocks
810 — — 810
Non-redeemable preferred stock 7 — — 7
Non-redeemable preferred stock fund 3,891 — — 3,891
Total equity securities 5,447 — — 5,447
Other long-term investments (1)
— — — 93,337
Total financial assets $ 11,398 1,215,010 — 1,319,745
(1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy. 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.
FINANCIAL INSTRUMENTS VALUATION
FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE
Fixed maturity securities, available-for-sale. At June 30, 2025, fixed maturity securities, valued using a third-party pricing source, totaled $ 1.2 billion for Level 2 assets and comprised 92.0 % 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 June 30, 2025. As of June 30, 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. Our equity securities are classified as Level 1 assets as their fair values are based upon quoted market prices.
Limited partnerships. The Company considers the net asset value ("NAV") to represent the value of the investment fund and is measured by the total value of assets minus the total value of liabilities. The following table includes information related to our investments in limited partnerships that calculate NAV per share. 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 specific to change in fair value of $ 2.9 million and $ 1.4 million for the three and six months ended June 30, 2025, and gains of $ 4 thousand and $ 1.3 million on limited partnerships
June 30, 2025 | 10-Q 15
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
held for the three and six months ended June 30, 2024. These investments are included in other long-term investments on the consolidated balance sheets.
June 30, 2025 December 31, 2024
(In thousands, except for years)
Fair Value
Using NAV Per Share Unfunded Commit-
ments Range
(In years)
Fair Value
Using NAV Per Share Unfunded Commit-
ments Range
(In years)
Description
Limited partnerships:
Middle market Investments in privately-originated, performing senior secured debt primarily in North America-based companies $ 35,562 — 0 $ 35,369 1,660 3
Global equity fund Investments in common stocks of U.S., international developed and emerging markets with a focus on long-term capital growth 12,518 — 0 11,568 — 0
Late-stage growth Investments in private late-stage, established companies seeking capital to accelerate growth prior to an IPO or sale 32,108 5,613 3 to 5
27,825 8,134 3 to 5
Infrastructure Investments in environmental infrastructure and related technology, focusing on renewable power generation and distribution 15,954 4,863 8 to 10
18,575 5,637 9 to 10
Total limited partnerships $ 96,142 10,476 $ 93,337 15,431
The majority of our limited partnership investments are not redeemable because distributions from the funds will be received when the underlying investments of the funds are liquidated. The life spans indicated above may be shortened or extended at the fund manager's discretion, typically in one or two-year increments. The global equity fund is redeemable monthly.
FINANCIAL INSTRUMENTS NOT CARRIED AT FAIR VALUE
Estimates of fair values are made at a specific point in time, based on relevant market prices and information about the financial instruments. The estimated fair values of financial instruments presented below are not necessarily indicative of the amounts the Company might realize in actual market transactions.
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:
June 30, 2025 December 31, 2024
(In thousands) Carrying
Value Fair
Value Carrying
Value Fair
Value
Financial assets:
Policy loans $ 69,648 69,648 71,216 71,216
Residential mortgage loan 29 29 33 34
Cash and cash equivalents 22,671 22,671 29,271 29,271
Financial liabilities:
Annuity - investment contracts 66,592 61,922 68,888 63,629
June 30, 2025 | 10-Q 16
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
Policy loans. Policy loans had a weighted average annual interest rate of 7.7 % at both June 30, 2025 and December 31, 2024 and no specified maturity dates. The aggregate fair value of policy loans approximates the carrying value reflected on the consolidated balance sheets. Policy loans are an integral part of the life insurance policies we have in force, cannot be valued separately and are not marketable. Therefore, the fair value of policy loans approximates the carrying value and policy loans are considered Level 3 assets in the fair value hierarchy.
Residential mortgage loan. This mortgage loan is secured by a residential property. The interest rate for this loan was 7.0 % at both June 30, 2025 and December 31, 2024. At June 30, 2025, the remaining loan matures in three years . Management estimated the fair value using an annual interest rate of 6.25 % at both June 30, 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 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 June 30, 2025 and December 31, 2024 using discounted cash flows based upon spot rates adjusted for various risk adjustments ranging from 3.68 % to 5.06 % 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.
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.
Carrying Value
(In thousands )
June 30, 2025 December 31, 2024
Other long-term investments:
Limited partnerships $ 96,142 93,337
FHLB common stock 217 212
Mortgage loans 29 33
Real estate held-for-sale
15 —
All other investments 21 22
Total other long-term investments $ 96,424 93,604
We are a member of the Federal Home Loan Bank ("FHLB") of Dallas and such membership requires members to own stock in the FHLB. Our FHLB stock is carried at amortized cost, which approximates fair value.
(5) DEFERRED POLICY ACQUISITION COSTS AND COST OF INSURANCE ACQUIRED
DAC
The following tables roll forward the DAC and COIA balances for the six months ended June 30, 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
June 30, 2025 | 10-Q 17
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
premiums payable for a limited time after which the policy is fully paid up. Both reporting cohorts include whole life and endowment policies.
