What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-06 · 259 added, 339 removed, 398 unchanged (60% of the section changed)

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The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Securities and Exchange Commission ("SEC") maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC.

The public can obtain any documents that the Company files with the SEC at http://www.sec.gov.

We also make available, free of charge, through our website (http://www.citizensinc.com), our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Section 16 Reports filed by officers and directors, news releases, and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the SEC.

We are not including any of the information contained on our website as part of, or incorporating it by reference into, this Form 10-Q.

Securities and Exchange Commission ("SEC") maintains a website at www.sec.gov that contains reports, proxy statements, and other information regarding issuers, including the Company, that file electronically with the SEC.

Our own website, www.citizensinc.com, provides free access to the Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Section 16 filings made by our executive officers and directors, and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

These materials are made available on our website as soon as reasonably practicable after we file them with, or furnish them to, the SEC.

Information contained on, or accessible through, our website is not incorporating by reference into, and should not be considered part of, this Form 10-Q.

OBJECTIVE OF OUR MANAGEMENT'S DISCUSSION AND ANALYSIS

We refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations as our “MD&A”.

The objective of our MD&A is to provide investors with information in order to assess the material changes in our financial condition from December 31, 2024 to September 30, 2025 and the material changes in our results of operations for the three and nine months ended September 30, 2025 as compared to the same periods in 2024.

The objective of our MD&A is to provide investors with information in order to assess the material changes in our financial condition from December 31, 2025 to March 31, 2026 and the material changes in our results of operations for the three months ended March 31, 2026 as compared to the same period in 2025.

We also discuss in the MD&A any trends that we believe may materially affect our future operations or financial condition.

For over 55 years, Citizens has been fulfilling the needs of our policyholders and their families by providing insurance products that offer both living and death benefits.

We conduct insurance related operations through our insurance subsidiaries, which provide benefits to policyholders and their beneficiaries globally.

We conduct insurance related operations through our insurance subsidiaries, which provide benefits to policyholders globally.

We specialize in offering primarily individual whole life insurance, endowment products and final expense insurance in niche markets where we believe we can optimize our competitive position.

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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.

In addition to paying and reserving for insurance benefits that we pay to our policyholders, our expenses consist primarily of the costs of selling our insurance products (e.g., commissions, underwriting, marketing expenses), operating expenses and income taxes.

September 30, 2025 | 10-Q 39

In addition to reserving for and paying insurance benefits to our policyholders, our expenses consist primarily of the costs of selling our insurance products (e.g., commissions, underwriting, marketing expenses), operating expenses and income taxes.

We operate in two segments - International Insurance and Domestic Insurance.

Our International Insurance segment operates through CICA Life, A.I., a Puerto Rican insurer, referred to as "CICA International".

March 31, 2026 | 10-Q 34

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

We operate in two segments - Life Insurance and Home Services Insurance.

Our Life Insurance segment operates through our subsidiaries CICA Life Insurance Company of America, referred to as "CICA Domestic" and CICA Life, A.I., a Puerto Rican insurer, referred to as "CICA International".

Our Home Services Insurance operates primarily through Security Plan Life Insurance Company in Louisiana.

Insurance segment operates through our subsidiaries CICA Life Insurance Company of America ("CLOA"), Security Plan Life Insurance Company ("SPLIC") and Magnolia Guaranty Life Insurance Company ("MGLIC").

EVENTS THAT IMPACTED OUR BUSINESS

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"Management's Discussion and Analysis of Financial Condition and Results of Operations - Events that Impacted Our Business" in the 2025 Form 10-K .

and (3) the discussion of the BlackRock write-down in Part 1.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Events that Impacted Our Business" in our Form 10-Q for the quarter ended March 31, 2025.

FINANCIAL HIGHLIGHTS

Net income before federal income tax in the three months ended September 30, 2025 increased to $4.5 million from $3.0 million in the three months ended September 30, 2024 due to a $1.1 million increase in total revenues and a $0.4 million decrease in total benefits and expenses.

The primary factors that drove these changes were:

• $1.7 million increase in net investment income;

• $1.0 million increase in other income related to issuance of supplemental contracts;

partially offset by:

• $2.1 million decline in investment related gains and losses primarily related to the BlackRock write-down.

Net income before federal income tax in the nine months ended September 30, 2025 decreased to $9.6 million from $11.3 million in the same period in 2024.

The factors that drove this decrease were:

• $3.3 million decrease in investment related gains and losses primarily related to the BlackRock write-down;

• $3.8 million increase in insurance benefits paid or provided due to increased matured endowments in our international business;

partially offset by:

• $2.4 million increase in total premium revenue;

• $1.7 million increase in other income.

At September 30, 2025

Income before federal income tax increased by $4.2 million in the three months ended March 31, 2026 compared to the same period in 2025, to $2.4 million from a loss of $1.8 million, respectively.

The primary factor that drove this was a $3.9 million increase in investment related gains and losses, reflecting the absence of the BlackRock write-down recorded in the prior year period.

Financial Condition at March 31, 2026

• Total assets of $1.7 billion

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• Adjusted book value per share of Class A common stock of $6.48 1

• Diluted earnings per share of Class A common stock for the nine months ended of $0.14

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.

September 30, 2025 | 10-Q 40

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

• Diluted earnings per share of Class A common stock for the three months ended of $0.04

The Factors that Drive our Operating Results

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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.

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 period, 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 segments and actively manage new product margins and in-force profitability.

Product mix can have an impact on profitability - selling 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 has been trending towards sales of our newer whole life products, both internationally and domestically, which have a smaller margin than sales of 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.

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 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 in our International

March 31, 2026 | 10-Q 35

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

Insurance segment to continue due to the anticipated volumes of endowment maturities being replaced by higher volumes of whole life products.

Premium Revenues.

Premium revenues consist of all money deposited by customers into new and existing insurance policies.

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

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 RGA Reinsurance Company ("RGA") and our other reinsurers.

Direct premium revenue increased 4% in the three months ended September 30, 2025, to $46.6 million from $44.7 million in the three months ended September 30, 2024 and increased 6% in the nine months ended September 30, 2025, to $135.3 million from $127.7 million in the nine months ended September 30, 2024.

This increase was driven by sales of CICA Domestic products.

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.

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 4% in the three months ended March 31, 2026 to $43.9 million from $42.4 million in the three months ended March 31, 2025.

This increase was driven by sales and renewal premiums in our Domestic Insurance segment.

First Year Premiums.

Direct first year premiums increased 8% in the three months ended September 30, 2025, to $9.5 million from $8.8 million in the three months ended September 30, 2024 and increased 23%, to $27.8 million in the nine months ended September 30, 2025, compared to $22.6 million in the nine months ended September 30, 2024, including 29% growth in our Life Insurance segment, driven by sales of our newer products and an increased number of producing agents.

First year premium growth was primarily in our new CICA Domestic final expense business.

September 30, 2025 | 10-Q 41

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

Direct first year premiums increased 2% in the three months ended March 31, 2026 to $9.0 million from $8.8 million in the three months ended March 31, 2025, driven by sales in our Domestic Insurance segment and an increased number of producing agents.

First year premium growth primarily resulted from our CLOA final expense business.

Renewal Premiums.

Our direct renewal premium revenues in the three and nine months ended September 30, 2025 increased primarily due to strong sales in 2024 leading to higher number of policies paying renewal premiums in the current periods.

Our direct renewal premiums in the three months ended March 31, 2026 increased primarily due to strong sales in 2025 in our Domestic Insurance segment, leading to higher number of policies paying renewal premiums in the current period.

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 for the three and nine months ended September 30, 2025 compared to the same prior year periods.

In the three-month period, we received a one-time dividend of $1.7 million from one of our limited partnership investments due to the sale of one of its assets.

Additionally, we have begun investing in investment grade private placement fixed income securities and structured notes where we expect higher returns;

this investment strategy led to slightly higher net investment income in the three and nine month periods.

Claims and Surrenders.

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 the three and nine months ended September 30, 2025 compared to the prior year periods,

• death claim benefits decreased in our Life Insurance segment due to a combination of lower volume of claims and our coinsurance agreement with RGA alleviating some of our liability to pay these claims than in the prior year periods,

• surrenders were relatively flat, and

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

September 30, 2025 | 10-Q 42

Our net investment income decreased for the three months ended March 31, 2026 compared to the same prior year period.

Total investment income increased for the three months ended March 31, 2026 compared to the same prior year period as we began investing in investment grade private placement credit, where we expect higher returns.

This increase was outweighed by non-recurring fund fees due to the underperformance of the BlackRock middle market limited partnership.

Excluding one time and unanticipated events, we expect our

March 31, 2026 | 10-Q 36

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

net investment income to increase, as we have begun investing in investment grade private placement credit, where we expect higher returns.

Claims and Surrenders.

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 graph below.

Operating Expenses.

Operating expenses are our second largest expense and thus also drive our operating results.

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

Our operating expenses increased in the three months ended September 30, 2025, but decreased in the nine month period as compared to the prior year periods.

Despite 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, this expense was lower in the nine month period due to the accrual of $3.5 million in legal fees in the prior year.

These were fees awarded to certain defendants in the trade secret lawsuit.

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

Additionally, we receive expense allowances in CICA Domestic from RGA under our coinsurance agreement that was not in effect during the first part of 2024.

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

Our operating expenses increased by $0.7 million in the three months ended March 31, 2026, as compared to the prior year period due to continued investment in supporting the growth of our business.

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.

September 30, 2025 | 10-Q 43

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.

March 31, 2026 | 10-Q 37

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

We expect to see a rebalancing in our mix of business arising due to the anticipated volume of maturities in our international endowment business, as well as continued domestic growth in the Life Insurance segment, which has been discussed previously.

Recently, we have experienced a rebalancing in our business mix due to the volume of maturities in our international endowment business and continued growth in the 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 negatively affected our operating results by $1.0 million compared to the same prior year quarter due to unfavorable experience in our International Insurance segment.

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

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 the third quarter of 2025, this review results in favorable changes to mortality, lapse, and accrual assumptions in our Home Service segment and in CICA Domestic, consistent with emerging trends in Company experience.

Conversely, this review resulted in additional reserves in our international business from better than expected retention of our endowment products.

Excluding the impact of assumption changes, the Company's results for actual variances from expected experience for the nine months ended September 30, 2025 was $1.5 million net remeasurement loss and for the nine months ended September 30, 2024 was a $2.6 million net measurement loss.

OUR OPERATING SEGMENTS

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 a detailed analysis.

INSURANCE ISSUED AND INFORCE

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

Nine Months Ended September 30, 2025 2024

Three Months Ended March 31, 2026 2025

Issued Number of

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Issued Average Policy

Life Insurance:

International $ 88,357,208 870 $ 101,560 $ 106,875,869 942 $ 113,456

Domestic 147,347,717 17,017 8,659 148,285,315 14,819 10,006

Total Life Insurance 598,385,897 36,697 16,306 701,270,817 35,475 19,768

Home Service Insurance 179,216,117 13,591 13,186 175,988,517 13,800 12,753

Total $ 235,704,925 17,887 $ 255,161,184 15,761

In the first nine months of 2025, we issued $777.6 million in new insurance as we continued to grow our inforce business with our newer products tailored to our specific markets.

In our Life Insurance segment, implementation of new initiatives in CICA Domestic, 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 f ace amounts , which led to a lower amount of insurance issued despite a higher number of policies issued.

CICA International benefited from increased sales of our whole life product, which accounted for 66% of total insurance issued in CICA International for the nine months ended September 30, 2025.

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

Insurance issued in our Home Service Insurance segment increased 2% for the nine months ended September 30, 2025 compared to the prior year period.

We continue our strategic actions intended to improve sales quality and persistency, which resulted in higher insurance 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.

September 30, 2025 | 10-Q 44

In the first three months of 2026, we issued $235.7 million in new direct insurance.

The number of insurance policies issued, average policy face amount and total insurance issued in our International Insurance segment decreased in the three months ended March 31, 2026 as compared to the prior year period due to lower volume and product mix.

During the first three months of 2026, a larger proportion of our sales was comprised of our single premium product aimed at replacing maturing endowments, which has a $100,000 maximum face value, as well as other endowment products.

Our endowment products generally have lower policy face amounts than our whole life product.

In our Domestic Insurance segment, we continue to experience strong sales and increased number of policies issued of our final expense products.

The use of information to enhance underwriting decisions with additional medical and lab data from third parties is resulting in issuance of policies with lower face amounts, as expected.

We also believe 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 periods indicated is shown below.

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.

March 31, 2026 | 10-Q 38

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

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

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

CONSOLIDATED RESULTS OF OPERATIONS

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

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands) 2026 2025

Life insurance $ 42,872 42,461 125,158 122,823

Accident and health insurance 431 452 1,330 1,324

Property insurance — (16) — (18)

$ 39,938 39,797

Net investment income 17,304 17,377

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Total revenues $ 59,720 55,652

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands)

2025 2024 2025 2024

Life and A&H premiums:

Direct premiums:

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Renewal 34,962 33,533

Total direct life and A&H premiums

Total direct premiums

43,932 42,350

(3,994) (2,553)

Total life and A&H premiums

Total premiums

$ 39,938 39,797

September 30, 2025 | 10-Q 45

Our first year direct premiums increased 2% in the three months ended March 31, 2026 compared to the same period in 2025, due to sales and expanded distribution in our Domestic Insurance segment.

Renewal premiums also increased from strong first year sales in 2025 in our Domestic Insurance segment, leading to higher number of policies paying renewal premiums in the current period, which more than offset the impact from the high level of surrenders during the last few years and increasing matured endowment benefits paid in our International Insurance segment which has lowered the number of policies paying renewal premiums in this segment.

Reinsurance premiums ceded increased in the three months ended March 31, 2026 compared to the same period in 2025.

We have a coinsurance agreement with RGA Reinsurance Company ("RGA") in order to provide more capacity for growth in our Domestic Insurance segment.

Since we cede 50% of the direct premiums we receive for our CLOA final expense products to RGA, as sales of these products increase, reinsurance ceded to RGA also increases.

March 31, 2026 | 10-Q 39

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

Our first year direct premiums increased 8% and 23% in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024, due to sales of our newer products in our Life Insurance segment and expanded domestic distribution.

Renewal premiums increased from strong first year sales in 2024 in our Life Insurance segment leading to higher number of policies paying renewal premiums in 2025, which more than offset the impact from the high level of surrenders during the last few years and increasing matured endowment benefits paid in the international portion of our Life Insurance segment.

Reinsurance premiums ceded increased in the three and nine months ended September 30, 2025 compared to the same periods in 2024 due to the coinsurance agreement we entered into with RGA in the second quarter of 2024.

Net Investment Income.

A summary of our net investment income and annualized net investment income performance is as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

A summary of our net investment income performance is as follows:

Three Months Ended

(In thousands, except for %) 2026 2025

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Policy loans 1,267 1,369

Long-term investments 2,620 1,151 4,517 3,643

Other investment income 138 230 446 651

Other long-term investments

Total investment income 18,457 18,036

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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 net fixed maturity investment portfolio, primarily invested in callable securities, has faced challenges as many securities were called between 2019 and 2021, necessitating reinvestment in low interest rate fixed maturity assets, which impact 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 structured notes, while maintaining a prudent risk profile.

Gross investment income from long-term investments increased as we received a $1.7 million dividend from one limited partnership investment due to a sale of one of its assets.

Our 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.

As discussed above, net investment income is down slightly for the three months ended March 31, 2026 as a result of higher investment expenses when compared to prior year quarter.

Investment Related Gains (Losses), Net.

We recorded investment related losses of $1.3 million and $1.7 million during the three and nine months ended September 30, 2025, respectively, compared to investment related gains of $0.8 million and $1.5 million during the same prior year periods.

The losses are primarily related to the non-cash write-down of our BlackRock ESG investment during 2025.

We recorded investment related gains of $1.0 million during the three months ended March 31, 2026 compared to investment related losses of $2.9 million during the same prior year period.

The losses in the prior year period are primarily related to the non-cash write-down of our BlackRock 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.

however, 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.

Supplemental contracts offer our

September 30, 2025 | 10-Q 46

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.

March 31, 2026 | 10-Q 40

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

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

BENEFITS AND EXPENSES

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands) 2026 2025

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Claims and Surrenders.

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands) 2026 2025

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Total claims and surrenders $ 39,653 40,098

Death claim benefits decreased in the three and nine months ended September 30, 2025 compared to the same periods in 2024 due to both lower volume and our coinsurance agreement with RGA, which alleviates some of our liability to pay death claims.

We did not have this agreement during the first quarter of 2024.

Many of our endowment policies are reaching their contractual maturity dates and thus matured endowment benefits increased in the three and nine months ended September 30, 2025 compared to the prior year periods.

We anticipated these increases in 2025 based upon the scheduled maturity of the contracts.

We expect continued year-over-year increases in matured endowment benefits throughout the remainder of 2025, then expect the

September 30, 2025 | 10-Q 47

Death claim benefits increased in the three months ended March 31, 2026 compared to the same period in 2025 due to a higher volume of claims.

While we maintain diligent oversight of claims activities, we expect a rise in line with the expansion of our business.

Many of these death claims are expected to be partially offset by our reinsurance coverage.

The vast majority 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 8% in the three months ended March 31, 2026 compared to the prior year period and can vary from one period to another.

We continue to focus efforts on retention initiatives.

March 31, 2026 | 10-Q 41

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

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

Many of our endowment policies are reaching their contractual maturity dates and thus matured endowment benefits increased slightly in the three months ended March 31, 2026 compared to the prior year period.

Compared to peak endowment activity in 2025, we expect maturity benefits to decrease throughout 2026.

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 better persistency (i.e., more policies on which we expect to pay future benefits) and decrease when we have lower sales and persistency.

In the three and nine months ended September 30, 2025, the change in future policy benefit reserves decreased significantly as compared to the prior year periods despite the increase in our inforce business, due to the amount of reserves released in connection with matured endowments.

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 three months ended March 31, 2026, the change in future policy benefit reserves decreased compared to the prior year period despite the increase in our inforce business, driven by reserves released in connection with policyholder benefits payouts.

Policyholder Liability Remeasurement (Gain) Loss.

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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.

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.

In the three months ended March 31, 2026, the remeasurement (gain) loss was negatively affected by unfavorable experience in our International Insurance segment.

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.

Although first year sales increased in the three and nine months ended September 30, 2025 as compared to the same periods in 2024, commissions decreased in the three and nine months ended September 30, 2025 due to our coinsurance agreement with RGA where they share in commission expenses.

Although first year sales increased in the three months ended March 31, 2026 as compared to the same period in 2025, commissions decreased in the three months ended March 31, 2026 due to more sales of our single premium product offered to policyholders with maturing endowments in the International Insurance segment, which has a lower commission rate than other products.

Other General Expenses.

Total general expenses increased $1.2 million in the three months ended September 30, 2025 and decreased $0.6 million in the nine months ended September 30, 2025 compared to the same periods in 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 second quarter of 2024 due to the trade secret lawsuit.

Total general expenses increased $0.7 million in the three months ended March 31, 2026 compared to the same period in 2025 due to continued investment in supporting the growth of our business.

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

3 unchanged sentences

Amortization of Deferred Policy Acquisition Costs.

Amortization of DAC increased in the three and nine months ended September 30, 2025, compared to the same periods in 2024.

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

Our deferred policy acquisition costs (DAC) are 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 for the three and nine months ended September 30, 2025 resulting in effective tax rates of 46.0% and 24.5% for the three and nine months ended September 30, 2025, compared to 8.1% and (0.2)% for the same periods in 2024.

The increase in the current quarter primarily reflects higher taxable U.S.

income and discrete tax adjustments recorded during the period.

Excluding the discrete tax adjustments for the period, the effective tax rate for the period would be 24.6%.

In the three months ended September 30, 2025, the Company recognized a $0.8 million return-to-provision true-up related to 2024 Subpart F income adjustments from partnership investments, which increased tax expense for the quarter.

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

September 30, 2025 | 10-Q 48

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MANAGEMENT'S DISCUSSION & ANALYSIS

permanent tax difference and therefore included in the Company's effective tax rate calculation.

Tax expense increased in the current period as compared to prior year, reflecting higher taxable income.

See Part I, Item 1, Note 11.

2 unchanged sentences

We operate in two business segments:

Life Insurance and Home Service Insurance.

International Insurance and Domestic Insurance.

These segments are reported in accordance with U.S.

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

GAAP net income (loss) before federal income taxes for these segments.

The Company's Other Non-Insurance Enterprises include non-insurance operations such as IT and corporate-support functions, which are included in the table presented below to properly reconcile the segment information with the consolidated financial statements of the Company.

GAAP income (loss) before federal income tax for these segments.

The Company's Other Non-Insurance Enterprises include non-insurance operations such as IT and corporate-support functions, which are

March 31, 2026 | 10-Q 42

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MANAGEMENT'S DISCUSSION & ANALYSIS

included in the table presented below to properly reconcile the segment information with the consolidated financial statements of the Company.

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

Three Months Ended Nine Months Ended

September 30, September 30,

Three Months Ended

(In thousands) 2026 2025

Income (loss) before federal income tax:

Life Insurance $ 3,535 4,416 11,926 17,688

Home Service Insurance 2,978 (80) 4,705 1,954

International Insurance

$ 3,605 (195)

Domestic Insurance

Total segments 4,856 363

2 unchanged sentences

$ 2,374 (1,787)

September 30, 2025 | 10-Q 49

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MANAGEMENT'S DISCUSSION & ANALYSIS

LIFE INSURANCE

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

Three Months Ended Nine Months Ended

September 30, September 30,

INTERNATIONAL INSURANCE

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

Three Months Ended

(In thousands) 2026 2025

Life insurance $ 32,612 32,005 94,030 91,105

Accident and health insurance 173 196 552 562

$ 25,198 25,608

Net investment income 12,004 12,131

13 unchanged sentences

Amortization of deferred policy acquisition costs 3,552 3,466

Amortization of cost of insurance acquired 18 26 60 81

Total benefits and expenses 36,418 36,533

Income before federal income tax

Income (loss) before federal income tax

$ 3,605 (195)

In the three months ended September 30, 2025, income before federal income tax in the Life Insurance segment decreased by $0.9 million despite higher first year and renewal direct premiums, higher other income due to supplemental contracts and higher net investment income.

This decrease was driven by a $3.0 million decrease in investment related gains and losses and a $1.4 million increase in insurance benefits paid or provided due to increased matured endowments in CICA International.

Commissions were lower despite higher first year sales due to our CICA Domestic coinsurance agreement with RGA.

In the nine months ended September 30, 2025, income before federal income tax decreased despite a $2.9 million increase in premiums, higher other income and higher net investment income.

The decrease was driven by a $3.9 million decrease in investment related gains and losses primarily related to the BlackRock write-down;

and a $6.4 million increase in insurance benefits paid or provided due to increased matured endowments in CICA International.

September 30, 2025 | 10-Q 50

In our International Insurance segment, income before federal income tax was $3.6 million in the three months ended March 31, 2026 compared to a loss before federal income tax of $0.2 million in the prior year period.

March 31, 2026 | 10-Q 43

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MANAGEMENT'S DISCUSSION & ANALYSIS

Life Insurance segment premium breakout is detailed below.

Three Months Ended Nine Months Ended

September 30, September 30,

was driven by a $4.1 million increase in investment related gains and losses primarily related to the BlackRock write-down in the prior year period.

Premium breakout is detailed below.

Three Months Ended

(In thousands) 2026 2025

5 unchanged sentences

Total premiums $ 25,198 25,608

Direct premiums increased by $2.0 million and $8.1 million in the three and nine months ended September 30, 2025, respectively, as compared to the same periods in 2024.

The increase was driven by sales of our newer products, including our newly launched single premium product designed specifically for the international market, which aims to attract business that is reaching maturity, and an increased number of producing agents selling our final expense products in CICA Domestic.

Ceded reinsurance premiums increased due to the CICA Domestic coinsurance agreement with RGA entered into in the second quarter of 2024.

While CICA Domestic 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 three and nine months ended September 30, 2025 and 2024.

Three Months Ended Nine Months Ended

September 30, September 30,

Direct premiums decreased by $0.5 million in the three months ended March 31, 2026 compared to the same period in 2025 mainly due to the impact the matured endowments have had on renewal premiums.

Our International Insurance segment derives its premiums from policyholders residing in over 80 different countries across the globe.

The following table sets forth our premiums by location for the three months ended March 31, 2026 and 2025.

Three Months Ended

(In thousands) 2026 2025

International premiums:

Colombia $ 6,825 6,554

Ecuador 3,527 3,421 10,093 9,610

Taiwan 3,406 3,886

Venezuela 3,178 3,350

Ecuador 2,996 3,200

Argentina 2,602 2,096

Other non-United States 9,717 9,935 28,414 28,282

Total international premiums 29,801 30,006 86,823 86,476

United States premiums

6,952 4,507 19,084 10,211

Reinsurance and change in premium accruals

2 unchanged sentences

$ 25,198 25,608

Sales in Taiwan have been declining recently due to 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 premiums revenues, due to the strength of the US dollar compared to the local currency and their difficulties to obtain dollars.

Net Investment Income.

Our net investment income increased for the three and nine months ended September 30, 2025 compared to the same prior year periods.

In the three-month period, we received a one-time dividend of $1.7

September 30, 2025 | 10-Q 51

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million from one of our limited partnership investments due to the sale of one of its assets.

Additionally, we have begun investing in investment grade private placement fixed income securities and structured notes;

this investment strategy led to slightly higher net investment income in the three and nine month periods.

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

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.

We recorded investment related losses of $2.1 million and $2.2 million during the three and nine months ended September 30, 2025, respectively, compared to investment related gains of $0.9 million and $1.7 million during the same prior year periods.

These fluctuations in investment-related gains and losses were primarily influenced by changes in the estimated fair market value of our limited partnership investments.

Notably, the loss for the both three and nine months ending September 30, 2025, was largely attributed to a write-down in the estimated fair market value of our ESG BlackRock investment.

This decline was significant enough to outweigh the gains from other investments.

Investment related gains and losses improved in the three months ended March 31, 2026 compared to the prior year period largely due to the BlackRock write-down in 2025.

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 international 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.

Claims and Surrenders.

The following table sets forth our primary claims and surrender benefits paid within our Life Insurance segment for the three and nine months ended September 30, 2025 compared to the same periods in 2024.

Three Months Ended Nine Months Ended

September 30, September 30,

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

March 31, 2026 | 10-Q 44

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MANAGEMENT'S DISCUSSION & ANALYSIS

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.

Benefits and Expenses.

Claims and surrender benefits breakout is detailed below.

Three Months Ended

(In thousands) 2026 2025

6 unchanged sentences

Total claims and surrenders $ 32,111 33,034

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

Many of our endowment policies are reaching their contractual maturity dates and thus matured endowment benefits are expected to be higher in each quarter of 2025 as compared to 2024.

We expect elevated trends to continue over the next few years but at a reduced level when compared to 2025.

Death claim benefits decreased for the three and nine months ended September 30, 2025, compared to the prior year periods due to a combination of lower volume and our coinsurance agreement with RGA alleviating some of our liability to pay these claims.

Increase (Decrease) in Future Policy Benefit Reserves.

The change in future policy benefit reserves for the three and nine months ended September 30, 2025 and 2024 was the result of reserves released due to surrenders and higher matured endowment benefits.

These releases were partially offset by increases in reserves due to new insurance issued and the reserves that increase on our in force block of business.

September 30, 2025 | 10-Q 52

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 the three months ended March 31, 2026 compared to the prior year period and can vary from one period to another.

We continue to focus efforts on retention initiatives.

Commissions decreased due to strong sales of our single premium product offered to policyholders with maturing endowments, which product has a lower commission rate than other products.

March 31, 2026 | 10-Q 45

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HOME SERVICE INSURANCE

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

Three Months Ended Nine Months Ended

September 30, September 30,

DOMESTIC INSURANCE

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

Three Months Ended

(In thousands) 2026 2025

Life insurance $ 10,260 10,456 31,128 31,718

Accident and health insurance 258 256 778 762

Property insurance — (16) — (18)

$ 14,740 14,189

Net investment income 5,113 5,059

16 unchanged sentences

Income before federal income tax

$ 2,978 (80) 4,705 1,954

Income before federal income tax in the three and nine months ended September 30, 2025 increased to $3.0 million and $4.7 million from a loss before federal income tax of $0.1 million and income of $2.0 million in the same prior year periods.

The factors that drove these increases were mainly investment related gains as well as lower claims and surrenders.

These drivers coupled with a favorable policyholder liability remeasurement stemming primarily from revised mortality and accrual assumptions.

September 30, 2025 | 10-Q 53

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MANAGEMENT'S DISCUSSION & ANALYSIS

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

Three Months Ended Nine Months Ended

September 30, September 30,

Income before federal income tax in the three months ended March 31, 2026 increased to $1.3 million from $0.6 million in the prior year period.

The increase was driven by increased premiums and slightly lower insurance benefits paid or provided.

Premium breakout is detailed below.

Three Months Ended

(In thousands) 2026 2025

Direct life and A&H premiums:

Direct premiums:

First year $ 5,680 5,425

Renewal 12,670 10,846

Total direct life and A&H premiums 10,525 10,717 31,994 32,504

Total direct premiums

18,350 16,271

Total life and A&H premiums

( 3,610 ) ( 2,082 )

Our life and A&H premiums in the Home Service segment slightly declined in the three and nine months ended September 30, 2025 compared to the same prior year periods.

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

Claims and Surrenders.

Payments of claims and surrender benefits, which are the largest portion of our expenses, are summarized as follows:

Three Months Ended Nine Months Ended

September 30, September 30,

Total premiums

$ 14,740 14,189

March 31, 2026 | 10-Q 46

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MANAGEMENT'S DISCUSSION & ANALYSIS

Total direct premiums increased by $2.1 million in the three months ended March 31, 2026 compared to the same prior year period due to sustained first year sales and increase in renewal year premiums due to strong prior year sales.

As a result of these increases, reinsurance premiums ceded also increased.

Benefits and Expenses.

Claims and surrender benefits breakout is detailed below.

Three Months Ended

(In thousands) 2026 2025

6 unchanged sentences

Total claims and surrenders $ 7,542 7,064

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

Death claim benefits decreased slightly in the three and nine months ended September 30, 2025 compared to the same prior year periods due primarily to lower volume of reported claims.

OTHER NON-INSURANCE ENTERPRISES

Three Months Ended Nine Months Ended

September 30, September 30,

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

Death claim benefits increased slightly in the three months ended March 31, 2026 compared to the same prior year period due primarily to a higher volume of reported claims.

The Company carefully tracks mortality experience as an important measure of performance, which can fluctuate from quarter-to-quarter based on reported claims.

While we monitor claims activities, we expect a rise in claims corresponding with business expansion.

A portion of these death claims should be offset by our reinsurance coverage.

NON-INSURANCE ENTERPRISES

Three Months Ended

(In thousands)

2025 2024 2025 2024

Loss before federal income tax

4 unchanged sentences

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.

For the three months ending September 30, 2025, the elevated loss before federal income tax compared to the equivalent period in 2024

September 30, 2025 | 10-Q 54

For the three months ended March 31, 2026, the elevated loss before federal income tax compared to the same period in 2025 is mainly due to higher general expenses.

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.

Our cash and invested assets at March 31, 2026 were $1.4 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.

March 31, 2026 | 10-Q 47

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MANAGEMENT'S DISCUSSION & ANALYSIS

is mainly due to higher general expenses.

These expenses rose as a result of additional participants in our equity incentive compensation program and a higher share price, which led to greater costs recognized as these awards vest.

Conversely, the reduction in loss before federal income tax for the nine months ended September 30, 2025, versus the same period in 2024, is primarily the result of lower general expenses.

The decrease is mostly due to a significant $3.5 million legal fee incurred during the second quarter of 2024, which did not recur in 2025, though this was somewhat counterbalanced by increased expenses related to the equity incentive compensation program, as previously described.

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 of our ongoing operations.

Our cash and invested assets at September 30, 2025 were $1.4 billion, of which 88% was invested in fixed maturity securities, all of which are classified as available-for-sale.

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

Carrying Value September 30, 2025 December 31, 2024

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

Carrying Value March 31, 2026 December 31, 2025

(In thousands, except for %) Amount % Amount %

16 unchanged sentences

Total cash, cash equivalents and invested assets $ 1,444,889 100.0 % $ 1,465,087 100.0 %

(1) Includes $109.0 million and $113.4 million of securities guaranteed by third parties at September 30, 2025 and December 31, 2024, respectively.

(1) Includes $100.1 million and $106.9 million of securities guaranteed by third parties at March 31, 2026 and December 31, 2025, respectively.

(2) Includes $95.8 million and $101.1 million of U.S.

Government-sponsored enterprises at September 30, 2025 and December 31, 2024, respectively.

The carrying value of the Company’s fixed maturity securities investment portfolio at September 30, 2025 was $1.27 billion compared to $1.22 billion at December 31, 2024.

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 September 30, 2025 did not materially change from December 31, 2024 – the weighted average was “A” at both dates.

Cash and cash equivalents decreased as of September 30, 2025 from December 31, 2024 and fluctuates from period-to-period primarily due to the timing of operating and investing activities.

September 30, 2025 | 10-Q 55

Government-sponsored enterprises at March 31, 2026 and December 31, 2025, respectively.

The carrying value of the Company’s fixed maturity securities investment portfolio at March 31, 2026 was $1.27 billion compared to $1.29 billion at December 31, 2025.

This decrease 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 March 31, 2026 did not materially change from December 31, 2025 – the weighted average was “A” at both dates.

Cash and cash equivalents decreased as of March 31, 2026 from December 31, 2025 and fluctuate from period to period primarily due to the timing of operating and investing activities.

As of March 31, 2026, other long-term investments increased by $1.2 million compared to December 31, 2025, primarily due to funding commitments of other investments and the impact of changes in the fair market value of our limited partnership holdings.

Obligations of States and Political Subdivisions

21% of the Company’s fixed maturity securities investment portfolio at March 31, 2026 consists of municipal bonds, which are securities that are obligations of states and political subdivisions.

A portion of these municipal bonds

March 31, 2026 | 10-Q 48

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MANAGEMENT'S DISCUSSION & ANALYSIS

As of September 30, 2025, other long-term investments declined by $7.9 million compared to December 31, 2024, primarily because one investment was exited.

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

Obligations of States and Political Subdivisions

The Company’s fixed maturity securities investment portfolio at September 30, 2025 and December 31, 2024 included $267.8 million and $268.3 million, respectively, of securities that are obligations of states and political subdivisions, including municipalities (collectively referred to as the municipal fixed maturity security portfolio).

The Company's municipal fixed maturity security portfolio includes third-party guarantees.

Detailed below is a presentation by the Nationally Recognized Statistical Rating Organization ("NRSRO") rating of these holdings by funding type as of September 30, 2025.

includes third-party guarantees, which enhance a bond's credit rating.

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

General Obligation Special Revenue Other Total % Based on Amortized

12 unchanged sentences

State and political subdivision fixed maturity securities excluding third-party guarantees:

AAA $ 5,350 5,302 2,890 3,020 3,349 3,235 11,589 11,557 3.9 %

AA $ 30,098 30,077 37,193 42,910 1,035 1,068 68,326 74,055 25.7

3 unchanged sentences

Total $ 55,468 55,929 196,226 222,083 10,364 10,460 262,058 288,472 100.0 %

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 September 30, 2025.

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 March 31, 2026.

(In thousands, except for %) Fair

4 unchanged sentences

Transportation 32,638 39,739 12.5

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

September 30, 2025 | 10-Q 56

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

however, as of March 31, 2026, municipal bonds from issuers in Texas and California comprised 22% and 18%, 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 March 31, 2026.

March 31, 2026 | 10-Q 49

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MANAGEMENT'S DISCUSSION & ANALYSIS

maturity security portfolio as of September 30, 2025.

The Company holds 21% and 17% of its municipal fixed maturity security portfolio in Texas and California issuers, respectively, as of September 30, 2025.

There were no other states or individual issuer holdings that represented or exceeded 10% of the total municipal fixed maturity security portfolio as of September 30, 2025.

The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in Texas at September 30, 2025.

The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in Texas at March 31, 2026.

General Obligation Special Revenue Other Total

11 unchanged sentences

Texas state and political subdivision fixed maturity securities excluding third-party guarantees:

AAA $ 5,350 5,302 — — — — 5,350 5,302

AA $ 20,212 20,040 4,242 4,764 — — 24,454 24,804

3 unchanged sentences

Total $ 24,531 24,355 32,488 39,059 45 55 57,064 63,469

The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in California at September 30, 2025.

The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in California at March 31, 2026.

General Obligation Special Revenue Other Total

11 unchanged sentences

A 3,000 3,319 18,724 21,811 1,823 1,976 23,547 27,106

BBB — — 1,199 1,535 — — 1,199 1,535

BB and other — — 14,717 17,039 2,008 2,008 16,725 19,047

Total $ 3,457 3,765 38,855 45,935 4,555 4,744 46,867 54,444

September 30, 2025 | 10-Q 57

IMPAIRMENT CONSIDERATIONS RELATED TO INVESTMENTS IN FIXED MATURITY SECURITIES

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 of the three months ended March 31, 2026 or 2025.

Gross unrealized losses on AFS fixed maturity securities amounted to $167.6 million as of March 31, 2026 and $154.3 million as of December 31, 2025.

This increase in gross unrealized losses during 2026 was a result of the decrease in average market interest rates in 2026 as compared to 2025.

March 31, 2026 | 10-Q 50

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

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 either of the three and nine months ended September 30, 2025 or 2024.

Gross unrealized losses on AFS fixed maturity securities amounted to $150.6 million as of September 30, 2025 and $185.7 million as of December 31, 2024.

This decrease in gross unrealized losses during 2025 was a result of the decrease in average market interest rates in 2025 as compared to 2024.

Information on both unrealized and realized gains and losses by category is set forth in Part I, Item 1, Note 3.

3 unchanged sentences

(In thousands)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Fixed maturity securities $ 1,271,111 1,287,861

1 unchanged sentence

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

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 in order to ensure that we have stable and reliable sources of cash flows to meet our obligations.

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).

Citizens had no debt as of September 30, 2025.

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 $8.9 million in the nine months ended September 30, 2025.

Cash used in Investing Activities.

In the three months ended March 31, 2026, our operations used $0.3 million of net cash due to matured endowment benefit payments, commissions and general expenses supporting our business growth.

We expect our business will generate cash the remainder of the year as our level of maturities declines.

Despite using cash in the first quarter of 2026, we anticipate meeting our short-term and long-term cash needs with cash generated by our insurance operations and from our invested assets.

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 we may also access our Credit Facility if needed (also described below).

Citizens had no debt as of March 31, 2026.

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.

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

Net cash outflows from investing activities totaled $11.2 million in the nine months ended September 30, 2025.

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

We purchased $31.0 million of fixed maturity securities and we also used $1.0 million to purchase other long-term investments in the first three months of 2026.

PARENT COMPANY LIQUIDITY AND CAPITAL RESOURCES

5 unchanged sentences

The ability to make payments to the holding company is limited by applicable laws of the U.S.

states of domicile and by the Puerto Rico Office of Commissioner of Insurance, which subject insurance operations to significant regulatory restrictions.

states of domicile and by the Puerto Rico Office of Commissioner of Insurance, which all subject insurance operations to significant regulatory restrictions.

These laws and regulations require, among other things, that our insurance subsidiaries maintain minimum solvency or premium to surplus ratio requirements, which limit the amount of dividends that can be paid to the holding company.

September 30, 2025 | 10-Q 58

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The regulations also require approval of our service agreements with the applicable regulatory authority in order to prevent insurance subsidiaries from moving large amounts of cash to the less regulated holding company.

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At our option, purchases of stock under the SIP can be made from newly issued or treasury stock, rather than in the open market, in which case, we can raise capital by selling our shares.

March 31, 2026 | 10-Q 51

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

We renewed our Credit Facility with Regions Bank on May 3, 2024 for an additional three years.

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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 direct premiums (i.e.

, new sales) of 71% from the year ended December 31, 2023 to the year ended December 31, 2024, and 23% from the nine months ended September 30, 2024 to the nine months ended September 30, 2025.

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 increases in first year direct premiums (i.e.

, new sales) in our Domestic Insurance segment in the last couple years.

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

While historically, cash flows from our operations have been sufficient to meet our cash needs, in the second quarter of 2024 we entered into a coinsurance reinsurance agreement with RGA to help with some of the costs, and the insurance subsidiaries also have the available-for-sale fixed maturity investment portfolio available to create additional cash flows if needed.

While historically, cash flows from our operations have been sufficient to meet our cash needs, we entered into a coinsurance reinsurance agreement with RGA to help with some of the costs, and the insurance subsidiaries also have the AFS fixed maturity investment portfolio available to create additional cash flows if required.

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

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Trends, Demands and Restrictions on our Uses of Cash

Payments of benefits for claims and surrenders are our largest use of cash.

There are three primary components of these payments:

death claims, surrenders and matured endowments.

Payments of benefits for claims and surrenders and commissions are our largest use of cash.

There are three primary components of payments of benefits:

matured endowments, surrenders and death claims.

Matured Endowments.

Our endowment products have contractual maturity dates and provide the policyholder with alternatives once the policy matures - they can choose to take a lump sum payout, leave the money on deposit at interest with the Company or purchase another insurance policy.

Approximately 15% of the endowments in force will mature in the next five years, totaling approximately 5% of our in force business as of September 30, 2025.

The highest level of maturities will occur this year.

Our endowment products have contractual maturity dates and provide the policyholder with alternatives once the policy matures - they can choose to take a lump sum payout or leave the money on deposit at interest with the Company.

Approximately 18% of the endowments in force will mature in the next five years, totaling approximately 5% of our in force business as of March 31, 2026.

Policyholder election behavior is unknown, but if too many policyholders elect lump sum distributions, the Company could be exposed to liquidity risk in years of high maturities.

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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

September 30, 2025 | 10-Q 59

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 and continued to decrease the first three months of 2026.

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.

March 31, 2026 | 10-Q 52

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

2024, introduced a new product designed to allow policyholders with maturing endowments to purchase a new life insurance policy.

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 older policies have reached the age where surrender charges have expired or significantly decreased, we have experienced high levels of surrenders in the past several years.

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 and tariff pressures, which may cause policyholders to want the cash values of their policies due to decreased purchasing power elsewhere.

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.

To the extent that early surrenders are higher than expected, our use of cash could be higher than expected.

We continue to monitor surrenders and early withdrawals and focus on our retention initiatives and efforts to retain cash when policyholders surrender their policies.

Our cash flow from operations is also negatively impacted with high matured endowments and surrenders, as they lead to lower renewal premiums.

Our liquidity is also negatively impacted with high matured endowments and surrenders, as they lead to lower renewal premiums.

Death Claims.

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 decreased in the nine months ended September 30, 2025.

Our death benefit payments increased in the three months ended March 31, 2026 due to a higher volume of reported claims.

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 coinsurance agreement with RGA in the second quarter of 2024 and elected to cede 50% of our final expense business to RGA, which alleviates some of the expense strain.

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 CICA Domestic's required commission payments exceed current resources.

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 coinsurance agreement with RGA 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.

See Part I, Item 1, Note 8.

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Regulatory Restrictions on our Use of Cash

As discussed above, we are subject to regulatory capital requirements that could affect the Company’s ability to access capital from our insurance operations or cause the Company to have to put additional cash in our wholly-owned subsidiaries.

Our domestic companies are subject to minimum capital requirements set by the NAIC in the form of risk-based capital ("RBC").

RBC considers the type of business written by an insurance company, the quality of its assets, and various other aspects of an insurance company's business to develop a minimum level of capital called the "Authorized Control Level Risk-Based Capital".

This level of capital is then compared to an adjusted statutory capital that includes capital and surplus as reported under statutory accounting principles, plus certain investment reserves.

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, which would require Citizens to contribute capital to CICA Domestic in order to maintain a RBC level above 350%.

At September 30, 2025, our domestic insurance subsidiaries were above the required minimum RBC levels and CICA Domestic was above 350%.

September 30, 2025 | 10-Q 60

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

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 an RBC level above 350%.

At March 31, 2026, 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.

At September 30, 2025, CICA International exceeded the required minimum capital and related ratio.

At March 31, 2026, 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.

March 31, 2026 | 10-Q 53

CITIZENS, INC.

MANAGEMENT'S DISCUSSION & ANALYSIS

CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

As of September 30, 2025, we have no additional contractual obligations or off-balance sheet arrangements other than those described in Part I, Item 1, Note 8.

As of March 31, 2026, we have no additional contractual obligations or off-balance sheet arrangements other than those described in Part I, Item 1, Note 8.

Commitments and Contingencies in the notes to our consolidated financial statements herein and in Part II, Item 7, Contractual Obligations and Off-Balance Sheet Arrangements in our 2025 Form 10-K .

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What changed 10-Q

Item 2. Management’s Discussion and Analysis