CITIZENS, INC. 10-Q

Item 1. FINANCIAL STATEMENTS CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets (In thousands) September 30, 2025 December 31, 2024 (Unaudited) Assets: Investments: Fixed maturity securities available-for-sale, at fair value (amortized cost: $ 1,409,626 and $ 1,401,301 in 2025 and 2024, respectively) $ 1,270,045 1,220,961 Equity securities, at fair value 1,371 5,447 Policy loans 68,717 71,216 Other long-term investments (portion measured at fair value $ 85,455 and $ 93,337 in 2025 and 2024, respectively) 85,738 93,604 Total investments 1,425,871 1,391,228 Cash and cash equivalents (restricted portion: $ 1,554 in both 2025 and 2024) 23,123 29,271 Accrued investment income 17,285 17,546 Receivable for securities 12,946 — Reinsurance recoverable 10,385 6,941 Deferred policy acquisition costs 214,123 199,635 Cost of insurance acquired 9,141 9,446 Current federal income tax receivable 532 148 Property and equipment, net 9,584 10,574 Due premiums 9,937 11,721 Other assets (less allowance for losses of $ 725 and $ 516 in 2025 and 2024, respectively) 9,438 8,815 Total assets $ 1,742,365 1,685,325 See accompanying Notes to Consolidated Financial Statements. September 30, 2025 | 10-Q 2 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets, Continued (In thousands, except share amounts) September 30, 2025 December 31, 2024 (Unaudited) Liabilities and Stockholders' Equity: Liabilities: Policy liabilities: Future policy benefit reserves: Life insurance $ 1,192,390 1,172,034 Accident and health insurance 1,241 1,071 Total future policy benefit reserves 1,193,631 1,173,105 Policyholders' funds: Annuities 168,396 149,977 Dividend accumulations 50,145 47,768 Premiums paid in advance 30,628 31,182 Policy claims payable 8,806 8,822 Other policyholders' funds 7,943 7,271 Total policyholders' funds 265,918 245,020 Total policy liabilities 1,459,549 1,418,125 Commissions payable 4,343 4,546 Deferred federal income tax liability 5,224 3,442 Payable for securities 454 — Other liabilities 47,191 48,857 Total liabilities 1,516,761 1,474,970 Commitments and contingencies ( Notes 7 and 8 ) Stockholders' Equity: Common stock: Class A, no par value, 100,000,000 shares authorized, 54,615,810 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 271,246 269,799 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 64,315 57,062 Accumulated other comprehensive income (loss) ( 89,416 ) ( 95,965 ) Treasury stock, at cost ( 23,725 ) ( 23,725 ) Total stockholders' equity 225,604 210,355 Total liabilities and stockholders' equity $ 1,742,365 1,685,325 See accompanying Notes to Consolidated Financial Statements. September 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 Nine Months Ended September 30, September 30, (In thousands, except per share amounts) 2025 2024 2025 2024 Revenues: Premiums: Life insurance $ 42,872 42,461 125,158 122,823 Accident and health insurance 431 452 1,330 1,324 Property insurance — ( 16 ) — ( 18 ) Net investment income 19,117 17,377 53,663 52,404 Investment related gains (losses), net ( 1,255 ) 827 ( 1,741 ) 1,537 Other income 1,643 630 5,136 3,457 Total revenues 62,808 61,731 183,546 181,527 Benefits and Expenses: Insurance benefits paid or provided: Claims and surrenders 44,276 36,478 124,594 104,121 Increase (decrease) in future policy benefit reserves ( 6,760 ) 471 ( 14,960 ) ( 130 ) Policyholder liability remeasurement (gain) loss ( 459 ) 1,157 720 2,836 Policyholders' dividends 1,377 1,320 3,987 3,748 Total insurance benefits paid or provided 38,434 39,426 114,341 110,575 Commissions 11,655 12,957 34,339 35,639 Other general expenses 13,291 12,095 39,443 40,072 Capitalization of deferred policy acquisition costs ( 9,974 ) ( 10,430 ) ( 28,543 ) ( 29,304 ) Amortization of deferred policy acquisition costs 4,795 4,493 14,055 12,804 Amortization of cost of insurance acquired 128 153 305 477 Total benefits and expenses 58,329 58,694 173,940 170,263 Income (loss) before federal income tax 4,479 3,037 9,606 11,264 Federal income tax expense (benefit) 2,062 247 2,353 ( 27 ) Net income (loss) 2,417 2,790 7,253 11,291 Per Share Amounts: Basic earnings (loss) per share of Class A common stock 0.04 0.06 0.14 0.23 Diluted earnings (loss) per share of Class A common stock 0.04 0.05 0.14 0.22 Other Comprehensive Income (Loss): Unrealized gains (losses) on fixed maturity securities: Unrealized holding gains (losses) arising during period 22,623 59,101 41,200 31,427 Reclassification adjustment for (gains) losses included in net income (loss) ( 691 ) ( 100 ) ( 440 ) 547 Unrealized gains (losses) on fixed maturity securities, net 21,932 59,001 40,760 31,974 Change in current discount rate for liability for future policy benefits ( 29,058 ) ( 45,404 ) ( 33,644 ) ( 5,887 ) Income tax expense (benefit) on other comprehensive income items ( 1,365 ) 356 567 2,615 Other comprehensive income (loss) ( 5,761 ) 13,241 6,549 23,472 Total comprehensive income (loss) $ ( 3,344 ) 16,031 13,802 34,763 See accompanying Notes to Consolidated Financial Statements. September 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 Comprehensive income (loss): Net income (loss) — — 2,417 — — 2,417 Other comprehensive income (loss) — — — ( 5,761 ) — ( 5,761 ) Total comprehensive income (loss) — — 2,417 ( 5,761 ) — ( 3,344 ) Stock-based compensation ( 78 ) — — — — ( 78 ) Balance at September 30, 2025 $ 271,246 3,184 64,315 ( 89,416 ) ( 23,725 ) 225,604 See accompanying Notes to Consolidated Financial Statements. September 30, 2025 | 10-Q 5 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, 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 Comprehensive income (loss): Net 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, 2025 | 10-Q 6 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, (In thousands) 2025 2024 Cash flows from operating activities: Net income (loss) $ 7,253 11,291 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 1,741 ( 1,537 ) Net deferred policy acquisition costs ( 14,488 ) ( 16,500 ) Amortization of cost of insurance acquired 305 477 Depreciation 535 443 Amortization of premiums and discounts on investments 3,459 3,738 Stock-based compensation 1,727 1,052 Deferred federal income tax expense (benefit) 1,215 ( 1,350 ) Change in: Accrued investment income 261 278 Reinsurance recoverable ( 3,444 ) ( 3,287 ) Due premiums 1,784 1,174 Future policy benefit reserves ( 13,118 ) 1,842 Other policyholders' liabilities 24,494 19,002 Federal income tax receivable ( 384 ) 1,041 Commissions payable and other liabilities ( 1,093 ) 6,397 Other, net ( 1,356 ) ( 2,969 ) Net cash provided by operating activities 8,891 21,092 Cash flows from investing activities: Purchases of fixed maturity securities, available-for-sale ( 101,344 ) ( 49,345 ) Sales of fixed maturity securities, available-for-sale 60,143 4,659 Maturities and calls of fixed maturity securities, available-for-sale 30,354 37,907 Purchases of equity securities ( 120 ) — Sales of equity securities 4,482 — Principal payments on mortgage loans 6 7 Change in policy loans 2,499 2,896 Sales of other long-term investments 1,603 2,226 Purchases of other long-term investments ( 8,443 ) ( 11,123 ) Purchases of property and equipment ( 343 ) ( 561 ) Net cash used in investing activities ( 11,163 ) ( 13,334 ) See accompanying Notes to Consolidated Financial Statements. September 30, 2025 | 10-Q 7 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows, Continued (Unaudited) Nine Months Ended September 30, (In thousands) 2025 2024 Cash flows from financing activities: Annuity deposits $ 6,939 5,181 Annuity withdrawals ( 10,535 ) ( 7,183 ) Other share repurchases ( 280 ) ( 371 ) Net cash used in financing activities ( 3,876 ) ( 2,373 ) Net increase (decrease) in cash and cash equivalents ( 6,148 ) 5,385 Cash and cash equivalents at beginning of year 29,271 26,997 Cash and cash equivalents at end of period $ 23,123 32,382 SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: During the nine months ended September 30, 2025, various fixed maturity issuers exchanged securities with book values of $ 7.9 million for securities of equal value and $ 3.7 million during the nine months ended September 30, 2024. The Company had $ 12.5 million net unsettled security trades at September 30, 2025 and none at September 30, 2024. The Company recognized right-of-use assets of $ 0.2 million in exchange for new operating lease liabilities during the nine months ended September 30, 2025 and none during the nine months ended September 30, 2024. See accompanying Notes to Consolidated Financial Statements. September 30, 2025 | 10-Q 8 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 September 30, 2025, the consolidated statements of operations and comprehensive income (loss) and stockholders' equity for the three and nine months ended September 30, 2025 and September 30, 2024 and the consolidated statements of cash flows for the nine months ended September 30, 2025 and September 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 September 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 September 30, 2025 | 10-Q 9 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 Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 notes to 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 %) September 30, 2025 December 31, 2024 Amount % Amount % Cash and invested assets: Fixed maturity securities $ 1,270,045 87.7 % 1,220,961 86.0 % Equity securities 1,371 0.1 5,447 0.4 Policy loans 68,717 4.7 71,216 5.0 Other long-term investments 85,738 5.9 93,604 6.6 Cash and cash equivalents 23,123 1.6 29,271 2.0 Total cash and invested assets $ 1,448,994 100.0 % 1,420,499 100.0 % September 30, 2025 | 10-Q 10 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 September 30, 2025 (In thousands) Fixed maturity securities: U.S. Treasury securities $ 5,704 77 92 5,689 U.S. Government-sponsored enterprises 1,272 93 — 1,365 States and political subdivisions 293,634 1,904 27,754 267,784 Corporate: Financial 296,501 4,126 25,975 274,652 Consumer 247,721 1,132 38,409 210,444 Utilities 131,878 822 19,377 113,323 Energy 83,805 303 7,430 76,678 Communications 63,311 296 7,460 56,147 All other 130,248 1,369 15,214 116,403 Commercial mortgage-backed 308 4 2 310 Residential mortgage-backed 105,767 13 8,373 97,407 Asset-backed 49,477 899 