Six Months Ended June 30, 2025
(In thousands)
Permanent Permanent Limited Pay Other Business Total
Life Insurance:
Balance, beginning of year $ 124,725 16,388 547 141,660
Capitalizations 14,196 1,534 144 15,874
Amortization expense ( 7,133 ) ( 561 ) ( 105 ) ( 7,799 )
Balance, end of period 131,788 17,361 586 149,735
Home Service Insurance:
Balance, beginning of year 45,656 11,151 1,168 57,975
Capitalizations 2,142 442 111 2,695
Amortization expense ( 1,143 ) ( 213 ) ( 105 ) ( 1,461 )
Balance, end of period 46,655 11,380 1,174 59,209
Consolidated:
Balance, beginning of year 170,381 27,539 1,715 199,635
Capitalizations 16,338 1,976 255 18,569
Amortization expense ( 8,276 ) ( 774 ) ( 210 ) ( 9,260 )
Balance, end of period $ 178,443 28,741 1,760 208,944
Six Months Ended June 30, 2024
(In thousands)
Permanent Permanent Limited Pay Other Business Total
Life Insurance:
Balance, beginning of year $ 105,552 14,075 1,213 120,840
Capitalizations 13,658 1,611 138 15,407
Amortization expense ( 6,304 ) ( 470 ) ( 170 ) ( 6,944 )
Balance, end of period 112,906 15,216 1,181 129,303
Home Service Insurance:
Balance, beginning of year 43,280 10,564 1,084 54,928
Capitalizations 2,727 621 119 3,467
Amortization expense ( 1,117 ) ( 213 ) ( 37 ) ( 1,367 )
Balance, end of period 44,890 10,972 1,166 57,028
Consolidated:
Balance, beginning of year 148,832 24,639 2,297 175,768
Capitalizations 16,385 2,232 257 18,874
Amortization expense ( 7,421 ) ( 683 ) ( 207 ) ( 8,311 )
Balance, end of period $ 157,796 26,188 2,347 186,331
June 30, 2025 | 10-Q 18
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
DAC capitalization decreased for the six months ended June 30, 2025, compared to the same prior year period mainly from increased ceding commissions and expenses due to a full six months of reinsurance with RGA in 2025 offset by higher first year sales.
COIA
Six Months Ended June 30, 2025
(In thousands)
Permanent Permanent Limited Pay Other Business Total
Life Insurance:
Balance, beginning of year $ 599 648 — 1,247
Amortization expense ( 21 ) ( 21 ) — ( 42 )
Balance, end of period 578 627 — 1,205
Home Service Insurance:
Balance, beginning of year 6,825 161 1,213 8,199
Amortization expense ( 178 ) ( 4 ) 47 ( 135 )
Balance, end of period 6,647 157 1,260 8,064
Consolidated:
Balance, beginning of year 7,424 809 1,213 9,446
Amortization expense ( 199 ) ( 25 ) 47 ( 177 )
Balance, end of period $ 7,225 784 1,260 9,269
Six Months Ended June 30, 2024
(In thousands)
Permanent Permanent Limited Pay Other Business Total
Life Insurance:
Balance, beginning of year $ 249 695 406 1,350
Amortization expense ( 8 ) ( 25 ) ( 22 ) ( 55 )
Balance, end of period 241 670 384 1,295
Home Service Insurance:
Balance, beginning of year 7,194 168 1,331 8,693
Amortization expense ( 187 ) ( 4 ) ( 78 ) ( 269 )
Balance, end of period 7,007 164 1,253 8,424
Consolidated:
Balance, beginning of year 7,443 863 1,737 10,043
Amortization expense ( 195 ) ( 29 ) ( 100 ) ( 324 )
Balance, end of period $ 7,248 834 1,637 9,719
(6) POLICYHOLDERS’ LIABILITIES
LIABILITY FOR FUTURE POLICY BENEFITS
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,
June 30, 2025 | 10-Q 19
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
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.
