What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-03-13 · 299 added, 307 removed, 568 unchanged (52% of the section changed)

7 unchanged sentences

Accordingly, the Company derives its revenues principally from:

(1) life insurance premiums earned for insurance coverages provided to insureds in our two operating segments – Life Insurance and Home Service Insurance;

(1) life insurance premiums earned for insurance coverages provided to insureds in our two operating segments – International Insurance and Domestic Insurance;

and (2) net investment income.

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ECONOMIC AND INSURANCE INDUSTRY DEVELOPMENTS

Over the last decade, life insurers have faced numerous disruptions as an industry, including profitability challenges driven by low interest rates, a global pandemic, high inflation followed by a rapid rise in interest rates, volatility in equity markets, and geopolitical uncertainty.

These significant trends and developments have and are impacting our business and industry as follows.

• Increase in Interest Rates;

Volatility in Equity and Credit Markets;

The material uptick in interest rates over the past few years has benefited the life insurance sector with respect to increased yields and higher net investment income.

However, this benefit was offset by a move to material unrealized loss positions on fixed-income portfolios.

Inflation has also impacted our industry over the past few years.

As the price of energy and food rises, customers have less discretionary income to spend on insurance products.

As the inflationary environment continues, the industry may see a rise in the number of policy lapsing, especially among lower- and middle-income customers.

• Sustained Low Interest Rate Environment Prior to 2022.

Market interest rates are a key driver of our results.

The multi-year sustained low interest rate environment significantly reduced the overall

Life insurers continue to operate in an environment marked by economic volatility, shifting financial market conditions, evolving regulatory expectations, geopolitical uncertainty and rapid technological change.

These developments have influenced profitability, product demand, capital requirements, and consumer behavior across the industry, including our Company.

Interest Rate Environment, Market Volatility and Inflation.

The material uptick in interest rates over the past few years has generally benefited life insurers by improving reinvestment yields and net investment income.

However, these benefits have been partially offset by unrealized losses in fixed-income portfolios as market values declined during the rate‑rising cycle, a trend observable across the industry.

Life insurers remain sensitive to interest‑rate movements given the asset‑intensive nature of the business and long‑duration liabilities.

Inflation has also affected insurers by reducing customer discretionary income and potentially increasing lapse rates, especially among lower- and middle-income policyholders.

Additionally, inflation can increase operating

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yield on investments, as regulations require that the vast majority of a life insurance company's portfolio consist of fixed income securities, which are primarily callable.

As interest rates declined, these fixed income securities were called and had to be re-invested in lower rate investments.

This has reduced and may continue to reduce profit margins for life insurers:

◦ by reducing the spread between guaranteed interest rates credited to policyholders and interest earned on supporting assets.

As older endowment and annuity products are maturing, the guaranteed interest rates may be higher than current yields;

◦ by surrendering or lapsing products sold during the last several years with lower interest rate guarantees, as customers look to invest in higher interest rate products;

◦ because products may have been priced with assumptions of higher interest rates (and higher interest earned on supporting assets), life insurance companies may have to increase reserves or trigger loss recognition that could accelerate amortization of COIA.

• Availability of Reinsurance.

Reinsurance market dynamics including increased cybersecurity concerns, significant weather-related losses, pandemic losses, and similar to the life insurance industry, economic-related market losses, have led to a decline in the availability of reinsurance, tighter terms (such as, for example, pandemic exclusions) and/or increased reinsurance prices.

While we currently cede a limited amount of our primary insurance business to reinsurers, we may encounter difficulty in obtaining reinsurance in the future, forcing us to resort to a more expensive reinsurance market.

If we are unable to obtain affordable reinsurance coverage, this may impact our net exposures and the number of underwriting commitments.

• Technology Adoption.

Innovation and digital development strategies, including the use of generative AI, continue to evolve and impact all industries, including the insurance industry.

The insurance industry is focused on digitizing distribution channels and empowering agents with advanced digital capabilities.

Access to real-time data has streamlined the way we underwrite our products.

The rapid development of artificial intelligence and the demand for fee-based, value-added services are challenging our industry.

Therefore, it is critical that we embrace these changes for the benefit of our policyholders, agents, employees and stockholders.

expenses and claims‑related costs.

Prolonged inflationary pressure may continue to affect both consumer purchasing behavior and overall insurer expense structures.

Prior to 2022, the life insurance industry operated for more than a decade in a sustained low interest rate environment, which constrained investment yields and compressed spreads.

As older, higher-yielding assets matured or were called, insurers were required to reinvest at lower rates, reducing margins on products with guaranteed minimum interest rates.

These dynamics contributed to reserve strengthening, loss recognition events, and faster amortization of deferred acquisition costs for certain products across the sector.

Although the rate environment has shifted, legacy portfolios and in‑force blocks continue to be influenced by these earlier conditions.

Reinsurance Market Dynamics.

Reinsurance markets have tightened due to factors such as increased cybersecurity risks, significant weather-related losses, pandemic losses, and volatility in asset valuations.

These pressures have led to a decline in the availability of reinsurance, tighter terms (such as, for example, pandemic exclusions) and/or increased reinsurance prices.

Continued market tightening could increase our cost of reinsurance or limit availability, which may affect our risk transfer strategies and capital management.

Technology, Innovation and Digitization.

T echnological advancement continues to reshape the life insurance sector.

Insurers are investing in digital distribution capabilities, automated underwriting, advanced analytics, and generative artificial intelligence to improve customer experience, enhance agent productivity, and streamline operations.

These innovations are transforming how products are designed, marketed, and serviced.

While technology presents opportunities to increase efficiency and support profitable growth, it also introduces industry‑wide challenges related to cybersecurity, data governance, and compliance with evolving regulatory frameworks.

These technological developments also require continuous investment in digital platforms, system modernization, and data capabilities.

Failure to invest adequately could impair our ability to compete effectively, support our distribution partners, meet policyholder expectations, or comply with evolving cybersecurity and data‑governance standards.

Ongoing investment is therefore an important component of our long‑term strategy.

RE-SEGMENTATION OF REPORTABLE SEGMENTS

Effective December 31, 2025, the Company reorganized its insurance reporting structure, shifting from Life Insurance and Home Service Insurance segments to Domestic Insurance and International Insurance segments.

The Company’s reportable segments are based on the geographic location of operations and the nature of products and services offered.

Management believes this structure provides a more meaningful view of the business and better reflects the way performance is assessed internally.

Historically, our operations were organized into (i) Life Insurance, which included both U.S.

domestic life insurance products and our international life operations, and (ii) Home Services Insurance, which consisted primarily of our Louisiana‑based, face‑to‑face home services business.

Management has implemented several strategic initiatives over the past few years aimed at enhancing profitability and operational efficiency.

These efforts, combined with improved sales performance, have strengthened the Company’s overall business.

Given these developments, management concluded that the prior segmentation no longer reflected how the Chief Operating Decision Maker ("CODM") reviews performance, allocates resources, and assesses the strategic direction of the business.

Accordingly, we have combined our former domestic life and home services operations into a single Domestic Insurance segment and report all non‑U.S.

operations in the International Insurance segment.

Recast of Prior‑Period Financial Information

In accordance with the segment reporting guidance under ASC 280, we have recast prior‑period segment information within this report to conform to the new segment structure.

These changes affect only how we present results by segment and had no impact on our previously reported consolidated financial statements, including net income, earnings per share, total assets, or cash flows.

Recast segment results for prior periods are included within this Form 10‑K to provide comparability and to assist readers in understanding trends in our operating performance under the revised structure.

Impact on MD&A

The MD&A reflects our results for fiscal year 2025 and all comparative periods under the Domestic Insurance and International Insurance segment structure.

Management believes this realignment enhances transparency and more

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accurately reflects the manner in which we operate the business, evaluate performance, and execute our strategic priorities.

EVENTS THAT IMPACTED OUR BUSINESS

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Risk Factors , the following events impacted our results of operations or financial condition.

Continued Elevated Interest Rates

To combat the inflation that began as a result of the COVID-19 pandemic, interest rates rose significantly starting in 2022 after being ultra-low for almost a decade.

In just a 16-month span starting in March 2022, the Federal Open Market Committee of the Federal Reserve lifted their key benchmark rate from a near-zero percent to a 22-year high of 5.25% - 5.5%.

Higher interest rates typically reduce the market value of fixed income assets, as the interest payments from existing fixed income assets become less competitive relative to newer higher rate fixed income instruments.

As a life insurer, we strive to match our asset duration to our liability duration.

Since a vast majority of our investment portfolio is long duration fixed maturity securities, our investment portfolio was impacted by these rising rates.

Higher interest rates resulted in an accumulated pre-tax net unrealized loss of $180.3 million on our available-for-sale securities at December 31, 2024 compared to an accumulated pre-tax net unrealized loss of $150.1 million at December 31, 2023.

The credit ratings and default risk of our fixed maturity securities were not significantly impacted by the rise in interest rates and because we intend to hold the long-term investments to maturity, we do not believe that the current unrealized loss is indicative of our long-term financial strength, as we expect the market values to recover prior to the maturity date of most of these investments.

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Coinsurance Agreement with RGA Reinsurance Company

In the second quarter of 2024, CLOA entered into an automatic coinsurance reinsurance agreement with RGA Reinsurance Company ("RGA") in order to provide more capacity for growth in our Domestic Insurance segment.

Under this agreement (the "RGA Agreement"), CLOA elected for RGA to reinsure 50% of its newly written final expense business, which means we cede 50% of direct premiums we receive for our CLOA final expense products that were issued since the date we entered into the RGA Agreement, to RGA.

In return, RGA pays 50% of death benefits paid for these products and also pays CLOA an expense allowance to cover its share of expenses such as commissions.

Investment Related Losses due to BlackRock write-down

As we have previously discussed, investment related gains and losses derive principally from our investments in equity securities and include unrealized gains and losses from market price changes in these equities during the period.

As evidenced, investment related gains and losses can cause significant fluctuations from period to period and while they are included in our operating revenue, we do not believe they are indicative of our operating results.

In December 2024, BlackRock, Inc.

Investment related gains and losses derive principally from our investments in equity securities and include unrealized gains and losses from market price changes in these equities during the period.

Investment related gains and losses can cause significant fluctuations from period to period and while they are included in our operating revenue, we do not believe they are indicative of our operating results.

As discussed in our 2024 Form 10-K , in December 2024, BlackRock, Inc.

("BlackRock") announced a substantial write-down of its Global Renewable Power Fund III, a $4.8 billion flagship renewable fund, due to the collapse of two key investments:

Northvolt and SolarZero.

We had invested in this fund as part of our environmental, social and governance ("ESG") initiatives and although we did not sell this investment, due to the write-down, we reported an investment related loss on this investment of $3.3 million.

In 2025, BlackRock continued to review the valuation of this fund and reduced the net asset value further.

We had invested in this fund as part of our environmental, social and governance ("ESG") initiatives and although we did not sell this investment, we reported an investment related loss on this investment of $3.3 million in the fourth quarter of 2024 and an additional $5.2 m illion in 2025.

This sector has experienced market headwinds primarily driven by rising interest rates, supply chain disruption and less certain policy environment.

In 2025, the write-down of our BlackRock investment was offset by positive fair value changes in some of our other limited partnership type investments.

Legal Proceedings

Commitments and Contingencies , as well as Part I.

Legal Proceedings - Trade Secret Lawsuit for a discussion of the trade secret lawsuit, which has impacted our results of operations and could negatively impact our cash if we do not succeed in our appeal.

Legal Proceedings - Trade Secret Lawsuit for a discussion of the trade secret lawsuit, which impacted our results of operations in 2024 and could negatively impact our cash if we do not succeed in our appeal.

FINANCIAL HIGHLIGHTS

Net income before federal income tax decreased to $15.0 million in 2024 from $26.2 million in 2023.

The factors that impacted this change were:

• $3.4 million decrease in investment related gains and losses primarily related to the BlackRock write-down;

• the accrual of $3.5 million in legal fees awarded to the certain defendants in the trade secret lawsuit;

• total premium revenues increased by $6.3 million in 2024 for the first time in 7 years, but offset by an $11.5 million increase in total insurance benefits paid or provided.

Net income before federal income tax increased to $17.5 million in 2025 from $15.0 million in 2024 due to a $10.6 million increase in total revenues offset by a $8.1 million increase in total benefits and expenses.

Total revenues increased due to:

• Increase in total premium revenues for the second straight year;

• Improvement in investment related gains and losses;

• Increase in net investment income due to our diversified investment strategy;

• Increase in other income related to strategic issuance of supplemental contracts.

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Total benefits and expenses increased primarily due to:

• $6.4 million increase in total insurance benefits paid or provided due to increased matured endowments in our International Insurance segment, partially offset by

◦ a decrease in future policy benefit reserves, and

◦ a decrease in policyholder liability remeasurement loss due to better than expected experience in our Domestic Insurance segment;

• $0.8 million increase in other general expenses due to strategic growth initiatives and increased participation in our equity compensation program in addition to being negatively impacted in 2024 by the accrual of $3.5 million in legal fees awarded to the certain defendants in the trade secret lawsuit.

Financial Condition at December 31, 2025

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We see the following as the primary factors that drive our operating results.

• Sales (i.e .

, premium revenues)

• Investments

• Sales of our products and the premiums we receive from these sales

• Investments and the income that they generate

• Claims and surrenders

1 unchanged sentence

• Actuarial assumptions

1 Adjusted book value per of Class A common share is a non-GAAP measure that is calculated by dividing actual Class A common stockholders’ equity, excluding AOCI, by the number of Class A common shares outstanding at the end of the period.

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Premium revenues and investment income are our two primary sources of income and thus key to our profitability.

Sales of our Products.

We believe sales statistics are meaningful to gain an understanding of, among other things, the attractiveness of our products, how expansion of our distribution channels affects our revenue, customer retention and the performance of our business from period-to-period.

Throughout the MD&A, we describe:

the actions and initiatives we are taking to increase sales and improve retention, sales performance in each period and as compared to prior year periods, and how we view trends with respect to sales and retention.

One sales factor that is key to our profitability is product mix.

We offer a competitive product mix designed to meet the needs of our specific customer demographics and actively manage new product margins and in-force profitability.

Product mix can have an impact on profitability;

when we sell a higher volume of lower-margin products, we may receive more premiums, but may not be as profitable as in periods when we sell a greater percentage of higher-margin products.

Our product mix in both the International Insurance segment and Domestic Insurance segment has been trending towards sales of our newer whole life products, which have a smaller margin than sales of our international endowment products.

We expect this trend to continue due to the anticipated volumes of endowment maturities being replaced by higher volumes of whole life products.

Premium Revenues.

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We view these 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.

We believe sales statistics are meaningful to gaining an understanding of, among other things, the attractiveness of our new products, how expansion of our distribution channels affects our revenue, customer retention and the performance of our business from period to period.

Throughout the MD&A and in Part I.

Business , we describe the actions and initiatives that we are taking to increase sales and improve retention, sales performance in each period and as compared to prior periods, and how we view trends with respect to sales and retention.

Over the last couple of years, we began our "white label" program to expand our distribution by expanding CICA Domestic's state licenses, developing new final expense and living benefit products, and filing these new products in multiple states.

As a result, in the past year, we have significantly expanded our domestic distribution in the Life Insurance segment and first year premiums have more than doubled in this segment quarter-over-quarter and year-to-date as compared to 2023.

We incur significant upfront costs in acquiring new business such as this, including the payment of sales commissions and underwriting costs, and thus in order to provide more capacity for growth, we entered into a coinsurance agreement in the second quarter of 2024 with RGA Reinsurance Company ("RGA" and the coinsurance agreement referred to as the "RGA Agreement") as discussed in Part I.

Business - Reinsurance.

We refer to "direct" premiums as all premiums received and "net" or "total" premiums as all premiums received less premiums ceded to RGA and our other reinsurers.

Because we ceased operations in our property insurance business effective June 30, 2023, the premiums charts and discussions below only reflect life insurance and accident and health insurance ("A&H") premiums results.

Total direct premium revenue increased 6% in 2024, totaling $178.8 million compared to $168.0 million in 2023.

This was the first time our total premium revenue has increased since 2017.

First Year Premiums.

Total direct first year premiums increased 71%, to $33.0 million in 2024, compared to $19.3 million in 2023, including 106% growth in our Life Insurance segment driven by new products and an increased number of producing agents.

In addition to increased first year premiums due to our domestic growth discussed above, first year premiums in our international business increased in 2024 from 2023 as we continue to work with our distribution partners to expand products and sales.

Throughout the MD&A, we refer to " direct" premiums as all premiums received and " net " or " total " premiums as all premiums received less premiums ceded to our reinsurers.

Direct premium revenue increased 5.5% in 2025, to $188.8 million from $178.8 million in 2024.

This increase was driven by sales in our Domestic Insurance segment of CLOA final expense whole life products.

This was the second consecutive year of total premium revenue growth, which prior to 2024, had not increased since 2017.

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First Year Premiums.

Direct first year premiums increased 16%, to $38.3 million in 2025, compared to $33.0 million in 2024, including 23% growth in our Domestic Insurance segment driven by new products and an increased number of producing agents.

First year premiums also increased in our International Insurance segment in 2025 from 2024 as we continue to work with our distribution partners to expand products and sales.

Renewal Premiums.

Our renewal premium revenues in 2024 decreased primarily due to the impact of a higher level of surrenders and matured endowments in our international business during the last few years, which has led to a lower number of policies paying renewal premiums.

In 2025, our direct renewal premium revenues increased as a result of robust sales in 2024 in our Domestic Insurance segment, which resulted in a greater volume of policies making renewal premium payments in 2025.

Premium growth was constrained by the high level of surrenders and matured endowments in our International Insurance segment during the last few years, which has lowered the number of policies remaining in force and paying renewal premiums in this segment.

Investment Income.

Our net investment income increased from 2023 to 2024 due primarily to investment income from our limited partnership investments, a growing diversified invested asset base and reinvesting matured or called fixed income maturity securities into a higher interest rate environment.

Our net investment income increased from 2024 to 2025.

In 2025, we received a special dividend of $1.7 million from one of our limited partnership investments due to the sale of one of its assets.

Additionally, we began investing in investment grade private placement fixed income securities and structured notes, which led to slightly higher net investment income in 2025.

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Claims and Surrenders.

Payment of policyholder benefits for claims and surrenders is our largest expense and thus also key to our profitability.

The three largest components of this expense are reflected in the graph below.

Payment of policyholder benefits for claims and surrenders is our largest expense and thus key to our profitability.

The three largest components of this expense are reflected in the graphs below.

In 2025, compared to 2024,

• death claim benefits increased due to the significant growth in our domestic life in force business as well as a higher average claim amount in our Home Services Insurance segment,

• death claim benefits decreased due to a combination of lower volume of claims and the RGA Agreement alleviating some of our liability to pay these claims in 2025 as compared to 2024,

• surrenders decreased as we continue to focus on retention efforts, and

• matured endowments increased as expected due to many of our endowment policies reaching their contractual maturity dates.

While surrenders and matured endowments do not significantly affect current profitability since reserves are released in a corresponding amount of the surrendered policy or matured endowment benefit payment, they negatively affect future renewal premium revenue and thus have a greater impact to future profitability versus current profitability.

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Operating Expenses.

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Operating expenses are meaningful to gaining an understanding of how we manage our business, including among other things, salaries, benefits, and spending on growth initiatives.

The primary reason for the increase in 2024 was the accrual of $3.5 million in legal fees awarded to certain defendants in the trade secret lawsuit.

The primary reason for the increase in 2025 was our continued investment in the growth of our business and higher costs associated with our equity compensation program as a result of increased stock price and additional participants.

Operating expenses in 2024 were negatively impacted by the accrual of $3.5 million in legal fees awarded to certain defendants in the trade secret lawsuit.

We have not paid any fees and have appealed the judgment against us.

1 unchanged sentence

Legal Proceedings - Trade Secret Lawsuit for additional details.

To a lesser extent, the increase was also due to our continued investment in the growth of our business and costs incurred as we transitioned to a new CEO.

Actuarial Assumptions.

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Our results will be affected to the extent there is a variance between our actuarial assumptions and actual experience.

As discussed above, our domestic growth in the Life Insurance segment has been significantly expanded.

Our current profitability is affected by the level of reserves we have to hold for this new business, and how closely actual experience matches our actuarial assumptions.

The actuarial assumptions that underlie our reserves are based upon our best estimates and are inherently more difficult to predict for a new product line.

As we continue our expansion into this market, we expect results will become proportionally less volatile.

This is reflected in our Consolidated Statements of Operations and Comprehensive Income as Increase (Decrease) in Future Policy Benefit Reserves and Policyholder Liability Remeasurement (Gain) Loss.

In 2025, we experienced a rebalancing in our mix of business due to the volume of maturities in our international endowment business, as well as continued growth in our Domestic Insurance segment.

Our current profitability is affected by how closely actual experience matches our actuarial assumptions for these shifts, and by the amount of reserves we must hold.

Updated assumptions to policyholder liability remeasurement (gain) loss improved our operating results by $2.2 million in 2025 due to better than expected experience in our Domestic Insurance segment.

Actuarial assumptions are continually monitored and updated at least annually to reflect overall experience as well as emerging trends.

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CONSOLIDATED RESULTS OF OPERATIONS

1 unchanged sentence

We manage our business in two operating segments:

Life Insurance and Home Service Insurance.

International Insurance and Domestic Insurance.

Business for a discussion about the business operations in each segment.

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Our insurance operations are the primary focus of the Company, as these operations generate most of our income.

See the discussion under Segment Operations below for detailed analysis.

The amount of insurance, number of policies, and average face amounts for life policies issued during the periods indicated are shown below.

The amount of direct insurance, number of policies, and average face amounts for life policies issued during the periods indicated are shown below.

Years Ended December 31, 2025 2024

Issued Number of

Average Policy Face

Amount Issued Amount of

Issued Average Policy

Issued Amount of

Issued Number of

Average Policy Face

Amount Issued

Life Insurance:

International $ 475,692,442 4,465 $ 106,538 $ 399,691,578 4,067 $ 98,277

Domestic 438,843,033 40,635 10,800 53,356,685 4,541 11,750

Total Life Insurance 914,535,475 45,100 20,278 453,048,263 8,608 52,631

Home Service Insurance 225,370,276 17,553 12,839 288,867,758 22,429 12,879

Issued Average Policy

International Insurance

$ 480,392,802 4,337 $ 110,766 $ 475,692,442 4,465 $ 106,538

Domestic Insurance

579,717,319 64,021 9,055 664,213,309 58,188 11,415

Total $ 1,060,110,121 68,358 $ 1,139,905,751 62,653

In 2024, we issued $1.1 billion in new insurance, a 54% increase from 2023 and the highest amount of insurance ever issued in a year by our company.

This was a direct result of our growth-oriented strategic initiatives including the introduction of new products tailored to our specific markets and expansion of our distribution channels through white-label partnerships.

The introduction of new products and expanded distribution channels helped drive the increase of $0.4 billion in total insurance issued in 2024.

The growth in our Life Insurance segment is primarily attributable to strong sales of our new domestic final expense products, which accounted for almost half of the insurance issued in this segment through December 31, 2024.

The Life Insurance segment also benefited from sales of our international whole life product, which accounted for 68% of total insurance issued internationally in this segment for the year ended December 31, 2024.

Insurance issued in our Home Service Insurance segment decreased for the year ended December 31, 2024 compared to the prior year period largely due to strategic actions intended to improve sales quality and persistency, which led to a decrease in our agent sales force as we focus on these improvements.

We also believe the impact of inflation on the cost of living has affected new sales since the customer demographic is primarily lower-income individuals.

In 2025, we issued $1.1 billion in new insurance, the second highest amount of insurance ever issued in a year by our company, as we continued to grow our inforce business with our newer products tailored to our specific markets.

Our International Insurance segment benefited from increased sales of our whole life product, which accounted for 64% of total insurance issued in this segment in 2025.

This product tends to have higher policy face amounts than our older endowment products, leading to an increase in insurance issued internationally.

In our Domestic Insurance segment, implementation of new initiatives in CLOA, including use of information to enhance underwriting decisions with additional medical and lab data from third parties, resulted in sales of products with lower policy face amounts, which led to a lower amount of insurance issued despite a higher number of policies issued.

We believe growth in this segment is being impacted by inflation on the cost of living, which has affected new sales since the customer demographic is primarily lower-income individuals.

The amount of direct insurance inforce for the years indicated is shown below.

Overall insurance inforce growth has been and will be impacted by persistency rates, policy maturities and surrenders.

Overall insurance inforce has grown due to the issuance of new business, but growth has been and will be impacted by persistency rates, policy maturities and surrenders.

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CONSOLIDATED RESULTS OF OPERATIONS

Our revenues are generated primarily by life insurance premiums and investment income from invested assets.

Years ended December 31,

7 unchanged sentences

Total revenues $ 255,616 245,001

The Company stopped accepting premiums for property insurance at the end of May 2023 and ceased operations on June 30, 2023.

Therefore, the table below shows a summary of our life and A&H premiums for the periods indicated.

Years ended December 31,

7 unchanged sentences

Total premiums $ 176,371 173,346

Total revenues increased in 2024 driven by an increase in direct premium revenue for the first time since 2017.

Our first year direct premiums increased 71% in 2024 compared to 2023 due to our new product offerings and expanded domestic distribution.

Our direct renewal premiums comprised 82% of our total direct premium revenue in 2024 and 89% in 2023.

Renewal premiums declined by 2% in 2024 compared to 2023;

as discussed above, the decline in Life Insurance segment renewal premiums is due to the impact from a higher level of surrenders during the last few years and increasing matured endowment benefits.

Reinsurance ceded premiums increased in the twelve months ended December 31, 2024 compared to the same periods in 2023 due to the RGA Agreement entered in the second quarter of 2024, which relates to our CICA Domestic business.

Our first year direct premiums increased 16% in 2025 compared to 2024 due to sales of our newer product offerings and expanded distribution in our Domestic Insurance segment.

Renewal premiums increased from strong first year sales in 2024 in our Domestic Insurance segment leading to higher number of policies paying renewal premiums in 2025, which more than offset the impact from matured endowments and the high level of surrenders during the last few years in our International Insurance segment.

Reinsurance ceded premiums increased in 2025 compared to 2024 due to the RGA Agreement we entered into the second quarter of 2024, which relates to our CLOA final expense business.

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Fixed maturity securities constitute the vast majority, or 89%, of our investment portfolio based on fair value and thus provide the majority of our net investment income.

Our fixed maturity investment portfolio, primarily invested in callable securities, has faced challenges due to the sustained low interest rate environment over the past decade.

Many securities were called between 2019 and 2021, necessitating reinvestment in lower interest rate fixed maturity assets, which has begun and will continue to impact net investment income and yields.

However, diversification into limited partnership investments has helped offset this challenging investment environment.

Our net fixed maturity investment portfolio, primarily invested in callable securities, has faced challenges due to the sustained low interest rate environment for the 10 years prior to 2021.

Many securities were called between 2019 and 2021, which required us to reinvest in lower interest rate fixed maturity assets, which impacts net investment income and yields.

In order to enhance yields, we are investing in new opportunities, including investment grade private placement fixed income securities and other asset classes, while maintaining a prudent risk profile.

Investment Related Gains (Losses).

We recorded an investment related loss of $2.6 million during 2024, compared to a gain of $0.8 million in 2023.

We recorded an investment related gain of $0.1 million during 2025, compared to a loss of $2.6 million in 2024.

As discussed above, the loss in 2024 was due to our write-down of the BlackRock ESG investment.

We did not sell this investment;

however, the changes in fair values of our equity securities are reflected as investment related gains or losses in our income statement, in addition to executed transactions that result in a gain or loss.

In 2025, positive fair value changes in limited partnership investments, specifically our private late-stage growth and global equity funds, counterbalanced the impact of the BlackRock write-down.

The changes in fair values of our equity securities are reflected as investment related gains or losses in our Consolidated Statements of Operations and Comprehensive Income, in addition to executed transactions that result in a gain or loss.

Other Income .

Other income consists primarily of supplemental contracts issued to international policyholders in our Life Insurance segment upon the surrender or maturity of their original policies.

Other income consists primarily of supplemental contracts issued to policyholders in our International Insurance segment upon the surrender or maturity of their original policies.

Supplemental contracts offer our policyholders the opportunity to leave their cash with us and be paid interest at a guaranteed rate or receive an annuity, at their option.

18 unchanged sentences

Total benefits and expenses $ 238,146 230,021

Payments of claims and surrenders benefits and other general expenses constitute the majority of our expenses.

Payments of claims and surrenders benefits constitute the vast majority of our expenses.

Claims and Surrenders.

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Matured endowment benefits 76,816 53,551

Property claims (11) 699

Accident and health benefits 402 458

Other policy benefits 6,685 5,371

A&H and other policy benefits 8,599 7,076

Total claims and surrenders $ 165,025 146,082

Death claim benefits increased 8% in 2024 compared to 2023 due primarily to the increase in policies issued over the past few years and an increase in the average amount of claims reported in our Home Service Insurance segment.

Surrender benefits decreased 6% in 2024 compared to 2023.

Surrenders are primarily related to international policies that have passed their surrender charge period.

We have implemented retention initiatives over the past few years, which we believe are helping to decrease surrenders.

Many of our endowment policies are reaching their contractual maturity dates and thus matured endowment benefits are increasing.

We anticipated the $11.7 million increase in 2024 based upon the contractual maturity dates and expect continued increases in matured endowment benefits over the next few years as more of these contracts expire.

Death claim benefits decreased 9% in 2025 compared to 2024 due to both lower volume and the RGA Agreement, which alleviates some of our liability to pay death claims.

We did not have the RGA Agreement during a portion of 2024.

90% of our surrender benefits payments are made on policies surrendered in our International Insurance segment.

These policies are generally policies that have been in place for many years, built up cash values, and have little or no surrender charges remaining.

Surrender benefits decreased 5% in 2025 compared to 2024 and vary from one period to another.

We continue to focus efforts on retention initiatives.

Over the past several years, many of our endowment policies have been reaching their contractual maturity dates and in 2025, we experienced our highest level of matured endowment benefits payments ever.

We anticipated this $23.3 million increase in 2025 based upon the contractual maturity dates.

We expect matured endowment benefits to remain at elevated, but slightly lower levels over the next few years, as more of these contracts expire.

Increase (Decrease) in Future Policy Benefit Reserves.

Future policy benefit reserves reflect the liability established to provide for the payment of policy benefits that we expect to pay in the future and thus generally increase when we have a larger in force block of business due to higher sales and persistency (i.e., more policies on which we expect to pay future benefits) and decrease when we have lower sales and persistency.

Future policy benefit reserves reflect the liability established to provide for the future payment of policy benefits and thus they generally increase when we have a larger in force block of business due to higher sales and persistency (i.e., more policies on which we expect to pay future benefits) and decrease when we have lower sales and persistency.

In the year ended December 31, 2025,

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ended December 31, 2024, the change in future policy benefit reserves increased due to the amount of reserves on new insurance issued and the in force book of business somewhat offset by released reserves in connection with higher matured endowments.

the change in future policy benefit reserves decreased significantly as compared to 2024 despite the increase in our inforce business, due to the amount of reserves released in connection with matured endowments.

Policyholder Liability Remeasurement (Gain) Loss.

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On a quarterly basis, we review actual versus expected experience in such quarter, which is reported as a policyholder liability remeasurement gain (if better performance than assumptions) or loss (if lower performance than assumptions).

Additionally, in the third quarter of each year, we update our cash flow assumptions to recalculate the NPR, with the impact on the liability for future policy benefits recognized as a policyholder liability remeasurement on a retrospective catch-up basis.

In 2024, remeasurement (gain) loss was negatively affected by updates to mortality and lapse assumptions that better reflect emerging experience for the new CICA Domestic block of business.

Commission expenses are a cost of acquiring business, as commissions are the primary compensation paid to our independent consultants and independent agents for selling our products.

Additionally, the best estimate assumptions are updated every year in our third quarter and are reflected on our income statement as a policyholder liability remeasurement gain or loss.

In 2025, the remeasurement (gain) loss was positively affected by updates to mortality and lapse assumptions that better reflect emerging experience for each of our segment blocks of business.

Commission expenses are a cost of acquiring business, as commissions are the primary compensation paid to our independent agents for selling our products.

First year commission rates are higher than renewal commission rates and thus commissions fluctuate directly in relation to first year sales.

The increases in first year sales in the year ended December 31, 2024 led to an increase in commission related expenses as compared to prior years.

Although first year sales increased in 2025 as compared to 2024, commissions decreased due to the RGA Agreement since RGA shares in commission expenses.

Other General Expenses.

Total general expenses increased $5.1 million, or 11%, in 2024 compared to 2023.

The increase was primarily driven by the $3.5 million accrual related to the trade secret lawsuit, as well as costs related to strategic growth initiatives and costs incurred as we transitioned to a new CEO.

Total general expenses increased $0.8 million in 2025 compared to 2024.

Although we continue to incur costs related to our strategic growth initiatives and costs incurred associated with our equity compensation program due to higher stock price and additional participants, we incurred a $3.5 million legal fee in the 2024 due to the trade secret lawsuit.

We continue to work on managing controllable operating expenses while investing in growth initiatives.

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We capitalize costs related to successful sales of our insurance products, which include certain commissions, policy issuance costs, and underwriting and agency expenses.

These costs vary based upon amounts of premiums received related to new and renewal business.

Capitalized DAC increased during 2024, which is in line with the increases in new sales activity.

Significantly lower amounts are capitalized related to renewal business in correlation with the lower commissions paid on that business compared to first year business, which has higher commission rates.

These costs vary based upon amounts of premiums received and ceded related to new and renewal business.

Amortization of Deferred Policy Acquisition Costs.

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DAC is amortized on a constant level basis over the expected term of the related contracts to approximate straight-line amortization.

Federal Income Tax.

Tax expense increased in 2025 resulting in an effective tax rate of 16.5%, compared to 0.5% in 2024.

The increase in 2025 primarily reflects higher taxable U.S.

income and discrete tax adjustments recorded in the year.

Excluding the discrete tax adjustments, the effective tax rate in 2025 would have been 11.6%.

In 2025, the Company recognized an $0.8 million return-to-provision true-up related to 2024 Subpart F income adjustments from partnership investments, which increased tax expense in the year.

The Company's tax rate was impacted by differences between our effective tax rate and the statutory tax rate resulting from income and expense items that are treated differently for financial reporting and tax purposes.

In addition, CICA International is considered a controlled foreign corporation for federal tax purposes and CICA International's activity gives rise to taxable income in the U.S.

as Subpart F Income, which is treated as a permanent tax difference and therefore included in the Company's effective tax rate calculation.

Income Taxes in the notes to our consolidated financial statements herein.

SEGMENT OPERATIONS

We operate in two business segments:

Life Insurance and Home Service Insurance.

These segments are reported in accordance with U.S.

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The re-segmentation has been applied retrospectively to all periods presented to ensure comparability.

The following tables present segment information for the years ended December 31, 2025 and 2024, as if the current segment structure had been in place during those periods.

The following table sets forth income (loss) before federal income taxes by segment during the periods indicated.

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Income before federal income taxes:

Life Insurance $ 22,946 28,621

Home Service Insurance 2,480 3,013

International $ 14,382 23,512

Domestic 12,133 1,914

Total Segments 26,515 25,426

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Total income before federal income taxes $ 17,470 14,980

LIFE INSURANCE

Detailed results of operations for the Life Insurance segment for the periods indicated are as follows:

INTERNATIONAL INSURANCE

Detailed results of operations for the International Insurance segment for the periods indicated are as follows:

Years ended December 31,

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Amortization of deferred policy acquisition costs 14,017 13,494

Amortization of cost of insurance acquired 103 111

Total benefits and expenses 161,277 147,070

Income (loss) before federal income taxes $ 14,382 23,512

In our Life Insurance segment, income before federal income tax was $22.9 million in 2024, as compared to $28.6 million in 2023 as $8.0 million in higher premium revenue was offset by an increase in total insurance benefits paid or provided and the investment related losses due to the BlackRock write-off.

Other general expenses were also higher to support our CICA Domestic growth.

In our International Insurance segment, income before federal income tax was $14.4 million in 2025, as compared to $23.5 million in 2024.

Maturing endowments over the last several years have negatively impacted renewal premiums and in 2025, we had our highest level of matured endowments, which led to the $21.3 million increase in claims and surrenders.

We expect this amount to decrease in 2026 and consistently over the next few years, as these contracts continue to expire.

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Life Insurance segment premium breakout is detailed below.

Premium breakout is detailed below.

Years ended December 31,

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Total premiums

Direct premiums increased by $11.8 million in 2024 as compared to 2023 due to the sales of new products and expanded domestic distribution in addition to increased first year premiums in our international business due to increased production by our existing agents in South America.

Due to the RGA Agreement, premiums ceded increased and thus total premiums increased by $8.0 million.

While our domestic life insurance business drove the significant increase in first year premiums, life insurance premiums are generated largely from our international policyholders living in almost 80 different countries across the globe.

The following table sets forth our premiums by location for the years ended December 31, 2024 and 2023.

Direct premiums decreased by $0.3 million in 2025 as compared to 2024 due to the impact the matured endowments have had on renewal premiums.

First year premiums continued to grow due to sales of new products.

Our International Insurance segment derives its premiums from policyholders residing in nearly 80 countries worldwide.

The following table sets forth our premiums by top locations for the years ended December 31, 2025 and 2024.

Years ended December 31,

(In thousands, except for %)

(In thousands)

International premiums:

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Taiwan 14,359 16,690

Venezuela 14,305 15,143

Ecuador 13,550 13,159

Venezuela 13,322 14,305

Argentina 11,758 10,319

Other Non-U.S.

39,315 38,943

Total international premiums

119,515 120,211

Domestic premiums 15,417 4,229

Other 40,135 40,090

Reinsurance and change in premium accruals

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$ 118,355 118,803

Sales in Taiwan have been declining recently due to leadership succession related difficulties within our primary distribution agency in Taiwan, regulatory challenges and geopolitical shift.

We are facing some headwinds in Venezuela that may affect premium revenues due to the strength of the U.S.

dollar compared to the local currency and their difficulties to obtain dollars.

The recent political instability may cause further decline in this business.

We continue to closely monitor emerging trends in our Venezuela business.

Investment Related Gains (Losses), Net.

T he investment related gains and losses in 2024 increased due to the BlackRock write-down.

Investment related gains and losses improved in 2025 compared to 2024 largely due to the BlackRock write-down in 2024.

These gains and losses are generally a result of the change in estimated fair market value for our limited partnerships, as previously discussed.

Other Income.

Other income consists primarily of supplemental contracts issued to policyholders upon the surrender or maturity of their original policies.

Supplemental contracts offer our policyholders the opportunity to leave their cash with us and be paid interest at a guaranteed rate or receive an annuity, at their option.

As our matured endowments have increased, a growing number of policyholders have chosen to enter into a supplemental contract and thus other income has steadily increased over the last few years.

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Claims and Surrenders.

The following table sets forth our primary claims and surrender benefits within our Life Insurance segment.

Benefits and Expenses.

Claims and surrender benefits breakout is detailed below.

Years ended December 31,

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Total claims and surrenders $ 139,017 117,730

The majority of our claims and surrender benefits in our Life Insurance segment were related to payment of surrender benefits and matured endowment benefits.

Many of our endowment policies are reaching their contractual maturity dates and thus matured endowment benefits are increasing.

We expect this trend to continue over the next few years.

Surrender benefits decreased in 2024 compared to 2023, which we believe is due to our retention efforts.

Death claims benefits increased in 2024 compared to 2023 as we saw a higher number of reported claims due to the increase in policies issued, primarily in our new domestic business.

Mortality experience is closely monitored by the Company as a key performance indicator and these amounts were within expected levels.

As discussed, the majority of our claims and surrender benefits in this segment were related to payment of matured endowment benefits.

Surrender benefits are also a large component of this expense;

often as surrender charges expire on endowments after certain periods, policyholders surrender their policies to access the cash value.

Surrenders decreased in 2025 compared to 2024, which we believe is due to our retention efforts.

Other General Expenses.

General expenses increased due primarily to expenses related to costs associated with the expansion of our domestic life insurance business.

General expenses increased due primarily to elevated convention costs and increased consulting related to the campaigns to expand our market to drive long-term value.

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HOME SERVICE INSURANCE

Detailed results of operations for the Home Service Insurance segment for the periods indicated are as follows:

DOMESTIC INSURANCE

Detailed results of operations for the Domestic Insurance segment for the periods indicated are as follows:

Years ended December 31,

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Investment related gains (losses), net 587 (680)

Other income 21 17

Other income (loss) 28 (30)

Total revenues 79,051 73,469

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Income (loss) before federal income taxes $ 12,133 1,914

In our Home Service Insurance segment, income before federal income tax was $2.5 million in 2024, as compared to $3.0 million in 2023.

The decline is attributed to lower premium revenue from unfavorable persistency on newer policies, investment related losses and higher insurance benefits offset by lower other general expenses.

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

In our Domestic Insurance segment, income before federal income tax was $12.1 million in 2025, as compared to $1.9 million in 2024.

The significant increase was driven by increased premiums and lower insurance benefits paid or provided due to better experience in this segment.

Premium breakout is detailed below.

Years ended December 31,

(In thousands)

Direct life and A&H premiums:

Life & A&H premiums:

Direct Life & A&H premiums:

First year $ 22,061 17,918

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Total direct life and A&H premiums 68,589 58,385

Reinsurance (10,573) (3,842)

Total life and A&H premiums

$ 58,016 54,543

Our life and A&H premiums declined in 2024 compared to 2023 due largely to strategic actions intended to improve sales quality and persistency, which actions led to a decrease in our agent sales force as we focus on these improvements.

Additionally, we believe external economic pressures, such as inflation, have impacted revenue in this segment disproportionately.

Total direct premiums increased in 2025 compared to 2024 due largely to continued first year premium growth in our CLOA final expense business as well as higher renewal premiums due to the large volume of sales in 2024.

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Claims and Surrenders.

Claims and surrender benefits, which are the largest portion of our expenses, are summarized below:

Because of the RGA Agreement, reinsurance premiums ceded also increased significantly, leading to an overall increase in premium revenue in this segment of $3.5 million.

Benefits and Expenses.

Claims and surrender benefits breakout is detailed below.

Years ended December 31,

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Matured endowment benefits 729 692

Property claims (11) 699

A&H and other policy benefits

Total claims and surrenders $ 26,008 28,352

The majority of claims and surrender benefits in our Home Service Insurance segment are death claim benefits.

Death claim benefits increased 4% in 2024 compared to 2023 due to a higher volume of reported claims.

In our Domestic Insurance segment, the majority of claims and surrender benefits is death claim benefits.

Death claim benefits decreased 11% in 2025 compared to 2024 due to a combination of lower volume and our coinsurance agreement with RGA alleviating some of our liability to pay these claims.

We did not have the RGA Agreement during a portion of 2024.

Mortality experience is closely monitored by the Company as a key performance indicator and fluctuates from quarter-to-quarter based on reported claims.

Surrender benefits increased in 2024 compared to 2023.

We believe the impact of inflation is negatively impacting persistency.

Increase in Future Policy Benefit Reserves.

Future policy benefit reserves increased in 2024 compared to 2023 due to better persistency on our inforce block coupled with unfavorable retention on newer issued policies.

Policyholder Liability Remeasurement (Gain) Loss.

In 2024, remeasurement gain was a result of favorable mortality experience compared to our assumptions.

In 2025, remeasurement gain increased significantly as a result of favorable mortality experience compared to our previous assumptions.

Other General Expenses.

Other general expenses decreased by $1.7 million in 2024 compared to 2023 due primarily to ceasing our property insurance business as discussed above.

Other general expenses increased by $0.9 million in 2025 compared to 2024 due to growth in this business.

NON-INSURANCE ENTERPRISES

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Income (loss) before federal income tax $ (9,045) (10,446)

This operating unit represents the administrative support entities to the insurance operations whose revenues are primarily intercompany and have been eliminated in consolidation under U.S.

This operating unit represents the administrative support functions for the insurance operations.

Its revenues are primarily intercompany and have been eliminated in consolidation under U.S.

GAAP, which typically results in a loss.

Revenue in this operating unit consists primarily of net investment income and investment related gains or losses, while expenses consist of other general expenses related to corporate functions.

The loss reported for 2024 increased as other general expenses increased primarily related to the accrual for the trade secret lawsuit.

The loss reported for 2025 decreased mostly due to a $3.5 million legal fee incurred during the second quarter of 2024, which did not recur in 2025, though this was somewhat offset by increased equity incentive compensation program from additional participants and a higher share price, which led to greater costs recognized as these awards vest.

Our investments are an integral part of our business success, as we invest the majority of premiums collected to pay for future benefits and rely on net investment income for our ongoing operations.

The administration of our investment portfolio is handled by our management and a third-party investment manager, pursuant to Board-approved investment guidelines.

As a primary goal of state insurance regulation is to ensure the solvency of an insurance company, state insurance statutes strictly regulate the types of investments that may be made by insurance companies.

The majority of investments are required to be in qualified state, municipal, federal and foreign government obligations and high quality corporate bonds.

To a lesser extent, we may invest in preferred and common stock, limited partnerships and mortgage loans.

In executing investing activities our management and

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third-party investment manager are incorporating environmental, social and governance factors into their respective investment processes as appropriate.

These factors include investing in opportunities to help mitigate climate change by pursuing relevant investments across asset classes.

Our cash and invested assets at December 31, 2025 were $1.5 billion, of which 88% was invested in fixed maturity securities, all of which are classified as available-for-sale.

We closely monitor the duration of our fixed maturity investments, and investment purchases and sales are executed with the objective of having adequate funds available to satisfy our insurance obligations.

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The following table shows the carrying value of our investments by investment category and cash and cash equivalents and the percentage of each to total cash, cash equivalents and invested assets.

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The carrying value of the Company’s fixed maturity securities investment portfolio at December 31, 2025 was $1.3 billion compared to $1.2 billion at December 31, 2024.

As discussed above, this decrease primarily reflects the impact of interest rate sensitivity on the fair value of our fixed maturity securities.

This increase primarily reflects the impact of interest rate sensitivity on the fair value of our fixed maturity securities.

The distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value as of December 31, 2025 did not materially change from December 31, 2024 – the weighted average was “A” at both dates.

Cash and cash equivalents increased as of December 31, 2024 compared to December 31, 2023 and fluctuate from period to period primarily due to the timing of operating and investing activities.

Other long-term investments increased to $93.6 million as of December 31, 2024, as compared to $82.7 million as of December 31, 2023 due to additional funding.

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Cash and cash equivalents decreased as of December 31, 2025 compared to December 31, 2024 and fluctuate from period to period primarily due to the timing of operating and investing activities.

Other long-term investments decreased to $85.4 million as of December 31, 2025, as compared to $93.6 million as of December 31, 2024 primarily due to the fact that we divested from one of our holdings to invest in new opportunities, including investment grade private placement fixed income securities and structured notes.

This reduction was partially counterbalanced by capital contributions to other investments and the impact of changes in the fair market value of our limited partnership holdings.

The following table shows annualized investment yields by segment and on a consolidated basis as of December 31 for each year presented.

Insurance Home

Service Insurance Consolidated

Year International Insurance

Domestic Insurance

2025 4.70 % 4.59 % 4.67 %

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Our fixed maturity investment portfolio, primarily invested in callable securities, has faced challenges due to the sustained low interest rate environment over the past decade.

Many securities were called between 2019 and 2021, necessitating

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reinvestment in lower interest rate fixed maturity assets, which has begun and will continue to impact net investment income and yields.

However, diversification of our investment portfolio into limited partnership investments helped offset that challenging investment environment.

Credit quality is an important feature of our investment guidelines for our fixed maturity securities.

Credit ratings reported for the periods indicated are assigned by a Nationally Recognized Statistical Rating Organization ("NRSRO") such as Moody’s Investors Service and Standard & Poor’s.

A credit rating assigned by a NRSRO is a quality-based rating, with AAA representing the highest quality and D the lowest, with BBB and above being considered investment grade.

If there is no NRSRO rating, the Company may use credit ratings of the NAIC Securities Valuation Office ("SVO") as assigned.

Securities rated by the SVO are grouped in the equivalent NRSRO category as stated by the SVO, and securities that are not rated by a NRSRO are included in the "other" category.

The following table shows the distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value.

Credit quality is an important feature of our fixed maturity securities because it directly affects the likelihood that an issuer will repay its debt—and therefore impacts both risk and return in a bond portfolio.

Credit ratings are assigned by a Nationally Recognized Statistical Rating Organization ("NRSRO") such as Moody’s Investors Service and Standard & Poor’s.

A credit rating assigned by a NRSRO is a quality-based rating, with AAA representing the highest quality (i.e., strong finances and lowest default risk) and D the lowest, with BBB and above being considered high-quality investment grade.

If an issuer does not have a NRSRO rating, we may look at credit ratings assigned by the NAIC Securities Valuation Office ("SVO").

Fixed maturity securities that we hold that are rated by the SVO are grouped together with the bonds held in the equivalent NRSRO category, and securities that are not rated by a NRSRO or SVO are included in the "other" category.

The following table shows the credit ratings of our fixed maturity securities portfolio by carrying value.

(In thousands, except for %)

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Totals $ 1,287,861 100.0 % $ 1,220,961 100.0 %

Our investment policy requires investment primarily in fixed maturity securities that are investment grade.

Non-investment grade securities are typically the result of ratings downgrades of issuers or securities acquired during acquisitions of other companies, as the Company has not purchased below investment grade securities.

Our investment policy requires us to invest primarily in fixed maturity securities that are investment grade.

The small percentage of non-investment grade securities that we hold are primarily the result of ratings downgrades.

Additionally, in the third quarter of 2025, the Company purchased a structured note that includes a component categorized as non-investment grade fixed maturity securities.

December 31, 2025 | 10-K 41

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Obligations of States and Political Subdivisions

The Company’s fixed maturity securities investment portfolio at December 31, 2024 and 2023 included $268.3 million and $287.2 million, respectively, of securities that are obligations of states and political subdivisions, including municipalities (collectively referred to as the municipal fixed maturity security portfolio).

As of December 31, 2024, the Company held municipal fixed maturity securities that include third-party guarantees.

Detailed below is a presentation by credit rating of our municipal fixed maturity securities by funding type.

18% of the Company’s fixed maturity securities investment portfolio at December 31, 2025 consists of municipal bonds, which are securities that are obligations of states and political subdivisions.

A portion of these municipal bonds include third-party guarantees, which enhances a bond's credit rating.

A presentation of our municipal bonds by credit rating and third-party guarantee is below.

December 31, 2025

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Total $ 58,862 59,155 195,983 221,230 13,947 13,962 268,792 294,347 100.0 %

The table below shows the categories in which the Company held investments in special revenue fixed maturity securities that were greater than 10% of fair value based upon the Company's total municipal fixed maturity security portfolio at December 31, 2024.

The table below shows the categories in which we held investments in special revenue municipal bonds that were greater than 10% of the fair value of our total municipal bond portfolio at December 31, 2025.

(In thousands, except for %) Fair

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Transportation 32,662 39,555 12.2 %

The Company's municipal fixed maturity security portfolio is spread across many states.

However, municipal fixed maturity securities from Texas and California comprise the most significant concentration of the total municipal fixed maturity security portfolio as of December 31, 2024.

The Company holds 22% and 16% of its municipal fixed maturity security portfolio in Texas and California issuers, respectively, as of December 31, 2024.

There were no other states or individual issuer holdings that represented or exceeded 10% of the total municipal fixed maturity security portfolio as of December 31, 2024.

The Company's municipal bond portfolio consists of bonds from state and political subdivisions in many states;

however, as of December 31, 2025, municipal bonds from issuers in Texas and California comprised 21% and 17%, respectively, of the portfolio.

There were no other states or individual issuer holdings equal to or greater than 10% of the total municipal bond portfolio as of December 31, 2025.

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The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in Texas at December 31, 2024.

The table below reflects our Texas municipal bonds by credit rating at December 31, 2025.

General Obligation Special Revenue Other Total

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A — — 10,845 14,730 — — 10,845 14,730

BBB — — 2,948 2,920 — — 2,948 2,920

Total $ 25,088 24,921 32,509 38,849 46 55 57,643 63,825

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Total $ 25,088 24,921 32,509 38,849 46 55 57,643 63,825

The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in California at December 31, 2024.

The table below reflects our California municipal bonds by credit rating at December 31, 2025.

General Obligation Special Revenue Other Total

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IMPAIRMENT CONSIDERATIONS RELATED TO INVESTMENTS IN FIXED MATURITY AND EQUITY SECURITIES

The Company assesses available-for-sale ("AFS") fixed maturity securities in an unrealized loss position for expected credit losses.

The Company did not record any credit valuation allowances on fixed maturity securities in 2024 or 2023.

We analyze our available-for-sale ("AFS") fixed maturity securities that are experiencing unrealized losses to ascertain if there is an expectation of credit-related impairments.

We did not record any credit valuation allowances on fixed maturity securities in either 2025 or 2024.

Gross unrealized losses on AFS fixed maturity securities amounted to $154.3 million as of December 31, 2025 and $185.7 million as of December 31, 2024.

This increase in gross unrealized losses during 2024 was a result of the increase in average market interest rates at the end of 2024 as compared to 2023.

The enhancement in gross unrealized losses seen in 2025 stemmed from the rise in average market interest rates at the close of 2025, relative to those at the end of 2024.

Information on both unrealized and realized gains and losses by category is set forth in Part IV.

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As is customary among insurance companies, our insurance company subsidiaries reinsure, with other companies, portions of the life insurance risks they underwrite.

A primary purpose of reinsurance agreements is to enable an insurance company to reduce the amount of risk by reinsuring the amount exceeding the maximum amount the insurance company is willing to retain and help manage risk and strain on statutory capital.

The Company evaluates the maximum amount it's willing to retain from time to time and may increase the amount retained which can lower premiums ceded and thus increase revenues.

Even though a portion of the risk may be reinsured, our insurance company subsidiaries remain liable to perform all the obligations imposed by the policies issued by them and could be liable if their reinsurers were unable to meet their obligations under the reinsurance agreements.

We believe we have established appropriate reinsurance coverage based upon our net retained insured liabilities compared to our surplus.

Our insurance subsidiaries use reinsurance to share life insurance risks with other companies, reducing exposure beyond their chosen retention limits and managing statutory capital.

The Company periodically reviews and may adjust its retention levels, which can affect ceded premiums and revenues.

Despite reinsurance, our subsidiaries remain responsible for policy obligations and may be liable if reinsurers fail to meet their commitments.

By evaluating our surplus in relation to the insured liabilities we maintain after retention, we consider our reinsurance arrangements to adequately provide for flexibility of strategy while protecting against downside risk.

The effect of reinsurance on premiums is as follows.

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The effect of reinsurance on life insurance in force is as follows.

Years ended December 31,

As of December 31,

(In millions)

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Below are our primary capital resources (based on carrying value) at December 31, 2025 and 2024.

(In thousands, except for %)

(In thousands)

Fixed maturity securities $ 1,287,861 1,220,961

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Liquidity refers to a company's ability to generate sufficient cash flows to meet the needs of its operations.

In the year ended December 31, 2024, our operations provided $31.9 million of net cash.

Cash provided by operating activities is an important liquidity metric because it reflects, during a given period, the amount of cash generated that is available to pay operating expenses, invest in our business or make strategic acquisitions.

We manage our insurance operations as described herein in order to ensure that we have stable and reliable sources of cash flows to meet our obligations.

In the year ended December 31, 2025, our operations provided $18.0 million of net cash.

We currently anticipate meeting our short-term and long-term cash needs with cash generated by our insurance operations and from our invested assets.

From time to time we may raise capital by selling shares in our SIP (as defined below) and we may also access our Credit Facility if needed (also as described below).

89% of our investments consist of marketable fixed maturity securities classified as available-for-sale that could be readily converted to cash for liquidity needs.

Additionally, we may raise capital by selling shares in our SIP (as defined below) and may access our Credit Facility if needed (also as described below).

Citizens had no debt at December 31, 2025.

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Cash from Operating Activities.

Cash provided by or used in operating activities is an important liquidity metric because it reflects, during a given period, the amount of cash generated that is available to pay our operating expenses, invest in our business or make strategic acquisitions.

Cash provided by operating activities was $31.9 million and $22.1 million for the years ended December 31, 2024 and 2023, respectively.

Cash used in Investing Activities.

We have traditionally also had significant cash flows from both scheduled and unscheduled investment security maturities, redemptions, and prepayments.

These cash flows, for the most part, are reinvested in new investments.

Net cash outflows from investing activities totaled $27.2 million and $14.5 million for the years ended December 31, 2024 and 2023, respectively.

The investing activities fluctuate from period to period due to timing of securities activities such as calls and maturities and reinvestment of those funds.

We purchased $170.4 million of fixed maturity securities and we also used $17.0 million to purchase other long-term investments in 2025.

88% of our investments consist of marketable fixed maturity securities classified as available-for-sale that could be readily converted to cash for liquidity needs.

PARENT COMPANY LIQUIDITY AND CAPITAL RESOURCES

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We manage our insurance operations in order to ensure that we have stable and reliable sources of cash flow to meet our obligations.

As we have discussed, we have been growing our domestic business by developing new products and expanding our distribution channels, which has led to an increase in first year premiums (i.e., new sales) of 71% from 2023 to 2024.

As we have discussed, we have been growing our domestic CLOA business by developing new products and expanding our distribution channels, which has led to significant increases in first year premiums (i.e., new sales) in our Domestic Insurance segment in the last two years.

When selling new policies, we incur upfront policy acquisition costs, such as agent commission payments.

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Two of our insurance subsidiaries are members of the Federal Home Loan Bank ("FHLB") of Dallas.

FHLB membership provides the insurance subsidiaries with access to various

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low-cost collateralized borrowings and funding agreements.

FHLB membership provides the insurance subsidiaries with access to various low-cost collateralized borrowings and funding agreements.

While not the only source of additional liquidity, the FHLB could provide the insurance subsidiaries with an additional source of liquidity, if needed.

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Cash flow projections and cash flow tests under various market interest rate scenarios are performed annually to assist in evaluating liquidity needs and adequacy.

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Trends, Demands and Restrictions on our Uses of Cash

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Alternatively, if the policyholders were to leave the money on deposit with the Company at interest, our profitability could be impacted if the product guaranteed rate is higher than the market rate we are earning on our investments.

We currently anticipate that our available operating cash flow and capital resources will be adequate to meet our needs for funds, but we are closely monitoring our policyholder behavior patterns, and in 2024, introduced a new product designed to allow policyholders with maturing endowments to purchase a new life insurance policy.

Surrender benefits, which have been higher than usual the last several years, slightly decreased during 2024.

In order to mitigate the risk of early policyholder surrenders, we include provisions in our insurance policies, such as surrender charges, that help limit and discourage early withdrawals, but as many of our policies have reached the age where surrender charges have expired or significantly decreased, we have experienced high levels of surrenders.

We currently anticipate that our available operating cash flow and capital resources will be adequate to meet our needs for funds, and we are closely monitoring our policyholder behavior patterns, and in 2024, introduced a new product designed to allow policyholders with maturing endowments to purchase a new life insurance policy.

Surrender benefits, which have been high the last several years, slightly decreased during 2025.