533 49,843 Total fixed maturity securities $ 1,409,626 11,038 150,619 1,270,045 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 September 30, 2025 | 10-Q 11 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) September 30, 2025 December 31, 2024 Equity securities: Bond mutual funds $ 222 739 Common stocks 1,142 810 Non-redeemable preferred stock 7 7 Non-redeemable preferred stock fund — 3,891 Total equity securities $ 1,371 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 gains of $ 0.3 million for both the three and nine months ended September 30, 2025, compared to gains of $ 0.4 million for both the three and nine months ended September 30, 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, 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 September 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. September 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 $ 470 2 2 828 90 6 1,298 92 8 States and political subdivisions 21,630 382 25 149,134 27,372 181 170,764 27,754 206 Corporate: Financial 17,197 231 33 147,423 25,744 178 164,620 25,975 211 Consumer 25,206 709 31 159,917 37,700 218 185,123 38,409 249 Utilities 12,308 178 34 79,033 19,199 140 91,341 19,377 174 Energy 13,304 160 29 45,449 7,270 53 58,753 7,430 82 Communications 6,269 49 10 41,961 7,411 50 48,230 7,460 60 All Other 7,481 207 17 73,067 15,007 95 80,548 15,214 112 Commercial mortgage-backed — — — 85 2 1 85 2 1 Residential mortgage-backed 1,574 2 7 94,084 8,371 79 95,658 8,373 86 Asset-backed 4,728 175 7 9,768 358 11 14,496 533 18 Total fixed maturity securities $ 110,167 2,095 195 800,749 148,524 1,012 910,916 150,619 1,207 September 30, 2025 | 10-Q 12 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 September 30, 2025 and December 31, 2024, 99.0 % 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 September 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. September 30, 2025 Amortized Cost Fair Value (In thousands) Fixed maturity securities: Due in one year or less $ 31,925 31,911 Due after one year through five years 117,290 117,944 Due after five years through ten years 281,140 281,669 Due after ten years 979,271 838,521 Total fixed maturity securities $ 1,409,626 1,270,045 September 30, 2025 | 10-Q 13 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 Nine Months Ended September 30, September 30, (In thousands) 2025 2024 2025 2024 Fixed maturity securities, available-for-sale: Proceeds $ 45,574 — 60,143 4,659 Gross realized gains $ 868 — 960 91 Gross realized losses $ 75 — 517 196 During the second quarter of 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. 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. There were no securities in this category as of or during the periods ended September 30, 2025 and December 31, 2024. September 30, 2025 | 10-Q 14 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The following tables set forth our assets measured at fair value on a recurring basis as of the dates indicated. September 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 $ 5,689 1,365 — 7,054 States and political subdivisions — 267,784 — 267,784 Corporate 43 847,604 — 847,647 Commercial mortgage-backed — 310 — 310 Residential mortgage-backed — 97,407 — 97,407 Asset-backed — 49,843 — 49,843 Total fixed maturity securities 5,732 1,264,313 — 1,270,045 Equity securities: Bond mutual funds 222 — — 222 Common stocks 1,142 — — 1,142 Non-redeemable preferred stock 7 — — 7 Total equity securities 1,371 — — 1,371 Other long-term investments (1) — — — 85,455 Total financial assets $ 7,103 1,264,313 — 1,356,871 (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. September 30, 2025 | 10-Q 15 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 September 30, 2025, fixed maturity securities, valued using a third-party pricing source, totaled $ 1.3 billion for Level 2 assets and comprised 93.2 % 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, 2025. As of September 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. Structured note. At September 30, 2025, the Company held an investment in a structured note, which includes components classified as fixed maturity securities and other long-term investments on the consolidated balance sheets. The partner interest is included in other long-term investments and is valued at net asset value ("NAV") as a practical expedient, which approximates fair value. As of September 30, 2025, we are committed to fund this investment up to $ 14.6 million over the next 10 years. Limited partnerships. The Company considers the 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 September 30, 2025 | 10-Q 16 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) 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 losses of $ 3.7 million and $ 2.3 million for the three and nine months ended September 30, 2025, and gains of $ 0.5 million and $ 1.8 million on limited partnership investments held for the three and nine months ended September 30, 2024. These investments are included in other long-term investments on the consolidated balance sheets. September 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 $ 34,813 — 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 — — 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 35,787 2,154 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 13,817 3,925 8 to 10 18,575 5,637 9 to 10 Total limited partnerships $ 84,417 6,079 $ 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. 