June 30, 2025
(In thousands)
Life Insurance
Home Service Insurance
Permanent Permanent Limited Pay Total Permanent Permanent Limited Pay Total
Present Value of Expected Net Premiums:
Balance, beginning of year $ 299,918 14,962 314,880 94,458 13,878 108,336
Beginning balance at original discount rate 310,919 15,180 326,099 101,026 14,732 115,758
Effect of actual variances from expected experience
( 16,659 ) 910 ( 15,749 ) ( 2,315 ) ( 1,191 ) ( 3,506 )
Adjusted beginning of year balance 294,260 16,090 310,350 98,711 13,541 112,252
Issuances 55,982 1,840 57,822 7,241 1,140 8,381
Interest accrual 6,577 298 6,875 2,121 267 2,388
Net premiums collected ( 27,005 ) ( 2,683 ) ( 29,688 ) ( 6,037 ) ( 108 ) ( 6,145 )
Derecognition and other ( 4,405 ) 149 ( 4,256 ) 57 6 63
Ending balance at original discount rate 325,409 15,694 341,103 102,093 14,846 116,939
Effect of changes in discount rates ( 6,052 ) ( 36 ) ( 6,088 ) ( 5,670 ) ( 641 ) ( 6,311 )
Balance, end of period $ 319,357 15,658 335,015 96,423 14,205 110,628
Present Value of Expected Future Policy Benefits:
Balance, beginning of year $ 996,556 187,066 1,183,622 198,809 111,639 310,448
Beginning balance at original discount rate 1,051,493 201,797 1,253,290 218,555 123,016 341,571
Effect of actual variances from expected experience
( 15,805 ) 2,064 ( 13,741 ) ( 2,147 ) ( 371 ) ( 2,518 )
Adjusted beginning of year balance 1,035,688 203,861 1,239,549 216,408 122,645 339,053
Issuances 56,302 1,994 58,296 7,240 1,135 8,375
Interest accrual 23,214 4,101 27,315 4,858 2,879 7,737
Benefit payments ( 55,261 ) ( 10,447 ) ( 65,708 ) ( 8,125 ) ( 2,952 ) ( 11,077 )
Derecognition and other ( 4,771 ) ( 2 ) ( 4,773 ) 47 3 50
Ending balance at original discount rate 1,055,172 199,507 1,254,679 220,428 123,710 344,138
Effect of changes in discount rates ( 43,994 ) ( 13,276 ) ( 57,270 ) ( 20,044 ) ( 12,490 ) ( 32,534 )
Balance, end of period $ 1,011,178 186,231 1,197,409 200,384 111,220 311,604
Net liability for future policy benefits $ 691,821 170,573 862,394 103,961 97,015 200,976
Less: Reinsurance recoverable 3,986 — 3,986 — — —
Net liability for future policy benefits, after reinsurance recoverable $ 687,835 170,573 858,408 103,961 97,015 200,976
June 30, 2025 | 10-Q 20
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
June 30, 2024
(In thousands)
Life Insurance Home Service Insurance
Permanent Permanent Limited Pay Total Permanent Permanent Limited Pay Total
Present Value of Expected Net Premiums:
Balance, beginning of year $ 244,917 13,260 258,177 98,831 14,926 113,757
Beginning balance at original discount rate 252,426 13,533 265,959 102,045 15,512 117,557
Effect of actual variances from expected experience
( 3,880 ) 456 ( 3,424 ) ( 2,791 ) ( 1,813 ) ( 4,604 )
Adjusted beginning of year balance 248,546 13,989 262,535 99,254 13,699 112,953
Issuances 39,391 1,566 40,957 8,038 1,278 9,316
Interest accrual 5,243 245 5,488 2,135 266 2,401
Net premiums collected ( 21,932 ) ( 1,537 ) ( 23,469 ) ( 6,056 ) 159 ( 5,897 )
Derecognition and other ( 3,417 ) 97 ( 3,320 ) 190 35 225
Ending balance at original discount rate 267,831 14,360 282,191 103,561 15,437 118,998
Effect of changes in discount rates ( 10,055 ) ( 333 ) ( 10,388 ) ( 5,741 ) ( 867 ) ( 6,608 )
Balance, end of period $ 257,776 14,027 271,803 97,820 14,570 112,390
Present Value of Expected Future Policy Benefits:
Balance, beginning of year $ 973,350 195,122 1,168,472 211,946 122,784 334,730
Beginning balance at original discount rate 995,962 202,755 1,198,717 217,524 123,941 341,465
Effect of actual variances from expected experience
( 2,480 ) 2,137 ( 343 ) ( 2,714 ) ( 917 ) ( 3,631 )
Adjusted beginning of year balance 993,482 204,892 1,198,374 214,810 123,024 337,834
Issuances 39,803 1,650 41,453 8,037 1,280 9,317
Interest accrual 22,134 4,127 26,261 4,826 2,878 7,704
Benefit payments ( 42,634 ) ( 9,283 ) ( 51,917 ) ( 7,789 ) ( 3,037 ) ( 10,826 )
Derecognition and other ( 4,154 ) 16 ( 4,138 ) 187 32 219
Ending balance at original discount rate 1,008,631 201,402 1,210,033 220,071 124,177 344,248
Effect of changes in discount rates ( 45,573 ) ( 13,063 ) ( 58,636 ) ( 15,138 ) ( 7,865 ) ( 23,003 )
Balance, end of period $ 963,058 188,339 1,151,397 204,933 116,312 321,245
Net liability for future policy benefits $ 705,282 174,312 879,594 107,113 101,742 208,855
Less: Reinsurance recoverable 142 — 142 — — —
Net liability for future policy benefits, after flooring impact $ 705,140 174,312 879,452 107,113 101,742 208,855
June 30, 2025 | 10-Q 21
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
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.