In order to mitigate the risk of early policyholder surrenders, we include provisions in our insurance policies, such as surrender charges, that help limit and discourage early withdrawals, but as many of our policies reach the age where surrender charges have expired or significantly decreased, we have experienced high levels of surrenders.

We believe that surrenders have been high due to other reasons, including the loss of one of our biggest distributors in Venezuela in 2018, increasing interest rates, which may encourage policyholders to seek higher rates of return in different investment products, post-pandemic beliefs that life insurance may not be as important as it was during the pandemic, and inflationary pressures, which may cause policyholders to want the cash values of their policies due to decreased purchasing power elsewhere.

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Our product pricing assumes a certain mortality rate and thus a primary liquidity concern is the risk of higher than expected mortality experience.

Our death benefit payments increased in the year ended December 31, 2024, which is expected as the amount of insurance issued has increased significantly over the past couple of years.

Our death benefit payments decreased in the year ended December 31, 2025 as compared to 2024, partially as a result of RGA paying a portion of the death benefits pursuant to the RGA Agreement.

Another significant use of cash is payment of commissions.

In our CICA Domestic business, we pay advance commissions on some of our insurance products, meaning we pay an agent a portion of their first-year commission immediately upon sale of a policy, rather than "as earned", or when premiums are received by us.

In our Domestic Insurance segment, we pay advance commissions on some of our insurance products, meaning we pay an agent a portion of their first-year commission immediately upon sale of a policy, rather than "as earned", or when premiums are received by us.

Because of this, another liquidity concern is that rapid growth in first year sales of these products creates a significant increase in commission payments.

CICA Domestic sales have increased significantly since the third quarter of 2023.

To offset some of this strain on our capital, we entered into the RGA Agreement in the second quarter of 2024 and elected to cede 50% of our final expense business to RGA, which alleviates some of the strain.

We may also seek other

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options, such as loans at the holding company level (from the Credit Facility or otherwise) that would allow us to reduce the liquidity risk should CICA Domestic's required commission payments exceed current resources.

Since CLOA sales have increased significantly since the third quarter of 2023, in order to offset some of this strain on our capital, we entered into the RGA Agreement in the second quarter of 2024 and elected to cede 50% of our final expense business to RGA.

We may also seek other options, such as loans at the holding company level (from the Credit Facility or otherwise) that would allow us to reduce the liquidity risk should required commission payments exceed current resources.

Commitments and Contingencies , as well as Part I.

Legal Proceedings - Trade Secret Lawsuit, for a discussion of the trade secret lawsuit, which could negatively impact our cash if we do not succeed in our appeal.

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Regulatory Restrictions on our Use of Cash

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Should the ratio of adjusted statutory capital to control level RBC fall below 200% for our domestic companies, a series of remedial actions by the affected company would be required.

Additionally, we have a Capital Maintenance Agreement between Citizens and CICA Domestic, Citizens' wholly-owned subsidiary domiciled in Colorado, that would require Citizens to contribute capital to CICA Domestic in order to maintain a RBC level above 350%.

At December 31, 2024, our domestic insurance subsidiaries were above the required minimum RBC levels and CICA Domestic was above 350%.

For CICA Domestic, commission advances are non-admitted assets, which means we need capital to "replace" these assets in order to maintain required regulatory capital levels.

As discussed above, management is investigating various options in order to reduce both regulatory capital and liquidity risk should the capital required to support this pace of growth exceed current resources.

Citizens may have to contribute capital to CICA Domestic to maintain the required RBC ratio.

Additionally, we have a Capital Maintenance Agreement between Citizens and CLOA, Citizens' wholly-owned subsidiary domiciled in Colorado, that would require Citizens to contribute capital to CLOA in order to maintain a RBC level above 350%.

At December 31, 2025, our domestic insurance subsidiaries were above the required minimum RBC levels and CLOA was above 350%.

CICA International is a Puerto Rico domiciled company.

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

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

At December 31, 2025, CICA International exceeded the required minimum capital and related ratio.

Any capital that Citizens is required to contribute to its insurance subsidiaries would negatively impact the holding Company's capital resources and liquidity.

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CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

Our material cash requirements from known contractual and other obligations primarily relate to our policy liabilities.

Expected timing of those payments are as follows:

As a life insurance company, the vast majority of our known contractual and other obligations relate to our future policy benefits payable.

These amounts have been projected utilizing assumptions based upon our historical expe rience and anticipated future experience.

Because life insurance is a long-duration product, we believe that 81% of our future policy benefit reserves will be payable in more than 5 years, due to the ages of our insureds, years to policy maturity, and our past experience with persistency, claims and surrenders.

Expected timing of those payments and other known obligations are as follows:

Year ended December 31, 2025

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Total contractual obligations $ 1,485,715 92,477 112,738 104,721 1,175,779

Future Policy Benefit Reserves and Policy Claims Payable.

As a life insurance company, the vast majority of our known cash requirements are for payments related to future policy benefits and policy claims payable, which we estimated in the table above.

These amounts have been projected utilizing assumptions based upon our historical experience and anticipated future experience.

We have reflected the majority of the obligation in the more than five-years category due to the age of the insured, years to policy maturity and our past experience with claims and surrenders.

Other Obligations.

The other obligations are related to the legal accrual for litigation expense awarded in the trade secret lawsuit, as disclosed in Part I.

Other obligations are related to the legal accrual for litigation expense awarded in the trade secret lawsuit, as disclosed in Part I.

Legal Proceedings and in Part IV.

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In addition, we do not hedge our investment positions.

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We have no known material cash requirements other than those described above.

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Management determines the appropriate classification at the time of purchase.

The classification of securities is significant since it directly impacts the accounting for unrealized gains and losses on

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The classification of securities is significant since it directly impacts the accounting for unrealized gains and losses on securities.

Fixed maturity securities are classified as held-to-maturity and carried at amortized cost when management has the positive intent and the Company has the ability to hold the securities to maturity.

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Such costs include the incremental direct costs of contract acquisition, such as sales commissions;

the portion of employees’ total compensation and payroll-related fringe benefits related directly to time spent performing acquisition activities, such as underwriting, issuing, and processing policies for contracts that have actually been acquired;

the portion of employees’ total compensation and payroll-related fringe benefits related directly to time spent performing acquisition activities, such as underwriting, issuing, and processing

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policies for contracts that have actually been acquired;

and other costs related directly to acquisition activities that would not have been incurred if the contract had not been acquired.

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DAC is amortized on a constant level basis over the expected term of the related contracts to approximate straight-line amortization.

For the Life Insurance segment, the constant level basis used is policy count in force.

For the Home Service Insurance segment, the constant level basis used is face amount in force.

For CICA International and CLOA, the constant level basis used is policy count in force.

For SPLIC, the constant level basis used is face amount in force.

The constant level bases used for amortization are projected using mortality and lapse assumptions that are based on the Company’s experience, industry data, and other factors at the end of each reporting period and are consistent with those used for the liability for future policy benefit life reserves.

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If those assumptions are updated, the DAC amortization basis is recalculated and the impact of the assumption change will be reflected in the cohort level amortization in future periods.

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POLICY LIABILITIES

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

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

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

Annually, the Company completes experience studies to evaluate mortality and lapse assumptions.

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For current year issues, the locked-in discount rate is the average of the current year quarterly discount rates and will change throughout the year as new discount rates are calculated, with the change reflected in net income.

TAX ACCOUNTING

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

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in net income in the period in which the change is enacted.

CICA International and CICA Bermuda, wholly-owned subsidiaries of Citizens, are considered controlled foreign corporations for U.S.

federal tax purposes.

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

federal income tax return.

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

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

As required by U.S.

GAAP, we evaluated the recoverability of deferred tax assets and the establishment of a valuation allowance, if necessary, to reduce the deferred tax asset to an amount that is more likely than not to be realized.

For the years ended December 31, 2024 and 2023, changes in market conditions, including rising interest rates, resulted in deferred tax assets related to the net unrealized capital losses in our investment portfolio.

When assessing the need for a valuation allowance on the unrealized capital loss deferred tax assets, we asserted a tax planning strategy to hold a majority of the underlying securities to recovery or maturity.

Our ability to assert such a tax planning strategy is dependent upon factors such as our asset/liability matching process, overall investment strategy, projected future product sales and expected liquidity needs.

In the event these estimates differ from our prior estimates due to the receipt of new information, we may be required to significantly change the income tax expense recorded in the consolidated financial statements.

This includes a further significant decline in the value of assets incorporated into our tax planning strategies which could lead to an increase in our valuation allowance on deferred tax assets having an adverse effect on current and future results.

RECENT ACCOUNTING PRONOUNCEMENTS

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Summary of Significant Accounting Policies in the notes to our consolidated financial statements.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

What changed 10-K

Item 7. Management’s Discussion and Analysis