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: September 30, 2025 December 31, 2024 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Financial assets: Policy loans $ 68,717 68,717 71,216 71,216 Residential mortgage loan 27 26 33 34 Cash and cash equivalents 23,123 23,123 29,271 29,271 Financial liabilities: Annuity - investment contracts 67,714 64,420 68,888 63,629 September 30, 2025 | 10-Q 17 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 September 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 September 30, 2025 and December 31, 2024. At September 30, 2025, the remaining loan matures in three years . Management estimated the fair value using an annual interest rate of 6.25 % at both September 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 September 30, 2025 and December 31, 2024 using discounted cash flows based upon spot rates adjusted for various risk adjustments ranging from 3.42 % to 4.86 % 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 ) September 30, 2025 December 31, 2024 Other long-term investments: Limited partnerships $ 84,417 93,337 Structured note 1,038 — FHLB common stock 219 212 All other investments 64 55 Total other long-term investments $ 85,738 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 nine months ended September 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 September 30, 2025 | 10-Q 18 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) with 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, 2025 (In thousands) Permanent Permanent Limited Pay Other Business Total Life Insurance: Balance, beginning of year $ 124,725 16,388 547 141,660 Capitalizations 22,135 2,207 202 24,544 Amortization expense ( 10,804 ) ( 852 ) ( 206 ) ( 11,862 ) Balance, end of period 136,056 17,743 543 154,342 Home Service Insurance: Balance, beginning of year 45,656 11,151 1,168 57,975 Capitalizations 3,189 650 160 3,999 Amortization expense ( 1,725 ) ( 320 ) ( 148 ) ( 2,193 ) Balance, end of period 47,120 11,481 1,180 59,781 Consolidated: Balance, beginning of year 170,381 27,539 1,715 199,635 Capitalizations 25,324 2,857 362 28,543 Amortization expense ( 12,529 ) ( 1,172 ) ( 354 ) ( 14,055 ) Balance, end of period $ 183,176 29,224 1,723 214,123 Nine Months Ended September 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 21,792 2,220 250 24,262 Amortization expense ( 9,763 ) ( 740 ) ( 278 ) ( 10,781 ) Balance, end of period 117,581 15,555 1,185 134,321 Home Service Insurance: Balance, beginning of year 43,280 10,564 1,084 54,928 Capitalizations 3,973 892 177 5,042 Amortization expense ( 1,698 ) ( 323 ) ( 2 ) ( 2,023 ) Balance, end of period 45,555 11,133 1,259 57,947 Consolidated: Balance, beginning of year 148,832 24,639 2,297 175,768 Capitalizations 25,765 3,112 427 29,304 Amortization expense ( 11,461 ) ( 1,063 ) ( 280 ) ( 12,804 ) Balance, end of period $ 163,136 26,688 2,444 192,268 September 30, 2025 | 10-Q 19 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) DAC capitalization decreased for the nine months ended September 30, 2025, compared to the same prior year period mainly from increased ceding commissions and expenses due to a full nine months of reinsurance with RGA in 2025 offset by higher first year sales. COIA Nine Months Ended September 30, 2025 (In thousands) Permanent Permanent Limited Pay Other Business Total Life Insurance: Balance, beginning of year $ 599 648 — 1,247 Amortization expense ( 30 ) ( 30 ) — ( 60 ) Balance, end of period 569 618 — 1,187 Home Service Insurance: Balance, beginning of year 6,825 161 1,213 8,199 Amortization expense ( 264 ) ( 5 ) 24 ( 245 ) Balance, end of period 6,561 156 1,237 7,954 Consolidated: Balance, beginning of year 7,424 809 1,213 9,446 Amortization expense ( 294 ) ( 35 ) 24 ( 305 ) Balance, end of period $ 7,130 774 1,237 9,141 Nine Months Ended September 30, 2024 (In thousands) Permanent Permanent Limited Pay Other Business Total Life Insurance: Balance, beginning of year $ 249 695 406 1,350 Amortization expense ( 12 ) ( 36 ) ( 33 ) ( 81 ) Balance, end of period 237 659 373 1,269 Home Service Insurance: Balance, beginning of year 7,194 168 1,331 8,693 Amortization expense ( 279 ) ( 5 ) ( 112 ) ( 396 ) Balance, end of period 6,915 163 1,219 8,297 Consolidated: Balance, beginning of year 7,443 863 1,737 10,043 Amortization expense ( 291 ) ( 41 ) ( 145 ) ( 477 ) Balance, end of period $ 7,152 822 1,592 9,566 (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, September 30, 2025 | 10-Q 20 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. September 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 changes in cash flow assumptions ( 5,915 ) 4,119 ( 1,796 ) 831 ( 82 ) 749 Effect of actual variances from expected experience ( 25,621 ) 867 ( 24,754 ) ( 4,508 ) ( 2,568 ) ( 7,076 ) Adjusted beginning of year balance 279,383 20,166 299,549 