June 30, 2025
June 30, 2024
(In thousands) Life
Insurance Home Service
Insurance Consolidated Life
Insurance Home Service
Insurance Consolidated
Life Insurance:
Permanent $ 687,835 103,961 791,796 705,140 107,113 812,253
Permanent limited pay 170,573 97,015 267,588 174,312 101,742 276,054
Deferred profit liability 32,288 30,370 62,658 29,749 27,849 57,598
Other 33,630 14,444 48,074 29,609 14,079 43,688
Total life insurance 924,326 245,790 1,170,116 938,810 250,783 1,189,593
Accident & Health Insurance:
Other 737 503 1,240 634 361 995
Total future policy benefit reserves $ 925,063 246,293 1,171,356 939,444 251,144 1,190,588
The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefit payments for long-term duration contracts.
June 30, 2025 June 30, 2024
(In thousands) Life
Insurance Home Service
Insurance Life
Insurance Home Service
Insurance
Undiscounted:
Permanent:
Expected future gross premiums $ 824,655 445,487 687,927 455,504
Expected future benefit payments 1,654,150 494,455 1,538,163 491,992
Permanent Limited Pay:
Expected future gross premiums 45,791 76,469 46,682 77,217
Expected future benefit payments 323,376 321,480 325,481 321,190
Discounted:
Permanent:
Expected future gross premiums $ 612,505 259,470 517,392 267,791
Expected future benefit payments 1,011,178 200,384 963,058 204,933
Permanent Limited Pay:
Expected future gross premiums 41,192 49,205 41,444 51,050
Expected future benefit payments 186,231 111,220 188,339 116,312
June 30, 2025 | 10-Q 22
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
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 June 30,
Six Months Ended June 30,
2025 2024 2025 2024
(In thousands)
Gross Premiums Interest Expense Gross Premiums Interest Expense Gross Premiums Interest Expense Gross Premiums Interest Expense
Life Insurance Segment:
Life Insurance:
Permanent $ 27,930 8,270 24,801 8,427 54,982 16,637 48,117 16,891
Permanent Limited Pay 3,995 2,215 4,026 2,207 8,622 4,429 7,672 4,470
Other 3,470 — 3,933 — 3,298 — 5,042 —
Less:
Reinsurance 2,944 — 1,358 — 5,484 — 1,731 —
Total, net of reinsurance 32,451 10,485 31,402 10,634 61,418 21,066 59,100 21,361
Accident & Health Insurance:
Other 192 — 204 — 380 — 368 —
Less:
Reinsurance — — 1 — 1 — 2 —
Total, net of reinsurance 192 — 203 — 379 — 366 —
Total $ 32,643 10,485 31,605 10,634 61,797 21,066 59,466 21,361
Home Service Insurance Segment:
Life Insurance:
Permanent $ 8,045 1,371 8,225 1,347 16,149 2,737 16,466 2,691
Permanent Limited Pay 1,936 1,665 2,028 1,632 3,893 3,322 4,068 3,258
Other 574 — 453 — 907 — 747 —
Less:
Reinsurance 69 — 7 — 81 — 19 —
Total, net of reinsurance 10,486 3,036 10,699 2,979 20,868 6,059 21,262 5,949
Accident & Health Insurance:
Other 259 — 255 — 520 — 506 —
Total $ 10,745 3,036 10,954 2,979 21,388 6,059 21,768 5,949
June 30, 2025 | 10-Q 23
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
The following table provides the weighted-average durations of the liability for future policy benefits.
June 30, 2025 June 30, 2024
(In years) Life
Insurance Home Service
Insurance Life
Insurance Home Service
Insurance
Permanent:
Duration at original discount rate 8.5 15.1 8.3 16.1
Duration at current discount rate 8.5 14.2 8.5 15.7
Permanent Limited Pay:
Duration at original discount rate 8.0 13.7 8.1 14.5
Duration at current discount rate 7.6 13.1 7.8 14.4
The following table provides the weighted-average interest rates for the liability for future policy benefits.
June 30, 2025 June 30, 2024
Life
Insurance Home Service
Insurance Life
Insurance Home Service
Insurance
Permanent:
Interest rate at original discount rate 4.86 % 4.84 % 4.88 % 4.96 %
Interest rate at current discount rate 5.12 % 5.62 % 5.18 % 5.37 %
Permanent Limited Pay:
Interest rate at original discount rate 4.26 % 4.89 % 4.28 % 5.03 %
Interest rate at current discount rate 5.12 % 5.58 % 5.18 % 5.37 %
LIABILITY FOR POLICYHOLDERS’ ACCOUNT BALANCES
The following table presents the policyholders' account balances by range of guaranteed minimum crediting rates and the related range of the difference, in basis points, between rates being credited and the respective guaranteed minimums.