97,349 12,082 109,431 Issuances 85,513 2,971 88,484 10,668 1,626 12,294 Interest accrual 9,912 491 10,403 3,176 394 3,570 Net premiums collected ( 41,992 ) ( 4,144 ) ( 46,136 ) ( 9,054 ) 444 ( 8,610 ) Derecognition and other ( 6,592 ) 250 ( 6,342 ) 191 32 223 Ending balance at original discount rate 326,224 19,734 345,958 102,330 14,578 116,908 Effect of changes in discount rates ( 413 ) 90 ( 323 ) ( 3,354 ) ( 336 ) ( 3,690 ) Balance, end of period $ 325,811 19,824 345,635 98,976 14,242 113,218 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 changes in cash flow assumptions ( 7,051 ) 5,992 ( 1,059 ) ( 624 ) ( 306 ) ( 930 ) Effect of actual variances from expected experience ( 24,376 ) 2,340 ( 22,036 ) ( 4,499 ) ( 889 ) ( 5,388 ) Adjusted beginning of year balance 1,020,066 210,129 1,230,195 213,432 121,821 335,253 Issuances 85,929 3,215 89,144 10,664 1,619 12,283 Interest accrual 34,698 6,182 40,880 7,284 4,317 11,601 Benefit payments ( 86,637 ) ( 16,113 ) ( 102,750 ) ( 11,706 ) ( 4,382 ) ( 16,088 ) Derecognition and other ( 7,141 ) 11 ( 7,130 ) 172 27 199 Ending balance at original discount rate 1,046,915 203,424 1,250,339 219,846 123,402 343,248 Effect of changes in discount rates ( 19,237 ) ( 10,085 ) ( 29,322 ) ( 13,648 ) ( 8,858 ) ( 22,506 ) Balance, end of period $ 1,027,678 193,339 1,221,017 206,198 114,544 320,742 Net liability for future policy benefits $ 701,867 173,515 875,382 107,222 100,302 207,524 Plus: Flooring impact ( 2 ) — ( 2 ) — — — Less: Reinsurance recoverable 5,786 — 5,786 — — — Net liability for future policy benefits, after reinsurance recoverable $ 696,079 173,515 869,594 107,222 100,302 207,524 September 30, 2025 | 10-Q 21 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) September 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 changes in cash flow assumptions 17,731 274 18,005 ( 462 ) 21 ( 441 ) Effect of actual variances from expected experience ( 12,203 ) 973 ( 11,230 ) ( 5,784 ) ( 3,526 ) ( 9,310 ) Adjusted beginning of year balance 257,954 14,780 272,734 95,799 12,007 107,806 Issuances 74,426 2,249 76,675 11,412 1,853 13,265 Interest accrual 8,342 380 8,722 3,193 394 3,587 Net premiums collected ( 36,066 ) ( 2,420 ) ( 38,486 ) ( 9,116 ) 892 ( 8,224 ) Derecognition and other ( 5,530 ) 92 ( 5,438 ) 317 57 374 Ending balance at original discount rate 299,126 15,081 314,207 101,605 15,203 116,808 Effect of changes in discount rates ( 1,303 ) ( 43 ) ( 1,346 ) ( 2,042 ) ( 325 ) ( 2,367 ) Balance, end of period $ 297,823 15,038 312,861 99,563 14,878 114,441 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 changes in cash flow assumptions 18,320 734 19,054 ( 502 ) ( 1,078 ) ( 1,580 ) Effect of actual variances from expected experience ( 9,656 ) 2,916 ( 6,740 ) ( 5,880 ) ( 1,692 ) ( 7,572 ) Adjusted beginning of year balance 1,004,626 206,405 1,211,031 211,142 121,171 332,313 Issuances 75,132 2,352 77,484 11,407 1,858 13,265 Interest accrual 33,624 6,185 39,809 7,233 4,305 11,538 Benefit payments ( 67,441 ) ( 13,281 ) ( 80,722 ) ( 11,399 ) ( 4,286 ) ( 15,685 ) Derecognition and other ( 6,642 ) 16 ( 6,626 ) 301 51 352 Ending balance at original discount rate 1,039,299 201,677 1,240,976 218,684 123,099 341,783 Effect of changes in discount rates ( 8,395 ) ( 6,067 ) ( 14,462 ) ( 5,797 ) ( 2,493 ) ( 8,290 ) Balance, end of period $ 1,030,904 195,610 1,226,514 212,887 120,606 333,493 Net liability for future policy benefits $ 733,081 180,572 913,653 113,324 105,728 219,052 Less: Reinsurance recoverable 1,308 — 1,308 — — — Net liability for future policy benefits, after reinsurance recoverable $ 731,773 180,572 912,345 113,324 105,728 219,052 September 30, 2025 | 10-Q 22 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. September 30, 2025 September 30, 2024 (In thousands) Life Insurance Home Service Insurance Consolidated Life Insurance Home Service Insurance Consolidated Life Insurance: Permanent $ 696,079 107,222 803,301 731,773 113,324 845,097 Permanent limited pay 173,515 100,302 273,817 180,572 105,728 286,300 Deferred profit liability 33,226 30,849 64,075 29,572 29,158 58,730 Other 36,780 14,417 51,197 32,426 14,320 46,746 Total life insurance 939,600 252,790 1,192,390 974,343 262,530 1,236,873 Accident & Health Insurance: Other 712 529 1,241 586 412 998 Total future policy benefit reserves $ 940,312 253,319 1,193,631 974,929 262,942 1,237,871 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, 2025 September 30, 2024 (In thousands) Life Insurance Home Service Insurance Life Insurance Home Service Insurance Undiscounted: Permanent: Expected future gross premiums $ 841,337 440,922 731,580 448,837 Expected future benefit payments 1,650,874 495,085 1,586,017 487,851 Permanent Limited Pay: Expected future gross premiums 50,368 75,656 46,270 76,032 Expected future benefit payments 337,949 323,121 322,188 320,318 Discounted: Permanent: Expected future gross premiums $ 630,663 262,157 564,242 272,938 Expected future benefit payments 1,027,678 206,198 1,030,904 212,887 Permanent Limited Pay: Expected future gross premiums 45,453 49,168 41,999 51,752 Expected future benefit payments 193,339 114,544 195,610 120,606 September 30, 2025 | 10-Q 23 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 September 30, Nine Months Ended September 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 $ 29,882 8,149 27,930 8,391 84,864 24,786 76,047 25,282 Permanent Limited Pay 4,184 2,244 3,395 2,269 12,806 6,673 11,067 6,739 Other 1,826 — 2,508 — 5,124 — 7,550 — Less: Reinsurance 3,280 — 1,828 — 8,764 — 3,559 — Total, net of reinsurance 32,612 10,393 32,005 10,660 94,030 31,459 91,105 32,021 Accident & Health Insurance: Other 174 — 197 — 554 — 565 — Less: Reinsurance 1 — 1 — 2 — 3 — Total, net of reinsurance 173 — 196 — 552 — 562 — Total $ 32,785 10,393 32,201 10,660 94,582 31,459 91,667 32,021 Home Service Insurance Segment: Life Insurance: Permanent $ 8,035 1,371 8,257 1,349 24,184 4,108 24,723 4,040 Permanent Limited Pay 1,881 1,672 1,837 1,636 5,774 4,994 5,905 4,894 Other 351 — 367 — 1,258 — 1,114 — Less: Reinsurance 7 — 5 — 88 — 24 — Total, net of reinsurance 10,260 3,043 10,456 2,985 31,128 9,102 31,718 8,934 Accident & Health Insurance: Other 258 — 256 — 778 — 762 — Total $ 10,518 3,043 10,712 2,985 31,906 9,102 32,480 8,934 September 30, 2025 | 10-Q 24 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. September 30, 2025 September 30, 2024 (In years) Life Insurance Home Service Insurance Life Insurance Home Service Insurance Permanent: Duration at original discount rate 8.8 15.3 8.6 16.0 Duration at current discount rate 8.8 14.3 8.6 15.6 Permanent Limited Pay: Duration at original discount rate 8.6 13.8 8.1 14.7 Duration at current discount rate 8.0 13.1 7.8 14.7 The following table provides the weighted-average interest rates for the liability for future policy benefits. September 30, 2025 September 30, 2024 Life Insurance Home Service Insurance Life Insurance Home Service Insurance Permanent: Interest rate at original discount rate 4.85 % 4.83 % 4.87 % 4.96 % Interest rate at current discount rate 4.81 % 5.35 % 4.61 % 5.03 % Permanent Limited Pay: Interest rate at original discount rate 4.28 % 4.88 % 4.28 % 5.03 % Interest rate at current discount rate 4.88 % 5.32 % 4.63 % 5.02 % 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 September 30, 2025 (In thousands) Range of Guaranteed Minimum Crediting Rates: 0.00 % - 1.49 % $ 870 — — 33,360 34,230 1.50 % - 2.99 % 3,916 179 6 35,308 39,409 3.00 % - 4.49 % 113,376 385 26,965 — 140,726 Greater or equal to 4.50 % 31,254 — — — 31,254 Total $ 149,416 564 26,971 68,668 245,619 September 30, 2025 | 10-Q 25 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 September 30, 2024 (In thousands) Range of Guaranteed Minimum Crediting Rates: 0.00 % - 1.49 % $ 816 — 726 34,772 36,314 1.50 % - 2.99 % 8,840 176 37 27,092 36,145 3.00 % - 4.49 % 101,646 346 16,039 — 118,031 Greater or equal to 4.50 % 31,519 — — — 31,519 Total $ 142,821 522 16,802 61,864 222,009 The following tables summarize balances of and changes in policyholders' account balances. September 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 26,548 3,312 590 3,581 Premiums received 186 3,475 4,300 580 Interest credited 2,060 2,251 1,473 625 Other 3 — — — Less: Surrenders and withdrawals — 10,149 3,986 6,125 Benefit payments 9,264 — — — Balance, end of period $ 79,947 86,969 50,145 28,558 Weighted-average crediting rates 4.09 % 3.97 % 3.87 % 3.23 % Cash surrender value $ 79,947 86,969 50,145 28,558 September 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 17,642 2,132 598 4,211 Premiums received 126 3,015 4,173 500 Interest credited 1,496 2,043 1,377 1,348 Less: Surrenders and withdrawals — 6,997 4,056 6,498 Benefit payments 6,803 — — — Balance, end of period $ 57,030 87,327 47,052 30,600 Weighted-average crediting rates 4.00 % 3.67 % 3.53 % 2.99 % Cash surrender value $ 57,030 87,327 47,052 30,600 September 30, 2025 | 10-Q 26 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 September 30, (In thousands) 2025 2024 Annuities: Supplemental contracts without life contingencies $ 79,947 57,030 Fixed annuity 86,969 87,327 Unearned revenue reserve 1,480 1,481 Total annuities $ 168,396 145,838 Premiums paid in advance: Premiums paid in advance $ 28,558 30,600 Other 2,070 1,820 Total premiums paid in advance $ 30,628 32,420 (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) September 30, 2025 December 31, 2024 Life insurance in force: Direct life insurance in force $ 5,379,220 5,227,506 Aggregate assumed life insurance in force 3,427 3,427 Aggregate ceded life insurance in force ( 814,607 ) ( 821,215 ) Net life insurance in force $ 4,568,040 4,409,718 September 30, 2025 | 10-Q 27 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The Company's reinsurance recoverable on ceded reinsurance was $ 10.4 million and $ 6.9 million as of September 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 Nine Months Ended September 30, September 30, (In thousands) 2025 2024 2025 2024 Premiums from short duration contracts: Direct $ 432 449 1,332 1,376 Ceded ( 1 ) ( 14 ) ( 2 ) ( 16 ) Net premiums earned 431 435 1,330 1,360 Premiums from long duration contracts: Direct 46,162 44,295 134,013 126,351 Assumed 13 15 38 48 Ceded ( 3,303 ) ( 1,848 ) ( 8,893 ) ( 3,630 ) Net premiums earned 42,872 42,462 125,158 122,769 Total premiums earned $ 43,303 42,897 126,488 124,129 Claims and surrenders assumed $ 22 22 73 97 Claims and surrenders ceded $ ( 571 ) ( 1,395 ) ( 1,523 ) ( 2,876 ) Commissions assumed and ceded $ ( 2,887 ) ( 2,016 ) ( 9,293 ) ( 2,957 ) Other general expenses ceded $ ( 699 ) ( 341 ) ( 1,982 ) ( 497 ) (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 nine months ended September 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 September 30, 2025, CICA International is committed to fund investments up to $ 20.7 million related to limited partnership and structured note investments 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 September 30, 2025 | 10-Q 28 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 September 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 Nine Months Ended September 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 381 — 340 — Balance at end of period 54,616 5,330 54,223 5,330 EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share. Three Months Ended September 30, 2025 2024 (In thousands, except per share amounts) Basic and diluted earnings per share: Net income (loss) $ 2,417 2,790 Weighted average shares of Class A outstanding - basic 50,265 49,837 Weighted average shares of Class A outstanding - diluted 51,570 50,669 Basic earnings per share of Class A common stock $ 0.04 0.06 Diluted earnings per share of Class A common stock 0.04 0.05 September 30, 2025 | 10-Q 29 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) Nine Months Ended September 30, 2025 2024 (In thousands, except per share amounts) Basic and diluted earnings per share: Net income (loss) $ 7,253 11,291 Weighted average shares of Class A outstanding - basic 50,099 49,687 Weighted average shares of Class A outstanding - diluted 51,401 50,519 Basic earnings per share of Class A common stock $ 0.14 0.23 Diluted earnings per share of Class A common stock 0.14 0.22 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 September 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 September 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 September 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. September 30, 2025 | 10-Q 30 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 September 30, 2025 (In thousands) Revenues: Premiums Life insurance $ 32,612 10,260 — 42,872 Accident and health insurance 173 258 — 431 Net investment income 15,342 3,581 194 19,117 Investment related gains (losses), net ( 2,063 ) 799 9 ( 1,255 ) Other income 1,518 — 125 1,643 Total revenues 47,582 14,898 328 62,808 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 38,603 5,673 — 44,276 Increase (decrease) in future policy benefit reserves ( 8,360 ) 1,600 — ( 6,760 ) Policyholder liability remeasurement (gain) loss 1,405 ( 1,864 ) — ( 459 ) Policyholders' dividends 1,372 5 — 1,377 Total insurance benefits paid or provided 33,020 5,414 — 38,434 Commissions 8,566 3,089 — 11,655 Other general expenses 7,050 3,879 2,362 13,291 Capitalization of deferred policy acquisition costs ( 8,670 ) ( 1,304 ) — ( 9,974 ) Amortization of deferred policy acquisition costs 4,063 732 — 4,795 Amortization of cost of insurance acquired 18 110 — 128 Total benefits and expenses 44,047 11,920 2,362 58,329 Income (loss) before federal income tax $ 3,535 2,978 ( 2,034 ) 4,479 September 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 Nine Months Ended September 30, 2025 (In thousands) Revenues: Premiums: Life insurance $ 94,030 31,128 — 125,158 Accident and health insurance 552 778 — 1,330 Net investment income 42,254 10,854 555 53,663 Investment related gains (losses), net ( 2,185 ) 433 11 ( 1,741 ) Other income 5,011 — 125 5,136 Total revenues 139,662 43,193 691 183,546 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 107,968 16,626 — 124,594 Increase (decrease) in future policy benefit reserves ( 19,257 ) 4,297 — ( 14,960 ) Policyholder liability remeasurement (gain) loss 2,499 ( 1,779 ) — 720 Policyholders' dividends 3,969 18 — 3,987 Total insurance benefits paid or provided 95,179 19,162 — 114,341 Commissions 24,913 9,426 — 34,339 Other general expenses 20,266 11,461 7,716 39,443 Capitalization of deferred policy acquisition costs ( 24,544 ) ( 3,999 ) — ( 28,543 ) Amortization of deferred policy acquisition costs 11,862 2,193 — 14,055 Amortization of cost of insurance acquired 60 245 — 305 Total benefits and expenses 127,736 38,488 7,716 173,940 Income (loss) before federal income tax $ 11,926 4,705 ( 7,025 ) 9,606 September 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 Three Months Ended September 30, 2024 (In thousands) Revenues: Premiums Life insurance $ 32,005 10,456 — 42,461 Accident and health insurance 196 256 — 452 Property insurance — ( 16 ) — ( 16 ) Net investment income 13,578 3,552 247 17,377 Investment related gains (losses), net 936 ( 111 ) 2 827 Other income 630 — — 630 Total revenues 47,345 14,137 249 61,731 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 30,083 6,395 — 36,478 Increase (decrease) in future policy benefit reserves ( 1,497 ) 1,968 — 471 Policyholder liability remeasurement (gain) loss 1,681 ( 524 ) — 1,157 Policyholders' dividends 