At Guaranteed Minimum 1 Basis Point-50 Basis Points Above 51 Basis Points-150 Basis Points Above Greater Than 150 Basis Points Above Total
June 30, 2025
(In thousands)
Range of Guaranteed Minimum Crediting Rates:
0.00 % - 1.49 %
$ 851 — — 33,465 34,316
1.50 % - 2.99 %
3,905 180 6 33,683 37,774
3.00 % - 4.49 %
104,553 381 26,989 — 131,923
Greater or equal to 4.50 %
31,349 — — — 31,349
Total $ 140,658 561 26,995 67,148 235,362
June 30, 2025 | 10-Q 24
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
At Guaranteed Minimum 1 Basis Point-50 Basis Points Above 51 Basis Points-150 Basis Points Above Greater Than 150 Basis Points Above Total
June 30, 2024
(In thousands)
Range of Guaranteed Minimum Crediting Rates:
0.00 % - 1.49 %
$ 786 — 877 34,729 36,392
1.50 % - 2.99 %
15,451 175 37 19,688 35,351
3.00 % - 4.49 %
100,357 200 13,728 — 114,285
Greater or equal to 4.50 %
31,367 — — — 31,367
Total $ 147,961 375 14,642 54,417 217,395
The following tables summarize balances of and changes in policyholders' account balances.
June 30, 2025
(In thousands, except for %)
Supplemental Contracts Without Life Contingencies Fixed Annuity Dividend Accumulations
Premiums Paid in Advance
Balance, beginning of year $ 60,414 88,080 47,768 29,897
Issuances 15,737 1,887 348 2,453
Premiums received 93 2,315 2,855 425
Interest credited 1,308 1,496 966 421
Less:
Surrenders and withdrawals — 7,967 2,656 4,281
Benefit payments 6,197 — — —
Balance, end of period $ 71,355 85,811 49,281 28,915
Weighted-average crediting rates 4.09 % 3.97 % 3.84 % 3.21 %
Cash surrender value $ 71,355 85,811 49,281 28,915
June 30, 2024
(In thousands, except for %)
Supplemental Contracts Without Life Contingencies Fixed Annuity Dividend Accumulations
Premiums Paid in Advance
Balance, beginning of year $ 44,569 87,134 44,960 31,039
Issuances 12,324 1,347 401 2,336
Premiums received 59 1,823 2,736 585
Interest credited 988 1,343 917 890
Less:
Surrenders and withdrawals — 4,855 2,370 4,223
Benefit payments 4,608 — — —
Balance, end of period $ 53,332 86,792 46,644 30,627
Weighted-average crediting rates 3.98 % 3.61 % 3.44 % 2.96 %
Cash surrender value $ 53,332 86,792 46,644 30,627
June 30, 2025 | 10-Q 25
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
The following table reconciles policyholders' account balances shown above to the policyholders' account balance liability in the consolidated balance sheets.
As of June 30,
(In thousands)
2025 2024
Annuities:
Supplemental contracts without life contingencies $ 71,355 53,332
Fixed annuity 85,811 86,792
Unearned revenue reserve 1,486 1,479
Total annuities $ 158,652 141,603
Premiums paid in advance:
Premiums paid in advance $ 28,915 30,627
Other 2,148 2,110
Total premiums paid in advance $ 31,063 32,737
(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 CICA International, prior to April 1, 2025, we retained up to $ 100,000 on any one individual life insurance policy and reinsured the death benefit amount. For new policies beginning on such date, we increased our retention amount to $ 250,000 and reinsure amounts above that. 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 has elected for RGA to reinsure 50 % of its newly written final expense business. 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 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).
A summary of life insurance in force, along with assumed and ceded reinsurance activity, is summarized below as of the periods indicated.
(In thousands)
June 30, 2025 December 31, 2024
Life insurance in force:
Direct life insurance in force $ 5,347,041 5,227,506
Aggregate assumed life insurance in force 3,427 3,427
Aggregate ceded life insurance in force ( 850,117 ) ( 821,215 )
Net life insurance in force $ 4,500,351 4,409,718
June 30, 2025 | 10-Q 26
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
The Company's reinsurance recoverable on ceded reinsurance was $ 9.4 million and $ 6.9 million as of June 30, 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 Six Months Ended
June 30, June 30,
(In thousands) 2025 2024 2025 2024
Premiums from short duration contracts:
Direct $ 451 475 900 927
Ceded — ( 1 ) ( 1 ) ( 2 )
Net premiums earned 451 474 899 925
Premiums from long duration contracts:
Direct 45,950 43,450 87,851 82,056
Assumed 14 16 25 33
Ceded ( 3,027 ) ( 1,381 ) ( 5,590 ) ( 1,782 )
Net premiums earned 42,937 42,085 82,286 80,307
Total premiums earned $ 43,388 42,559 83,185 81,232
Claims and surrenders assumed $ 45 41 51 75
Claims and surrenders ceded
$ ( 275 ) ( 697 ) ( 952 ) ( 1,481 )
Commissions assumed and ceded
$ ( 3,281 ) ( 949 ) ( 6,406 ) ( 941 )
Other general expenses ceded $ ( 695 ) ( 156 ) ( 1,283 ) ( 156 )
(8) COMMITMENTS AND CONTINGENCIES
LITIGATION AND REGULATORY ACTIONS
From time to time, we are subject to legal and regulatory actions relating to our business. 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 operations and financial condition. Part I. Item 3. Legal Proceedings and Part IV. Item 1. Note 8. 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 six months ended June 30, 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 June 30, 2025, CICA International is committed to fund investments up to $ 10.5 million related to limited partnerships previously described.
CREDIT FACILITY
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 rate (a fluctuating rate per annum) equal to
June 30, 2025 | 10-Q 27
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
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.
Obligations under the Credit Facility are secured by substantially all of the assets of the Company other than the equity interests in 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 June 30, 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
STOCK
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) 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. 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:
2025 2024
Six Months Ended June 30,
(In thousands)
Common Stock Class A
Treasury Stock
Common Stock Class A Treasury Stock
Balance at beginning of year 54,235 5,330 53,883 5,330
Stock issued for compensation 331 — 163 —
Balance at end of period 54,566 5,330 54,046 5,330
EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share.
Three Months Ended June 30, 2025 2024
(In thousands, except per share amounts)
Basic and diluted earnings per share:
Numerator:
Net income (loss)
$ 6,459 3,959
Net income (loss) allocated to Class A common stock
$ 6,459 3,959
Denominator:
Weighted average shares of Class A outstanding - basic 50,112 49,639
Weighted average shares of Class A outstanding - diluted 50,985 50,809
Basic and diluted earnings per share of Class A common stock
$ 0.13 0.08
June 30, 2025 | 10-Q 28
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
Six Months Ended June 30, 2025 2024
(In thousands, except per share amounts)
Basic and diluted earnings per share:
Numerator:
Net income (loss)
$ 4,836 8,501
Net income (loss) allocated to Class A common stock
$ 4,836 8,501
Denominator:
Weighted average shares of Class A outstanding - basic 50,024 49,606
Weighted average shares of Class A outstanding - diluted
50,897 50,775
Basic and diluted earnings per share of Class A common stock
$ 0.10 0.17
STATUTORY CAPITAL AND SURPLUS
Each of our domestic regulated insurance subsidiaries is required to meet stipulated regulatory capital requirements imposed by the U.S. National Association of Insurance Commissioners ("NAIC"). All domestic insurance subsidiaries exceeded the minimum capital requirements at June 30, 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 June 30, 2025, no capital contribution was necessary.
CICA International is a Puerto Rico domiciled company. The Insurance Code of Puerto Rico does not specifically set forth minimum capital and surplus standards, but rather requires that an insurer submit a business plan for approval to the Office of the Commissioner of Insurance ("OIC") that includes proposed minimum capital and surplus. CICA International is required to maintain a minimum of $750,000 in capital and maintain a premium to surplus ratio of 7 to 1 . At June 30, 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 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 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.
The Life Insurance and Home Service Insurance portions of the Company constitute separate businesses. In addition to the Life Insurance and Home Service Insurance business, the Company also operates other non-insurance portions of the Company ("Other Non-Insurance Enterprises"), which primarily include the Company’s IT and corporate-support functions.
June 30, 2025 | 10-Q 29
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
The accounting policies of the reportable segments and Other Non-Insurance Enterprises are presented in accordance with U.S. GAAP and are the same as those described in the summary of significant accounting policies in our Form 10-K . 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.
Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Three Months Ended June 30, 2025
(In thousands)
Revenues:
Premiums
Life insurance $ 32,451 10,486 — 42,937
Accident and health insurance 192 259 — 451
Net investment income 13,400 3,595 174 17,169
Investment related gains (losses), net 2,625 ( 218 ) 1 2,408
Other income 2,121 — — 2,121
Total revenues 50,789 14,122 175 65,086
Benefits and expenses:
Insurance benefits paid or provided:
Claims and surrenders 35,223 4,997 — 40,220
Increase (decrease) in future policy benefit reserves ( 5,571 ) 1,017 — ( 4,554 )
Policyholder liability remeasurement (gain) loss 1,081 270 — 1,351
Policyholders' dividends 1,308 7 — 1,315
Total insurance benefits paid or provided 32,041 6,291 — 38,332
Commissions 8,184 3,225 — 11,409
Other general expenses 6,644 3,799 3,016 13,459
Capitalization of deferred policy acquisition costs ( 8,155 ) ( 1,565 ) — ( 9,720 )
Amortization of deferred policy acquisition costs 3,906 707 — 4,613
Amortization of cost of insurance acquired 21 58 — 79
Total benefits and expenses 42,641 12,515 3,016 58,172
Income (loss) before federal income tax $ 8,148 1,607 ( 2,841 ) 6,914
June 30, 2025 | 10-Q 30
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Six Months Ended June 30, 2025
(In thousands)
Revenues:
Premiums:
Life insurance $ 61,418 20,868 — 82,286
Accident and health insurance 379 520 — 899
Net investment income 26,912 7,273 361 34,546
Investment related gains (losses), net ( 122 ) ( 366 ) 2 ( 486 )
Other income 3,493 — — 3,493
Total revenues 92,080 28,295 363 120,738
Benefits and expenses:
Insurance benefits paid or provided:
Claims and surrenders 69,365 10,953 — 80,318
Increase (decrease) in future policy benefit reserves ( 10,897 ) 2,697 — ( 8,200 )
Policyholder liability remeasurement (gain) loss 1,094 85 — 1,179
Policyholders' dividends 2,597 13 — 2,610
Total insurance benefits paid or provided 62,159 13,748 — 75,907
Commissions 16,347 6,337 — 22,684
Other general expenses 13,216 7,582 5,354 26,152
Capitalization of deferred policy acquisition costs ( 15,874 ) ( 2,695 ) — ( 18,569 )
Amortization of deferred policy acquisition costs 7,799 1,461 — 9,260
Amortization of cost of insurance acquired 42 135 — 177
Total benefits and expenses 83,689 26,568 5,354 115,611
Income (loss) before federal income tax $ 8,391 1,727 ( 4,991 ) 5,127
June 30, 2025 | 10-Q 31
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Three Months Ended June 30, 2024
(In thousands)
Revenues:
Premiums
Life insurance $ 31,402 10,699 — 42,101
Accident and health insurance 203 255 — 458
Property insurance — — — —
Net investment income 13,812 3,529 199 17,540
Investment related gains (losses), net ( 279 ) 23 3 ( 253 )
Other income 2,218 20 — 2,238
Total revenues 47,356 14,526 202 62,084
Benefits and expenses:
Insurance benefits paid or provided:
Claims and surrenders 29,169 5,361 — 34,530
Increase (decrease) in future policy benefit reserves ( 2,269 ) 1,217 — ( 1,052 )
Policyholder liability remeasurement (gain) loss 1,306 54 — 1,360
Policyholders' dividends 1,186 5 — 1,191
Total insurance benefits paid or provided 29,392 6,637 — 36,029
Commissions 8,543 3,689 — 12,232
Other general expenses 6,925 3,931 5,783 16,639
Capitalization of deferred policy acquisition costs ( 8,591 ) ( 1,952 ) — ( 10,543 )
Amortization of deferred policy acquisition costs 3,586 687 — 4,273
Amortization of cost of insurance acquired 29 123 — 152
Total benefits and expenses 39,884 13,115 5,783 58,782
Income (loss) before federal income tax $ 7,472 1,411 ( 5,581 ) 3,302
June 30, 2025 | 10-Q 32
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Six Months Ended June 30, 2024
(In thousands)
Revenues:
Premiums:
Life insurance $ 59,100 21,262 — 80,362
Accident and health insurance 366 506 — 872
Property insurance — ( 2 ) — ( 2 )
Net investment income 27,498 7,066 463 35,027
Investment related gains (losses), net 807 ( 68 ) ( 29 ) 710
Other income 2,724 20 83 2,827
Total revenues 90,495 28,784 517 119,796
Benefits and expenses:
Insurance benefits paid or provided:
Claims and surrenders 56,533 11,110 — 67,643
Increase (decrease) in future policy benefit reserves ( 3,462 ) 2,861 — ( 601 )
Policyholder liability remeasurement (gain) loss 1,679 — — 1,679
Policyholders' dividends 2,417 11 — 2,428
Total insurance benefits paid or provided 57,167 13,982 — 71,149
Commissions 15,503 7,179 — 22,682
Other general expenses 12,961 7,420 7,596 27,977
Capitalization of deferred policy acquisition costs ( 15,407 ) ( 3,467 ) — ( 18,874 )
Amortization of deferred policy acquisition costs 6,944 1,367 — 8,311
Amortization of cost of insurance acquired 55 269 — 324
Total benefits and expenses 77,223 26,750 7,596 111,569
Income (loss) before federal income tax $ 13,272 2,034 ( 7,079 ) 8,227
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
June 30, Six Months Ended
June 30,
2025 2024 2025 2024
Life Insurance Segment:
Premiums:
Direct premiums:
First year $ 8,107 6,496 15,711 11,080
Renewal 27,480 26,468 51,571 50,118
Total direct premiums 35,587 32,964 67,282 61,198
Reinsurance
( 2,944 ) ( 1,359 ) ( 5,485 ) ( 1,732 )
Total premiums $ 32,643 31,605 61,797 59,466
June 30, 2025 | 10-Q 33
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
A summary of the Home Service Insurance segment life and A&H premium breakout is detailed below.
(In thousands)
Three Months Ended
June 30, Six Months Ended
June 30,
2025 2024 2025 2024
Home Service Insurance Segment:
Direct life and A&H premiums:
First year $ 1,328 1,397 2,541 2,744
Renewal 9,486 9,564 18,928 19,043
Total direct life and A&H premiums 10,814 10,961 21,469 21,787
Reinsurance ( 69 ) ( 7 ) ( 81 ) ( 19 )
Total life and A&H premiums
$ 10,745 10,954 21,388 21,768
The table below summarizes assets by segment.
As of June 30,
(In thousands)
2025 2024
Assets:
Segments:
Life Insurance $ 1,311,093 1,263,544
Home Service Insurance 365,405 357,731
Total Segments
1,676,498 1,621,275
Other Non-Insurance Enterprises 36,002 41,198
Total assets $ 1,712,500 1,662,473
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
June 30, Six Months Ended
June 30,
(In thousands)
2025 2024 2025 2024
Area:
United States $ 16,983 14,248 33,483 27,399
Colombia 6,461 6,043 13,015 12,026
Taiwan 3,167 3,617 7,053 8,159
Venezuela 3,322 3,663 6,672 6,978
Ecuador 3,366 3,145 6,566 6,189
Argentina 2,923 2,673 5,019 4,771
Other foreign countries 8,995 9,533 18,697 18,348
Reinsurance and change in premium accruals ( 1,829 ) ( 363 ) ( 7,320 ) ( 2,638 )
Total premiums $ 43,388 42,559 83,185 81,232
June 30, 2025 | 10-Q 34
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
(11) INCOME TAXES
The effective tax rate is the ratio of tax expense or tax benefit over pre-tax income. The tax benefit effective rates were 6.6 % and 5.7 % for the three and six months ended June 30, 2025, compared to effective tax rate of ( 19.9 )% and ( 3.3 )% for the same periods 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% mainly due to the impact of Subpart F and the reduced Puerto Rico income tax rate.
At June 30, 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 $ 4.8 million and $ 5.0 million at June 30, 2025 and 2024, respectively, in Accumulated Other Comprehensive Income (Loss).
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements.
(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 six months ended June 30, 2025 and 2024. The following table provides a rollforward of accumulated other comprehensive income (loss) for the periods indicated below.
(In thousands) Unrealized Gains and Losses on Available for Sale Securities Discount Rate for Liability for Future Policy Benefits Other Comprehensive Income (Loss)
Balance at December 31, 2024, net of tax
$ ( 169,599 ) 73,634 ( 95,965 )
Other comprehensive income (loss) before reclassification, before tax 18,334 ( 8,589 ) 9,745
Amounts reclassified from other comprehensive income (loss), before tax
83 — 83
Income tax benefit (expense)
( 1,379 ) 442 ( 937 )
Balance at March 31, 2025, net of tax
( 152,561 ) 65,487 ( 87,074 )
Other comprehensive income (loss) before reclassification, before tax 243 4,003 4,246
Amounts reclassified from other comprehensive income (loss), before tax 168 — 168
Income tax benefit (expense) ( 213 ) ( 782 ) ( 995 )
Balance at June 30, 2025, net of tax
$ ( 152,363 ) 68,708 ( 83,655 )
June 30, 2025 | 10-Q 35
Table of Contents
CITIZENS, INC .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited )
(In thousands) Unrealized Gains and Losses on Available for Sale Securities Discount Rate for Liability for Future Policy Benefits Other Comprehensive Income (Loss)
Balance at December 31, 2023, net of tax
$ ( 141,741 ) 23,586 ( 118,155 )
Other comprehensive income (loss) before reclassification, before tax ( 13,416 ) 33,995 20,579
Amounts reclassified from other comprehensive income (loss), before tax
448 — 448
Income tax benefit (expense)
1,104 ( 3,746 ) ( 2,642 )
Balance at March 31, 2024, net of tax
( 153,605 ) 53,835 ( 99,770 )
Other comprehensive income (loss) before reclassification, before tax ( 14,258 ) 5,522 ( 8,736 )
Amounts reclassified from other comprehensive income (loss), before tax 199 — 199
Income tax benefit (expense) 951 ( 568 ) 383
Balance at June 30, 2024, net of tax
$ ( 166,713 ) 58,789 ( 107,924 )
(13) RELATED PARTY TRANSACTIONS
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 six months ended June 30, 2025. See our Form 10-K for a comprehensive discussion of related party transactions.
(14) SUBSEQUENT EVENTS
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.
June 30, 2025 | 10-Q 36
Table of Contents
CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.