1,314 6 — 1,320 Total insurance benefits paid or provided 31,581 7,845 — 39,426 Commissions 9,549 3,408 — 12,957 Other general expenses 6,791 3,756 1,548 12,095 Capitalization of deferred policy acquisition costs ( 8,855 ) ( 1,575 ) — ( 10,430 ) Amortization of deferred policy acquisition costs 3,837 656 — 4,493 Amortization of cost of insurance acquired 26 127 — 153 Total benefits and expenses 42,929 14,217 1,548 58,694 Income (loss) before federal income tax $ 4,416 ( 80 ) ( 1,299 ) 3,037 September 30, 2025 | 10-Q 33 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated Nine Months Ended September 30, 2024 (In thousands) Revenues: Premiums: Life insurance $ 91,105 31,718 — 122,823 Accident and health insurance 562 762 — 1,324 Property insurance — ( 18 ) — ( 18 ) Net investment income 41,076 10,618 710 52,404 Investment related gains (losses), net 1,743 ( 179 ) ( 27 ) 1,537 Other income 3,354 20 83 3,457 Total revenues 137,840 42,921 766 181,527 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 86,616 17,505 — 104,121 Increase (decrease) in future policy benefit reserves ( 4,959 ) 4,829 — ( 130 ) Policyholder liability remeasurement (gain) loss 3,360 ( 524 ) — 2,836 Policyholders' dividends 3,731 17 — 3,748 Total insurance benefits paid or provided 88,748 21,827 — 110,575 Commissions 25,052 10,587 — 35,639 Other general expenses 19,752 11,176 9,144 40,072 Capitalization of deferred policy acquisition costs ( 24,262 ) ( 5,042 ) — ( 29,304 ) Amortization of deferred policy acquisition costs 10,781 2,023 — 12,804 Amortization of cost of insurance acquired 81 396 — 477 Total benefits and expenses 120,152 40,967 9,144 170,263 Income (loss) before federal income tax $ 17,688 1,954 ( 8,378 ) 11,264 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 September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Life Insurance Segment: Premiums: Direct premiums: First year $ 8,294 7,541 24,005 18,621 Renewal 27,773 26,490 79,344 76,608 Total direct premiums 36,067 34,031 103,349 95,229 Reinsurance ( 3,282 ) ( 1,830 ) ( 8,767 ) ( 3,562 ) Total premiums $ 32,785 32,201 94,582 91,667 September 30, 2025 | 10-Q 34 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 September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Home Service Insurance Segment: Direct life and A&H premiums: First year $ 1,226 1,249 3,767 3,993 Renewal 9,299 9,468 28,227 28,511 Total direct life and A&H premiums 10,525 10,717 31,994 32,504 Reinsurance ( 7 ) ( 5 ) ( 88 ) ( 24 ) Total life and A&H premiums $ 10,518 10,712 31,906 32,480 The table below summarizes assets by segment. As of September 30, (In thousands) 2025 2024 Assets: Segments: Life Insurance $ 1,333,849 1,325,855 Home Service Insurance 372,916 372,362 Total Segments 1,706,765 1,698,217 Other Non-Insurance Enterprises 35,600 37,592 Total assets $ 1,742,365 1,735,809 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 September 30, Nine Months Ended September 30, (In thousands) 2025 2024 2025 2024 Area: United States $ 17,473 15,203 50,956 42,602 Colombia 7,088 6,512 20,103 18,538 Ecuador 3,527 3,421 10,093 9,610 Taiwan 3,031 3,520 10,084 11,679 Venezuela 3,258 3,828 9,930 10,806 Argentina 3,180 2,790 8,199 7,561 Other foreign countries 9,717 9,935 28,414 28,283 Reinsurance and change in premium accruals ( 3,971 ) ( 2,312 ) ( 11,291 ) ( 4,950 ) Total premiums $ 43,303 42,897 126,488 124,129 September 30, 2025 | 10-Q 35 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 46.0 % and 24.5 % for the three and nine months ended September 30, 2025, compared to effective tax rate of 8.1 % and ( 0.2 )% 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 September 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 $ 4.2 million and $ 3.8 million at September 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. The Company had an immaterial impact to our income tax expense or effective tax rate for the enactment of OBBBA for the three and nine months ended September 30, 2025. (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, 2025 | 10-Q 36 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) September 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 ) Other comprehensive income (loss) before reclassification, before tax 22,623 ( 29,058 ) ( 6,435 ) Amounts reclassified from other comprehensive income (loss), before tax ( 691 ) — ( 691 ) Income tax benefit (expense) ( 1,357 ) 2,722 1,365 Balance at September 30, 2025, net of tax $ ( 131,788 ) 42,372 ( 89,416 ) 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 ) Other comprehensive income (loss) before reclassification, before tax 59,101 ( 45,404 ) 13,697 Amounts reclassified from other comprehensive income (loss), before tax ( 100 ) — ( 100 ) Income tax benefit (expense) ( 4,339 ) 3,983 ( 356 ) Balance at September 30, 2024, net of tax $ ( 112,051 ) 17,368 ( 94,683 ) September 30, 2025 | 10-Q 37 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) (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 nine months ended September 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. September 30, 2025 | 10-Q 38 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS