CITIZENS, INC. 10-Q

Item 1. FINANCIAL STATEMENTS CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets (In thousands) March 31, 2026 December 31, 2025 (Unaudited) Assets: Investments: Fixed maturity securities available-for-sale, at fair value (amortized cost: $ 1,431,586 and $ 1,432,454 in 2026 and 2025, respectively) $ 1,271,111 1,287,861 Equity securities, at fair value 1,451 1,356 Policy loans 67,217 67,455 Other long-term investments (portion measured at fair value $ 86,308 and $ 85,157 in 2026 and 2025, respectively) 86,590 85,439 Total investments 1,426,369 1,442,111 Cash and cash equivalents (restricted portion: $ 1,554 in both 2026 and 2025) 18,520 22,976 Accrued investment income 18,564 18,241 Receivable for securities 1,875 90 Reinsurance recoverable 12,913 10,874 Deferred policy acquisition costs 224,502 220,537 Cost of insurance acquired 8,807 8,995 Current federal income tax receivable 427 624 Property and equipment, net 9,668 9,835 Due premiums 9,349 11,299 Other assets (less allowance for losses of $ 750 and $ 740 in 2026 and 2025, respectively) 8,506 9,178 Total assets $ 1,739,500 1,754,760 See accompanying Notes to Consolidated Financial Statements. March 31, 2026 | 10-Q 2 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets, Continued (In thousands, except share amounts) March 31, 2026 December 31, 2025 (Unaudited) Liabilities and Stockholders' Equity: Liabilities: Policy liabilities: Future policy benefit reserves: Life insurance $ 1,167,386 1,188,089 Accident and health insurance 1,399 1,338 Total future policy benefit reserves 1,168,785 1,189,427 Policyholders' funds: Annuities 181,175 175,569 Dividend accumulations 52,248 51,360 Premiums paid in advance 29,680 29,055 Policy claims payable 8,522 8,772 Other policyholders' funds 8,095 7,955 Total policyholders' funds 279,720 272,711 Total policy liabilities 1,448,505 1,462,138 Commissions payable 4,505 4,186 Deferred federal income tax liability 6,219 5,996 Other liabilities 41,603 47,455 Total liabilities 1,500,832 1,519,775 Commitments and contingencies ( Notes 7 and 8 ) Stockholders' Equity: Common stock: Class A, no par value, 100,000,000 shares authorized, 54,662,129 and 54,625,652 shares issued and outstanding in 2026 and 2025, respectively, including shares in treasury of 4,327,810 in 2026 and 2025 272,771 272,294 Class B, no par value, 2,000,000 shares authorized, 1,001,714 shares issued and outstanding in 2026 and 2025, including shares in treasury of 1,001,714 in 2026 and 2025 3,184 3,184 Retained earnings 73,921 71,653 Accumulated other comprehensive income (loss) ( 87,483 ) ( 88,421 ) Treasury stock, at cost ( 23,725 ) ( 23,725 ) Total stockholders' equity 238,668 234,985 Total liabilities and stockholders' equity $ 1,739,500 1,754,760 See accompanying Notes to Consolidated Financial Statements. March 31, 2026 | 10-Q 3 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) Three Months Ended March 31, (In thousands, except per share amounts) 2026 2025 Revenues: Premiums $ 39,938 39,797 Net investment income 17,304 17,377 Investment related gains (losses), net 984 ( 2,894 ) Other income 1,494 1,372 Total revenues 59,720 55,652 Benefits and Expenses: Insurance benefits paid or provided: Claims and surrenders 39,653 40,098 Increase (decrease) in future policy benefit reserves ( 4,703 ) ( 3,646 ) Policyholder liability remeasurement (gain) loss 875 ( 172 ) Policyholders' dividends 1,102 1,295 Total insurance benefits paid or provided 36,927 37,575 Commissions 10,824 11,275 Other general expenses 13,372 12,693 Capitalization of deferred policy acquisition costs ( 8,944 ) ( 8,849 ) Amortization of deferred policy acquisition costs 4,979 4,647 Amortization of cost of insurance acquired 188 98 Total benefits and expenses 57,346 57,439 Income (loss) before federal income tax 2,374 ( 1,787 ) Federal income tax expense (benefit) 106 ( 164 ) Net income (loss) 2,268 ( 1,623 ) Per Share Amounts: Basic earnings (loss) per share of Class A common stock 0.05 ( 0.03 ) Diluted earnings (loss) per share of Class A common stock 0.04 ( 0.03 ) Other Comprehensive Income (Loss): Unrealized gains (losses) on fixed maturity securities: Unrealized holding gains (losses) arising during period ( 16,295 ) 18,334 Reclassification adjustment for (gains) losses included in net income (loss) 412 83 Unrealized gains (losses) on fixed maturity securities, net ( 15,883 ) 18,417 Change in current discount rate for liability for future policy benefits 17,135 ( 8,589 ) Income tax expense (benefit) on other comprehensive income items 314 937 Other comprehensive income (loss) 938 8,891 Total comprehensive income (loss) $ 3,206 7,268 See accompanying Notes to Consolidated Financial Statements. March 31, 2026 | 10-Q 4 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Stockholders' Equity (Unaudited) Common Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Stockholders' Equity (In thousands) Class A Class B Balance at December 31, 2025 $ 272,294 3,184 71,653 ( 88,421 ) ( 23,725 ) 234,985 Comprehensive income (loss): Net income (loss) — — 2,268 — — 2,268 Other comprehensive income (loss) — — — 938 — 938 Total comprehensive income (loss) — — 2,268 938 — 3,206 Stock-based compensation 477 — — — — 477 Balance at March 31, 2026 $ 272,771 3,184 73,921 ( 87,483 ) ( 23,725 ) 238,668 Balance at December 31, 2024 $ 269,799 3,184 57,062 ( 95,965 ) ( 23,725 ) 210,355 Comprehensive income (loss): Net income (loss) — — ( 1,623 ) — — ( 1,623 ) Other comprehensive income (loss) — — — 8,891 — 8,891 Total comprehensive income (loss) — — ( 1,623 ) 8,891 — 7,268 Stock-based compensation 516 — — — — 516 Balance at March 31, 2025 $ 270,315 3,184 55,439 ( 87,074 ) ( 23,725 ) 218,139 See accompanying Notes to Consolidated Financial Statements. March 31, 2026 | 10-Q 5 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, (In thousands) 2026 2025 Cash flows from operating activities: Net income (loss) $ 2,268 ( 1,623 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Investment related (gains) losses on sale of investments and other assets, net ( 984 ) 2,894 Net deferred policy acquisition costs ( 3,965 ) ( 4,202 ) Amortization of cost of insurance acquired 188 98 Depreciation 171 161 Amortization of premiums and discounts on investments 979 1,181 Stock-based compensation 476 572 Deferred federal income tax expense (benefit) ( 91 ) ( 370 ) Change in: Accrued investment income ( 323 ) 289 Reinsurance recoverable ( 2,039 ) ( 990 ) Due premiums 1,950 2,260 Future policy benefit reserves ( 3,507 ) ( 3,495 ) Other policyholders' liabilities 7,714 11,491 Federal income tax receivable 197 206 Commissions payable and other liabilities ( 5,212 ) ( 7,855 ) Other, net 1,855 131 Net cash provided by (used in) operating activities ( 323 ) 748 Cash flows from investing activities: Purchases of fixed maturity securities, available-for-sale ( 31,022 ) ( 17,519 ) Sales of fixed maturity securities, available-for-sale 9,976 65 Maturities and calls of fixed maturity securities, available-for-sale 18,752 8,402 Principal payments on mortgage loans 2 2 Change in policy loans 238 255 Sales of other long-term investments — 232 Purchases of other long-term investments ( 1,048 ) ( 2,763 ) Purchases of property and equipment ( 326 ) ( 107 ) Net cash used in investing activities ( 3,428 ) ( 11,433 ) See accompanying Notes to Consolidated Financial Statements. March 31, 2026 | 10-Q 6 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows, Continued (Unaudited) Three Months Ended March 31, (In thousands) 2026 2025 Cash flows from financing activities: Annuity deposits $ 2,358 2,211 Annuity withdrawals ( 3,063 ) ( 2,385 ) Other share repurchases — ( 57 ) Net cash used in financing activities ( 705 ) ( 231 ) Net increase (decrease) in cash and cash equivalents ( 4,456 ) ( 10,916 ) Cash and cash equivalents at beginning of year 22,976 29,271 Cash and cash equivalents at end of period $ 18,520 18,355 SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: During the three months ended March 31, 2025, various fixed maturity issuers exchanged securities with book values of $ 5.7 million for securities of equal value and none during the three months ended March 31, 2026. The Company had $ 1.9 million net unsettled security trades at March 31, 2026 and $ 0.3 million at March 31, 2025. See accompanying Notes to Consolidated Financial Statements. March 31, 2026 | 10-Q 7 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) (1) FINANCIAL STATEMENTS BASIS OF PRESENTATION AND CONSOLIDATION The consolidated financial statements include the accounts and operations of Citizens, Inc. ("Citizens" or the "Company"), a Colorado corporation, and its wholly-owned subsidiaries, CICA Life Insurance Company of America ("CLOA"), CICA Life Ltd. ("CICA Bermuda"), Security Plan Life Insurance Company ("SPLIC"), Magnolia Guaranty Life Insurance Company ("MGLIC"), Computing Technology, Inc. ("CTI"), and Nexo Global Services LLC, a Puerto Rico holding company ("Nexo") and its wholly-owned subsidiaries, CICA Life A.I., a Puerto Rico company ("CICA International") and Nexo Enrollment Services LLC, a Puerto Rico service company ("NES"). All significant inter-company accounts and transactions have been eliminated. Citizens and its wholly-owned subsidiaries are collectively referred to as the "Company," "it," "we," "us" or "our". The consolidated balance sheet as of March 31, 2026, the consolidated statements of operations and comprehensive income (loss) and stockholders' equity for the three months ended March 31, 2026 and March 31, 2025 and the consolidated statements of cash flows for the three months ended March 31, 2026 and March 31, 2025 have been prepared by the Company without audit and are not subject to audit. In the opinion of management, all normal and recurring adjustments to present fairly the financial position, results of operations, and changes in cash flows at March 31, 2026 and for comparative periods have been made. The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission ("SEC"). Accordingly, the consolidated financial statements do not include all the information and footnotes required for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Form 10-K"). Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period. The Company operates through two segments: International Insurance and Domestic Insurance. International Insurance. All International policies are issued by CICA International. CICA International offers U.S. dollar-denominated products to non-U.S. residents/citizens internationally, including endowment products, which are principally accumulation contracts that incorporate an element of life insurance protection and whole life insurance. These contracts are designed to provide a fixed amount of insurance coverage over the life of the insured and may utilize rider benefits to provide additional increasing or decreasing coverage and annuity benefits to enhance accumulations. NES provides services to policyholders of CICA International. Domestic Insurance. Our Domestic Insurance segment operates through our subsidiaries CLOA, which issues whole life, final expense and life products with living benefits throughout the U.S. and SPLIC and MGLIC, which focus on the life insurance needs of the lower-income markets, primarily in Louisiana, Mississippi and Arkansas. Our products in this segment consist primarily of small face amount whole life, industrial life and pre-need policies, which are designed to fund final expenses for the insured, primarily relating to funeral and burial costs. SPLIC also issues critical illness policies. CTI provides data processing systems and services to the Company. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent March 31, 2026 | 10-Q 8 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates. Significant estimates include those used in the evaluation of credit losses on fixed maturity securities, valuation allowances on deferred tax assets, and actuarially determined assets and liabilities. Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the consolidated financial statements. SIGNIFICANT ACCOUNTING POLICIES For a description of all significant accounting policies, see Part IV, Item 15, Note 1. Summary of Significant Accounting Policies in the notes to our consolidated financial statements included in our 2025 Form 10-K , which should be read in conjunction with these accompanying consolidated financial statements. (2) ACCOUNTING PRONOUNCEMENTS ACCOUNTING STANDARDS NOT YET ADOPTED In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which is intended to enhance expense disclosures by requiring additional disaggregation of certain costs and expenses, on an interim and annual basis, within the footnotes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. This ASU will impact only our disclosures and not our financial condition or results of operations. We are currently evaluating the impact of adopting this pronouncement on the notes to the consolidated financial statements. No other new accounting pronouncements issued or effective during the year had, or is expected to have, a material impact on our consolidated financial statements. (3) INVESTMENTS The Company invests primarily in fixed maturity securities as shown below. Carrying Value (In thousands, except for %) March 31, 2026 December 31, 2025 Amount % Amount % Cash and invested assets: Fixed maturity securities $ 1,271,111 88.0 % 1,287,861 87.9 % Equity securities 1,451 0.1 1,356 0.1 Policy loans 67,217 4.7 67,455 4.6 Other long-term investments 86,590 5.9 85,439 5.8 Cash and cash equivalents 18,520 1.3 22,976 1.6 Total cash and invested assets $ 1,444,889 100.0 % 1,465,087 100.0 % March 31, 2026 | 10-Q 9 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The following tables represent the amortized cost, gross unrealized gains and losses and fair value of fixed maturity securities as of the dates indicated. Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value March 31, 2026 (In thousands) Fixed maturity securities: U.S. Treasury securities $ 5,680 36 109 5,607 U.S. Government-sponsored enterprises 1,265 70 — 1,335 States and political subdivisions 288,472 1,586 28,000 262,058 Corporate: Financial 320,215 2,811 30,828 292,198 Consumer 251,081 464 42,415 209,130 Utilities 136,346 620 21,678 115,288 Energy 84,239 383 8,389 76,233 Communications 68,990 192 9,673 59,509 All other 127,297 484 17,291 110,490 Commercial mortgage-backed 8,869 175 2 9,042 Residential mortgage-backed 106,254 20 8,635 97,639 Asset-backed 32,878 316 612 32,582 Total fixed maturity securities $ 1,431,586 7,157 167,632 1,271,111 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value December 31, 2025 (In thousands) Fixed maturity securities: U.S. Treasury securities $ 5,692 61 99 5,654 U.S. Government-sponsored enterprises 1,268 86 — 1,354 States and political subdivisions 294,347 1,881 27,436 268,792 Corporate: Financial 323,056 4,137 26,847 300,346 Consumer 244,480 797 39,093 206,184 Utilities 136,005 829 20,048 116,786 Energy 82,205 473 7,622 75,056 Communications 69,719 256 8,454 61,521 All other 122,240 764 16,027 106,977 Commercial mortgage-backed 8,872 24 2 8,894 Residential mortgage-backed 111,243 28 8,183 103,088 Asset-backed 33,327 412 530 33,209 Total fixed maturity securities $ 1,432,454 9,748 154,341 1,287,861 March 31, 2026 | 10-Q 10 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The Company's investments in equity securities are shown below. Fair Value (In thousands) March 31, 2026 December 31, 2025 Equity securities: Bond mutual funds $ 217 219 Common stocks 1,227 1,130 Non-redeemable preferred stock 7 7 Total equity securities $ 1,451 1,356 VALUATION OF INVESTMENTS Available-for-sale ("AFS") fixed maturity securities are reported in the consolidated financial statements at fair value with the change in fair value recorded through other comprehensive income (loss). Equity securities are also measured at fair value in the consolidated financial statements with the change in fair value recorded through net income (loss). The Company recognized net investment related gains of $ 0.1 million and $ 47 thousand for the three months ended March 31, 2026 and 2025, respectively, on equity securities held. The Company considers several factors in its review and evaluation of individual investments, using the process described in Part IV, Item 15, Note 2. Investments in the notes to the consolidated financial statements of our 2025 Form 10-K to determine whether a credit valuation loss exists. For the three months ended March 31, 2026 and 2025, the Company recorded no credit valuation losses on fixed maturity securities. For fixed maturity security investments that have unrealized losses as of March 31, 2026 and December 31, 2025, the gross unrealized losses and related fair values that have been in a continuous unrealized loss position by timeframe are as follows. March 31, 2026 Less than 12 months Greater than 12 months Total (In thousands, except for # of securities) Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fixed maturity securities: U.S. Treasury securities $ 408 2 1 876 107 7 1,284 109 8 States and political subdivisions 37,519 507 44 137,879 27,493 173 175,398 28,000 217 Corporate: Financial 36,097 768 85 140,330 30,060 174 176,427 30,828 259 Consumer 23,733 704 53 160,973 41,711 221 184,706 42,415 274 Utilities 15,837 425 43 80,176 21,253 152 96,013 21,678 195 Energy 23,787 490 38 40,158 7,899 53 63,945 8,389 91 Communications 15,289 367 22 37,738 9,306 47 53,027 9,673 69 All Other 17,772 312 32 69,523 16,979 90 87,295 17,291 122 Commercial mortgage-backed — — — 76 2 1 76 2 1 Residential mortgage-backed 1,923 8 9 87,893 8,627 71 89,816 8,635 80 Asset-backed 2,963 113 7 11,192 499 12 14,155 612 19 Total fixed maturity securities $ 175,328 3,696 334 766,814 163,936 1,001 942,142 167,632 1,335 March 31, 2026 | 10-Q 11 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) December 31, 2025 Less than 12 months Greater than 12 months Total (In thousands, except for # of securities) Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fair Value Unrealized Losses # of Securities Fixed maturity securities: U.S. Treasury securities $ — — — 883 99 7 883 99 7 States and political subdivisions 21,991 147 28 145,859 27,289 180 167,850 27,436 208 Corporate: Financial 13,485 196 23 148,244 26,651 182 161,729 26,847 205 Consumer 19,282 361 25 165,229 38,732 225 184,511 39,093 250 Utilities 12,109 170 35 82,012 19,878 152 94,121 20,048 187 Energy 11,650 214 24 44,795 7,408 55 56,445 7,622 79 Communications 10,682 126 14 39,964 8,328 50 50,646 8,454 64 All Other 4,289 38 13 72,186 15,989 93 76,475 16,027 106 Commercial mortgage-backed — — — 79 2 1 79 2 1 Residential mortgage-backed 17 — 4 93,197 8,183 77 93,214 8,183 81 Asset-backed 1,569 66 2 11,569 464 13 13,138 530 15 Total fixed maturity securities $ 95,074 1,318 168 804,017 153,023 1,035 899,091 154,341 1,203 In each category of our fixed maturity securities described above, we do not intend to sell our investments, and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases. As of March 31, 2026 and December 31, 2025, 98.8 % and 98.7 % of the fair value of our fixed maturity securities portfolio, respectively, were rated investment grade. While the losses are currently unrealized, we continue to monitor all fixed maturity securities on an on-going basis as future information may become available which could result in an allowance being recorded. These unrealized losses on fixed maturity securities are due to noncredit-related factors, including changes in credit spreads and rising interest rates since purchase, which have little bearing on the recoverability of our investments, hence they are not recognized as credit losses. The fair value is expected to recover as the securities approach maturity or if market yields for such investments decline. The amortized cost and fair value of fixed maturity securities at March 31, 2026 by contractual maturity are shown in the table below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date have been reflected based upon final stated maturity. March 31, 2026 Amortized Cost Fair Value (In thousands) Fixed maturity securities: Due in one year or less $ 20,413 20,418 Due after one year through five years 108,126 108,112 Due after five years through ten years 300,816 299,213 Due after ten years 1,002,231 843,368 Total fixed maturity securities $ 1,431,586 1,271,111 March 31, 2026 | 10-Q 12 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The Company uses the specific identification method of the individual security to determine the cost basis used in the calculation of realized gains and losses related to security sales. Three Months Ended March 31, (In thousands) 2026 2025 Fixed maturity securities, available-for-sale: Proceeds $ 11,761 65 Gross realized gains $ 55 1 Gross realized losses $ 368 4 (4) FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We hold AFS fixed maturity securities, which are carried at fair value with changes in fair value reported through other comprehensive income (loss). We also report our equity securities and certain other long-term investments at fair value with changes in fair value reported through the consolidated statements of operations and comprehensive income (loss). Fair value measurements are generally based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. All assets and liabilities carried at fair value are required to be classified and disclosed in one of the following three categories. • Level 1 - Quoted prices for identical instruments in active markets. • Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs or whose significant value drivers are observable. • Level 3 - Instruments whose significant value drivers are unobservable. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as U.S. Treasury securities and actively traded mutual fund and stock investments. Level 2 includes those financial instruments that are valued by independent pricing services or broker quotes. These pricing models are primarily industry-standard models that consider various inputs, such as interest rates, credit spreads and foreign exchange rates for the underlying financial instruments. All significant inputs are observable or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace. Financial instruments in this category primarily include corporate securities, U.S. Government-sponsored enterprise securities, securities issued by states and political subdivisions and certain mortgage and asset-backed securities. Level 3 is comprised of financial instruments whose fair value is estimated based on non-binding broker prices utilizing significant inputs not based on or corroborated by readily available market information. We have no investments in this category. March 31, 2026 | 10-Q 13 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The following tables set forth our assets measured at fair value on a recurring basis as of the dates indicated. March 31, 2026 Level 1 Level 2 Level 3 Total Fair Value (In thousands) Financial assets: Fixed maturity securities: U.S. Treasury and U.S. Government-sponsored enterprises $ 5,607 1,335 — 6,942 States and political subdivisions — 262,058 — 262,058 Corporate 40 862,808 — 862,848 Commercial mortgage-backed — 9,042 — 9,042 Residential mortgage-backed — 97,639 — 97,639 Asset-backed — 32,582 — 32,582 Total fixed maturity securities 5,647 1,265,464 — 1,271,111 Equity securities: Bond mutual funds 217 — — 217 Common stocks 1,227 — — 1,227 Non-redeemable preferred stock 7 — — 7 Total equity securities 1,451 — — 1,451 Other long-term investments (1) — — — 86,308 Total financial assets $ 7,098 1,265,464 — 1,358,870 (1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. March 31, 2026 | 10-Q 14 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) December 31, 2025 Level 1 Level 2 Level 3 Total Fair Value (In thousands) Financial assets: Fixed maturity securities: U.S. Treasury and U.S. Government-sponsored enterprises $ 5,654 1,354 — 7,008 States and political subdivisions — 268,792 — 268,792 Corporate 42 866,828 — 866,870 Commercial mortgage-backed — 8,894 — 8,894 Residential mortgage-backed — 103,088 — 103,088 Asset-backed — 33,209 — 33,209 Total fixed maturity securities 5,696 1,282,165 — 1,287,861 Equity securities: Bond mutual funds 219 — — 219 Common stocks 1,130 — — 1,130 Non-redeemable preferred stock 7 — — 7 Total equity securities 1,356 — — 1,356 Other long-term investments (1) — — — 85,157 Total financial assets $ 7,052 1,282,165 — 1,374,374 (1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. FINANCIAL INSTRUMENTS VALUATION FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE Fixed maturity securities, available-for-sale. At March 31, 2026, fixed maturity securities, valued using a third-party pricing source, totaled $ 1.3 billion for Level 2 assets and comprised 93.1 % of total reported fair value of our financial assets. The Level 1 and Level 2 valuations are reviewed and updated quarterly through testing by comparisons to separate pricing models, other third-party pricing services, and back tested to recent trades. In addition, we obtain information annually relative to the third-party pricing models and review model parameters for reasonableness. There were no Level 3 assets as of March 31, 2026. For the three months ended March 31, 2026, there were no material changes to the valuation methods or assumptions used to determine fair values, and no broker or third-party prices were changed from the values received. Equity securities. Our equity securities are classified as Level 1 assets as their fair values are based upon quoted market prices. Structured note. At March 31, 2026, the Company held an investment in a structured note, which includes components classified as fixed maturity securities and other long-term investments on the consolidated balance sheets. The partner interest is included in other long-term investments and is measured at its net asset value ("NAV") of $ 2.6 million as a practical expedient, which approximates fair value. The Company recognized investment related losses of $ 0.1 million for the three months ended March 31, 2026. These investments are included in other long-term investments on the consolidated balance sheets. As of March 31, 2026, we are committed to funding this structured note investment up to $ 4.1 million over the next nine years . Limited partnerships. The Company considers the NAV to represent the value of the investment fund and is measured by the total value of assets minus the total value of liabilities. The following table includes information March 31, 2026 | 10-Q 15 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) related to our investments in limited partnerships that calculate NAV per share. For these investments, which are measured at fair value on a recurring basis, we use the NAV per share to measure fair value. The Company recognized net investment related gains of $ 1.8 million and losses of $ 1.5 million on limited partnerships held for the three months ended March 31, 2026 and 2025, respectively. These investments are included in other long-term investments on the consolidated balance sheets. March 31, 2026 December 31, 2025 (In thousands, except for years) Fair Value Using NAV Per Share Unfunded Commit- ments Range (In years) Fair Value Using NAV Per Share Unfunded Commit- ments Range (In years) Description Limited partnerships: Middle market Investments in privately-originated, performing senior secured debt primarily in North America-based companies $ 29,385 — 2 $ 30,956 — 2 Late-stage growth Investments in private late-stage, established companies seeking capital to accelerate growth prior to an IPO or sale 39,603 1,558 2 to 4 36,623 2,232 2 to 4 Infrastructure Investments in environmental infrastructure and related technology, focusing on renewable power generation and distribution 14,738 2,638 8 15,013 4,052 8 Total limited partnerships $ 83,726 4,196 $ 82,592 6,284 The majority of our limited partnership investments are not redeemable because distributions from the funds will be received when the underlying investments of the funds are liquidated. The life spans indicated above may be shortened or extended at the fund manager's discretion, typically in one or two-year increments. FINANCIAL INSTRUMENTS NOT CARRIED AT FAIR VALUE Estimates of fair values are made at a specific point in time, based on relevant market prices and information about the financial instruments. The estimated fair values of financial instruments presented below are not necessarily indicative of the amounts the Company might realize in actual market transactions. The carrying amount and fair value for the financial assets and liabilities on the consolidated financial statements not otherwise disclosed for the periods indicated were as follows: March 31, 2026 December 31, 2025 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Financial assets: Policy loans $ 67,217 67,217 67,455 67,455 Residential mortgage loan 22 22 24 24 Cash and cash equivalents 18,520 18,520 22,976 22,976 Financial liabilities: Annuity - investment contracts 69,134 63,098 68,975 64,066 Policy loans. Policy loans had a weighted average annual interest rate of 7.7 % at both March 31, 2026 and December 31, 2025 and no specified maturity dates. Policy loans are an integral part of the life insurance policies we have in force, cannot be valued separately and are not marketable. Therefore, the fair value of policy loans March 31, 2026 | 10-Q 16 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) approximates the carrying value reflected on the consolidated balance sheets are considered Level 3 assets in the fair value hierarchy. Residential mortgage loan. The mortgage loan is secured by a residential property. The interest rate for this loan was 7.0 % at both March 31, 2026 and December 31, 2025. At March 31, 2026, the remaining loan matures in two years . Management estimated the fair value using an annual interest rate of 6.25 % at both March 31, 2026 and December 31, 2025. Our mortgage loan is considered a Level 3 asset in the fair value hierarchy and is included in other long-term investments on the consolidated balance sheets. Cash and cash equivalents. The fair value of cash and cash equivalents approximates carrying value and these assets are characterized as Level 1 assets in the fair value hierarchy. Annuity liabilities. The fair value of the Company's liabilities under annuity contracts, which are considered Level 3 liabilities, was estimated at March 31, 2026 and December 31, 2025 using discounted cash flows based upon spot rates adjusted for various risk adjustments ranging from 3.63 % to 5.10 % and 3.31 % to 4.98 %, respectively. The fair value of liabilities under all insurance contracts are taken into consideration in the overall management of interest rate risk, which seeks to minimize exposure to changing interest rates through the matching of investment maturities with amounts due under insurance contracts. Other long-term investments. Financial instruments included in other long-term investments are classified in various levels of the fair value hierarchy. The following table summarizes the carrying amounts of these investments. Carrying Value (In thousands ) March 31, 2026 December 31, 2025 Other long-term investments: Limited partnerships $ 83,726 82,592 Structured note 2,582 2,565 FHLB common stock 224 222 All other investments 58 60 Total other long-term investments $ 86,590 85,439 We are a member of the Federal Home Loan Bank ("FHLB") of Dallas and such membership requires members to own stock in the FHLB. Our FHLB stock is carried at amortized cost, which approximates fair value. (5) DEFERRED POLICY ACQUISITION COSTS AND COST OF INSURANCE ACQUIRED DAC The following tables roll forward the deferred policy acquisition costs ("DAC") and cost of insurance acquired ("COIA") balances for the three months ended March 31, 2026 and 2025 by reporting cohort. Our reporting cohorts are Permanent, which summarizes insurance policies with premiums payable over the lifetime of the policy, and March 31, 2026 | 10-Q 17 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) Permanent Limited Pay, which summarizes insurance policies with premiums payable for a limited time after which the policy is fully paid up. Both reporting cohorts include whole life and endowment policies. Three Months Ended March 31, 2026 (In thousands) Permanent Permanent Limited Pay Other Business Total International Insurance: Balance, beginning of year $ 113,915 18,585 538 133,038 Capitalizations 3,655 521 57 4,233 Amortization expense ( 3,183 ) ( 310 ) ( 59 ) ( 3,552 ) Balance, end of period 114,387 18,796 536 133,719 Domestic Insurance: Balance, beginning of year 74,622 11,683 1,194 87,499 Capitalizations 4,420 238 53 4,711 Amortization expense ( 1,263 ) ( 112 ) ( 52 ) ( 1,427 ) Balance, end of period 77,779 11,809 1,195 90,783 Consolidated: Balance, beginning of year 188,537 30,268 1,732 220,537 Capitalizations 8,075 759 110 8,944 Amortization expense ( 4,446 ) ( 422 ) ( 111 ) ( 4,979 ) Balance, end of period $ 192,166 30,605 1,731 224,502 Three Months Ended March 31, 2025 (In thousands) Permanent Permanent Limited Pay Other Business Total International Insurance: Balance, beginning of year $ 108,742 16,370 572 125,684 Capitalizations 3,779 920 88 4,787 Amortization expense ( 3,103 ) ( 276 ) ( 87 ) ( 3,466 ) Balance, end of period 109,418 17,014 573 127,005 Domestic Insurance: Balance, beginning of year 61,639 11,169 1,143 73,951 Capitalizations 3,831 173 58 4,062 Amortization expense ( 1,062 ) ( 107 ) ( 12 ) ( 1,181 ) Balance, end of period 64,408 11,235 1,189 76,832 Consolidated: Balance, beginning of year 170,381 27,539 1,715 199,635 Capitalizations 7,610 1,093 146 8,849 Amortization expense ( 4,165 ) ( 383 ) ( 99 ) ( 4,647 ) Balance, end of period $ 173,826 28,249 1,762 203,837 March 31, 2026 | 10-Q 18 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) COIA The Domestic Insurance segment is the only segment that recognizes COIA; therefore, the balances for the three months ended March 31, 2026 and 2025 on a consolidated basis by reporting cohort are shown below. (In thousands) Permanent Permanent Limited Pay Other Business Total Three Months Ended March 31, 2026 Balance, beginning of year $ 7,036 764 1,195 8,995 Amortization expense ( 93 ) ( 9 ) ( 86 ) ( 188 ) Balance, end of year $ 6,943 755 1,109 8,807 Three Months Ended March 31, 2025 Balance, beginning of year $ 7,424 809 1,213 9,446 Amortization expense ( 99 ) ( 13 ) 14 ( 98 ) Balance, end of year $ 7,325 796 1,227 9,348 (6) POLICYHOLDERS’ LIABILITIES LIABILITY FOR FUTURE POLICY BENEFITS The following tables summarize balances of and changes in the liability for future policy benefits for our reporting cohorts: Permanent, which summarizes insurance policies with premiums payable over the lifetime of the policy, March 31, 2026 | 10-Q 19 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) and Permanent Limited Pay, which summarizes insurance policies with premiums payable for a limited time after which the policy is fully paid up. Both reporting cohorts include whole life and endowment policies. March 31, 2026 (In thousands) International Insurance Domestic Insurance Permanent Permanent Limited Pay Total Permanent Permanent Limited Pay Total Present Value of Expected Net Premiums: Balance, beginning of year $ 241,394 20,592 261,986 189,845 13,052 202,897 Beginning balance at original discount rate $ 242,912 20,405 263,317 192,071 13,446 205,517 Effect of actual variances from expected experience 937 11 948 ( 13,394 ) ( 690 ) ( 14,084 ) Adjusted beginning of year balance 243,849 20,416 264,265 178,677 12,756 191,433 Issuances 6,319 782 7,101 24,866 483 25,349 Interest accrual 2,466 201 2,667 2,080 122 2,202 Net premiums collected ( 9,853 ) ( 1,460 ) ( 11,313 ) ( 6,646 ) ( 103 ) ( 6,749 ) Derecognition and other 190 44 234 ( 1,462 ) ( 50 ) ( 1,512 ) Ending balance at original discount rate 242,971 19,983 262,954 197,515 13,208 210,723 Effect of changes in discount rates ( 4,106 ) 23 ( 4,083 ) ( 4,967 ) ( 493 ) ( 5,460 ) Balance, end of period $ 238,865 20,006 258,871 192,548 12,715 205,263 Present Value of Expected Future Policy Benefits: Balance, beginning of year $ 910,575 166,327 1,076,902 324,382 139,220 463,602 Beginning balance at original discount rate $ 932,243 174,075 1,106,318 339,821 152,775 492,596 Effect of actual variances from expected experience 1,845 721 2,566 ( 13,531 ) ( 516 ) ( 14,047 ) Adjusted beginning of year balance 934,088 174,796 1,108,884 326,290 152,259 478,549 Issuances 6,433 773 7,206 24,867 482 25,349 Interest accrual 10,158 1,734 11,892 3,813 1,788 5,601 Benefit payments ( 25,408 ) ( 4,762 ) ( 30,170 ) ( 5,699 ) ( 1,819 ) ( 7,518 ) Derecognition and other 75 168 243 ( 1,472 ) 8 ( 1,464 ) Ending balance at original discount rate 925,346 172,709 1,098,055 347,799 152,718 500,517 Effect of changes in discount rates ( 34,522 ) ( 10,100 ) ( 44,622 ) ( 20,930 ) ( 16,000 ) ( 36,930 ) Balance, end of period $ 890,824 162,609 1,053,433 326,869 136,718 463,587 Net liability for future policy benefits $ 651,959 142,603 794,562 134,321 124,003 258,324 Plus: Flooring impact 2 — 2 — — — Less: Reinsurance recoverable — — — 7,705 — 7,705 Net liability for future policy benefits, after reinsurance recoverable $ 651,961 142,603 794,564 126,616 124,003 250,619 March 31, 2026 | 10-Q 20 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) March 31, 2025 (In thousands) International Insurance Domestic Insurance Permanent Permanent Limited Pay Total Permanent Permanent Limited Pay Total Present Value of Expected Net Premiums: Balance, beginning of year $ 237,944 15,592 253,536 156,432 13,248 169,680 Beginning balance at original discount rate $ 247,279 15,807 263,086 164,666 14,105 178,771 Effect of actual variances from expected experience 673 469 1,142 ( 10,389 ) ( 698 ) ( 11,087 ) Adjusted beginning of year balance 247,952 16,276 264,228 154,277 13,407 167,684 Issuances 6,639 985 7,624 23,901 547 24,448 Interest accrual 2,458 156 2,614 1,836 124 1,960 Net premiums collected ( 10,488 ) ( 1,452 ) ( 11,940 ) ( 5,616 ) ( 43 ) ( 5,659 ) Derecognition and other ( 261 ) 121 ( 140 ) ( 2,272 ) ( 24 ) ( 2,296 ) Ending balance at original discount rate 246,300 16,086 262,386 172,126 14,011 186,137 Effect of changes in discount rates ( 6,823 ) ( 106 ) ( 6,929 ) ( 5,961 ) ( 687 ) ( 6,648 ) Balance, end of period $ 239,477 15,980 255,457 166,165 13,324 179,489 Present Value of Expected Future Policy Benefits: Balance, beginning of year $ 914,153 159,244 1,073,397 281,212 139,461 420,673 Beginning balance at original discount rate $ 965,548 170,911 1,136,459 304,500 153,902 458,402 Effect of actual variances from expected experience 712 1,098 1,810 ( 10,578 ) ( 392 ) ( 10,970 ) Adjusted beginning of year balance 966,260 172,009 1,138,269 293,922 153,510 447,432 Issuances 6,766 1,113 7,879 23,902 541 24,443 Interest accrual 10,539 1,699 12,238 3,488 1,794 5,282 Benefit payments ( 25,894 ) ( 5,275 ) ( 31,169 ) ( 4,385 ) ( 1,727 ) ( 6,112 ) Derecognition and other ( 438 ) ( 12 ) ( 450 ) ( 2,258 ) ( 23 ) ( 2,281 ) Ending balance at original discount rate 957,233 169,534 1,126,767 314,669 154,095 468,764 Effect of changes in discount rates ( 42,070 ) ( 10,309 ) ( 52,379 ) ( 20,462 ) ( 14,131 ) ( 34,593 ) Balance, end of period $ 915,163 159,225 1,074,388 294,207 139,964 434,171 Net liability for future policy benefits $ 675,686 143,245 818,931 128,042 126,640 254,682 Less: Reinsurance recoverable — — — 2,875 — 2,875 Net liability for future policy benefits, after reinsurance recoverable $ 675,686 143,245 818,931 125,167 126,640 251,807 March 31, 2026 | 10-Q 21 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The following table reconciles the net liability for future policy benefits shown above to the liability for future policy benefits reported in the consolidated balance sheets. March 31, 2026 March 31, 2025 (In thousands) International Insurance Domestic Insurance Consolidated International Insurance Domestic Insurance Consolidated Life Insurance: Permanent $ 651,961 126,616 778,577 675,686 125,167 800,853 Permanent limited pay 142,603 124,003 266,606 143,245 126,640 269,885 Deferred profit liability 27,650 39,332 66,982 25,011 36,878 61,889 Other 30,549 24,672 55,221 27,595 16,864 44,459 Total life insurance 852,763 314,623 1,167,386 871,537 305,549 1,177,086 Accident & Health Insurance: Other 718 681 1,399 529 584 1,113 Total future policy benefit reserves $ 853,481 315,304 1,168,785 872,066 306,133 1,178,199 The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefit payments for long-term duration contracts. March 31, 2026 March 31, 2025 (In thousands) International Insurance Domestic Insurance International Insurance Domestic Insurance Undiscounted: Permanent: Expected future gross premiums $ 575,952 747,534 579,124 662,473 Expected future benefit payments 1,407,618 768,452 1,434,410 692,951 Permanent Limited Pay: Expected future gross premiums 48,714 74,179 45,251 75,765 Expected future benefit payments 262,826 398,337 247,965 395,557 Discounted: Permanent: Expected future gross premiums $ 445,487 461,960 447,554 405,189 Expected future benefit payments 890,824 326,869 915,163 294,207 Permanent Limited Pay: Expected future gross premiums 43,514 47,348 40,539 49,512 Expected future benefit payments 162,609 136,718 159,225 139,964 March 31, 2026 | 10-Q 22 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The following tables summarize the amount of revenue and interest related to long-term duration contracts recognized in the consolidated statement of operations and comprehensive income (loss). Three Months Ended March 31, 2026 2025 (In thousands) Gross Premiums Interest Expense Gross Premiums Interest Expense International Insurance: Life Insurance: Permanent $ 21,242 7,692 21,767 8,081 Permanent Limited Pay 4,771 1,767 4,461 1,764 Other ( 584 ) — ( 336 ) — Less: Reinsurance 384 — 471 — Total, net of reinsurance 25,045 9,459 25,421 9,845 Accident & Health Insurance: Other 153 — 187 — Total $ 25,198 9,459 25,608 9,845 Domestic Insurance: Life Insurance: Permanent $ 15,666 1,733 13,389 1,652 Permanent Limited Pay 1,973 2,133 2,123 2,107 Other 453 — 497 — Less: Reinsurance 3,610 — 2,082 — Total, net of reinsurance 14,482 3,866 13,927 3,759 Accident & Health Insurance: Other 258 — 262 — Total $ 14,740 3,866 14,189 3,759 The following table provides the weighted-average durations of the liability for future policy benefits. March 31, 2026 March 31, 2025 (In years) International Insurance Domestic Insurance International Insurance Domestic Insurance Permanent: Duration at original discount rate 8.1 17.1 8.0 17.0 Duration at current discount rate 8.0 16.0 8.0 16.4 Permanent Limited Pay: Duration at original discount rate 7.7 13.6 7.0 13.5 Duration at current discount rate 7.3 12.6 6.7 12.9 March 31, 2026 | 10-Q 23 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The following table provides the weighted-average interest rates for the liability for future policy benefits. March 31, 2026 March 31, 2025 International Insurance Domestic Insurance International Insurance Domestic Insurance Permanent: Interest rate at original discount rate 4.81 % 4.96 % 4.84 % 4.91 % Interest rate at current discount rate 5.07 % 5.64 % 5.12 % 5.50 % Permanent Limited Pay: Interest rate at original discount rate 4.21 % 4.84 % 4.16 % 4.83 % Interest rate at current discount rate 5.10 % 5.60 % 5.09 % 5.46 % LIABILITY FOR POLICYHOLDERS’ ACCOUNT BALANCES The following table presents the policyholders' account balances by range of guaranteed minimum crediting rates and the related range of the difference, in basis points, between rates being credited and the respective guaranteed minimums. At Guaranteed Minimum 1 Basis Point-50 Basis Points Above 51 Basis Points-150 Basis Points Above Greater Than 150 Basis Points Above Total March 31, 2026 (In thousands) Range of Guaranteed Minimum Crediting Rates: 0.00 % - 1.49 % $ 888 — — 31,980 32,868 1.50 % - 2.99 % 3,937 190 6 39,569 43,702 3.00 % - 4.49 % 124,787 386 26,329 — 151,502 Greater or equal to 4.50 % 31,000 — — — 31,000 Total $ 160,612 576 26,335 71,549 259,072 At Guaranteed Minimum 1 Basis Point-50 Basis Points Above 51 Basis Points-150 Basis Points Above Greater Than 150 Basis Points Above Total March 31, 2025 (In thousands) Range of Guaranteed Minimum Crediting Rates: 0.00 % - 1.49 % $ 815 — — 34,612 35,427 1.50 % - 2.99 % 3,956 187 6 35,108 39,257 3.00 % - 4.49 % 109,012 381 19,578 — 128,971 Greater or equal to 4.50 % 31,457 — — — 31,457 Total $ 145,240 568 19,584 69,720 235,112 March 31, 2026 | 10-Q 24 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The following tables summarize balances of and changes in policyholders' account balances. March 31, 2026 (In thousands, except for %) Supplemental Contracts Without Life Contingencies Fixed Annuity Dividend Accumulations Premiums Paid in Advance Balance, beginning of year $ 85,782 88,297 51,360 27,317 Issuances 9,235 1,043 125 830 Premiums received 71 1,220 1,415 199 Interest credited 862 765 515 203 Less: Surrenders and withdrawals — 2,902 1,167 1,408 Benefit payments 4,690 — — — Balance, end of period $ 91,260 88,423 52,248 27,141 Weighted-average crediting rates 4.13 % 3.97 % 3.97 % 3.35 % Cash surrender value $ 91,260 88,423 52,248 27,141 March 31, 2025 (In thousands, except for %) Supplemental Contracts Without Life Contingencies Fixed Annuity Dividend Accumulations Premiums Paid in Advance Balance, beginning of year $ 60,414 88,080 47,768 29,897 Issuances 9,719 1,001 183 1,249 Premiums received 39 1,135 1,416 212 Interest credited 655 759 454 222 Less: Surrenders and withdrawals — 2,267 1,228 1,607 Benefit payments 2,989 — — — Balance, end of period $ 67,838 88,708 48,593 29,973 Weighted-average crediting rates 4.08 % 3.97 % 3.78 % 3.19 % Cash surrender value $ 67,838 88,708 48,593 29,973 March 31, 2026 | 10-Q 25 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The following table reconciles policyholders' account balances shown above to the policyholders' account balance liability in the consolidated balance sheets. As of March 31, (In thousands) 2026 2025 Annuities: Supplemental contracts without life contingencies $ 91,260 67,838 Fixed annuity 88,423 88,708 Unearned revenue reserve 1,492 1,488 Total annuities $ 181,175 158,034 Premiums paid in advance: Premiums paid in advance $ 27,141 29,973 Other 2,539 1,991 Total premiums paid in advance $ 29,680 31,964 (7) REINSURANCE In the normal course of business, the Company reinsures portions of certain policies that we underwrite to mitigate exposure to potential losses and/or to provide additional capacity for growth. In CICA International, prior to April 1, 2025, we retained up to $ 100,000 on any one individual life insurance policy and reinsured the death benefit amount. For new policies beginning on such date, we increased our retention amount to $ 250,000 and reinsure amounts above that. We also reinsure 100 % of our accidental death benefit rider coverage. In CLOA, we have a coinsurance agreement with RGA Reinsurance Company ("RGA"). Under this agreement, CLOA has elected RGA to reinsure 50 % of its final expense business. The Company remains contingently liable in the event that any of the reinsurers are unable to meet their obligations under any reinsurance agreement. Our amounts recoverable from reinsurers represent receivables from and reserves ceded to reinsurers. We obtain reinsurance from multiple reinsurers and monitor our reinsurance concentration as well as the financial strength ratings of our reinsurers. Their ratings by A.M. Best Company range from A- (Excellent) to A+ (Superior). A summary of life insurance in force, along with assumed and ceded reinsurance activity, is summarized below as of the periods indicated. (In thousands) March 31, 2026 December 31, 2025 Life insurance in force: Direct life insurance in force $ 5,454,754 5,431,721 Aggregate assumed life insurance in force 3,157 3,193 Aggregate ceded life insurance in force ( 920,434 ) ( 910,226 ) Net life insurance in force $ 4,537,477 4,524,688 March 31, 2026 | 10-Q 26 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The Company's reinsurance recoverable on ceded reinsurance was $ 12.9 million and $ 10.9 million as of March 31, 2026 and December 31, 2025, respectively. Premiums, claims and surrenders assumed and ceded, and expenses ceded for all lines of business are summarized for the periods indicated below. Three Months Ended March 31, (In thousands) 2026 2025 Premiums from short duration contracts: Direct $ 412 449 Ceded ( 1 ) ( 1 ) Net premiums earned 411 448 Premiums from long duration contracts: Direct 43,520 41,901 Assumed 15 11 Ceded ( 4,008 ) ( 2,563 ) Net premiums earned 39,527 39,349 Total premiums earned $ 39,938 39,797 Claims and surrenders assumed $ 20 ( 40 ) Claims and surrenders ceded $ ( 744 ) ( 677 ) Commissions assumed and ceded $ ( 2,971 ) ( 3,125 ) Other general expenses ceded $ ( 803 ) ( 588 ) (8) COMMITMENTS AND CONTINGENCIES LITIGATION AND REGULATORY ACTIONS From time to time, we are subject to legal and regulatory actions relating to our business. We may incur defense costs, including attorneys' fees, and other direct litigation costs associated with defending claims. If we suffer an adverse judgment as a result of litigation claims, it could have a material adverse effect on our business, results of operations and financial condition. Part I. Item 3. Legal Proceedings and Part IV. Item 1. Note 8. Commitments and Contingencies of our consolidated financial statements and notes thereto included in the 2025 Form 10-K includes a discussion of our legal proceedings. There have been no material developments in the three months ended March 31, 2026 from the legal proceedings described in our consolidated financial statements and notes thereto included in the 2025 Form 10-K . CONTRACTUAL OBLIGATIONS As of March 31, 2026, we committed to funding investments up to $ 8.3 million related to limited partnership and structured note investments previously described. CREDIT FACILITY On May 3, 2024 , the Company renewed its $ 20 million senior secured revolving credit facility (the “Credit Facility”) with Regions Bank ("Regions"). The Credit Facility has a three-year term, maturing on May 5, 2027 , and allows the Company to borrow up to $ 20 million for working capital purposes, capital expenditures and other corporate purposes. Revolving loans may be requested by the Company in aggregate minimum principal amounts of $ 0.5 million per loan. At the Company's election, the revolving loans may either bear a rate (a fluctuating rate per annum) equal to March 31, 2026 | 10-Q 27 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) the greatest of (a) Regions' prime rate, (b) the federal funds rate plus 0.50 %, (c) the index rate plus 1.00 % or (d) 0.75 %. The Company is required to pay Regions an annual commitment fee of 0.375 % of the unused portion of the Credit Facility in quarterly installments, which the Company expenses as it is incurred. Obligations under the Credit Facility are secured by substantially all of the assets of the Company other than the equity interests in its subsidiaries, real estate owned by the Company, and other limited exceptions. The Credit Facility contains customary events of default and financial, affirmative and negative covenants including, but not limited to, restrictions on indebtedness, liens, investments, asset dispositions and restricted payments. As of March 31, 2026, the Company had no t borrowed any funds against the Credit Facility and was not in violation of any covenants. (9) STOCKHOLDERS' EQUITY AND RESTRICTIONS STOCK Our Restated and Amended Articles of Incorporation authorize the issuance of 127,000,000 shares, of which 100,000,000 shares shall be Class A common stock, 2,000,000 shares shall be Class B common stock, and 25,000,000 shall be preferred stock. Both authorized classes of common stock are equal in all respects, except (a) each share of Class A common stock is entitled to receive twice the cash dividends paid on a per share basis to the Class B common stock, if any; and (b) the holders of the Class B common stock have the exclusive right to elect a simple majority of the Board of Directors of Citizens. Citizens currently has no outstanding preferred stock or Class B common stock. A summary of the change in the number of shares of Class A common stock and treasury stock issued is as follows: 2026 2025 Three Months Ended March 31, (In thousands) Common Stock Class A Treasury Stock Common Stock Class A Treasury Stock Balance at beginning of year 54,626 5,330 54,235 5,330 Stock issued for compensation 36 — 1 — Balance at end of period 54,662 5,330 54,236 5,330 EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share of Class A common stock. Three Months Ended March 31, 2026 2025 (In thousands, except per share amounts) Basic and diluted earnings per share: Net income (loss) $ 2,268 ( 1,623 ) Weighted average shares of Class A outstanding - basic 50,308 49,908 Weighted average shares of Class A outstanding - diluted (1) 51,580 50,912 Basic earnings (loss) per share of Class A common stock $ 0.05 ( 0.03 ) Diluted earnings (loss) per share of Class A common stock 0.04 ( 0.03 ) (1) Because the Company reported a net loss for the three months ended March 31, 2025, the effect of all potentially dilutive securities was excluded from the calculation of diluted earnings per share as it would be anti-dilutive. March 31, 2026 | 10-Q 28 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) STATUTORY CAPITAL AND SURPLUS Each of our domestic regulated insurance subsidiaries is required to meet stipulated regulatory capital requirements imposed by the U.S. National Association of Insurance Commissioners ("NAIC"). All domestic insurance subsidiaries exceeded the minimum capital requirements at March 31, 2026. On March 27, 2024 , Citizens and the Colorado Division of Insurance entered into a capital maintenance agreement that specifies that Citizens will infuse capital as needed to ensure that CLOA's RBC remains above 350 %. As CLOA's RBC exceeded 350% at March 31, 2026, no capital contribution was necessary. CICA International is a Puerto Rico domiciled company. The Insurance Code of Puerto Rico does not specifically set forth minimum capital and surplus standards but rather requires that an insurer submit a business plan for approval to the Office of the Commissioner of Insurance ("OIC") that includes proposed minimum capital and surplus. CICA International is required to maintain a minimum of $750,000 in capital and maintain a premium to surplus ratio of 7 to 1 . At March 31, 2026, CICA International's capital exceeds both the required minimum capital and related ratio. (10) SEGMENT AND OTHER OPERATING INFORMATION The Company's segments are defined by management's reporting structure and operating activities. The chief operating decision maker ("CODM"), our President and Chief Executive Officer, reviews and analyzes income statement information by segment to make decisions, assess financial performance and allocate resources across the Company in order to meet the overall strategic objectives of the Company. The Company has two reportable segments: International Insurance and Domestic Insurance. Our International Insurance segment issues endowment contracts, which are principally accumulation contracts that incorporate an element of life insurance protection, and whole life insurance to non-U.S. residents through CICA International. These contracts are designed to provide a fixed amount of insurance coverage over the life of the insured and may utilize rider benefits to provide additional coverage and annuity benefits to enhance accumulations. Our Domestic Insurance segment operates through our subsidiaries: CLOA, which issues whole life, final expense and life products with living benefits throughout the U.S.; and SPLIC and MGLIC, which focus on the life insurance needs of the lower-income markets, primarily in Louisiana, Mississippi, and Arkansas. SPLIC also issues critical illness policies. Our policies are sold and serviced through independent agents. The International Insurance and Domestic Insurance portions of the Company constitute separate businesses. In addition to the International Insurance and Domestic Insurance business, the Company also operates other non-insurance portions of the Company ("Other Non-Insurance Enterprises"), which primarily include the Company’s IT and corporate-support functions. The accounting policies of the reportable segments and Other Non-Insurance Enterprises are presented in accordance with U.S. GAAP and are the same as those described in the summary of significant accounting policies in our 2025 Form 10-K . The CODM evaluates profit and loss performance based on U.S. GAAP income (loss) before federal income tax for its two reportable segments. The Company's Other Non-Insurance Enterprises represents the only reportable difference between segments and consolidated operations. March 31, 2026 | 10-Q 29 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) International Insurance Domestic Insurance Other Non-Insurance Enterprises Consolidated Three Months Ended March 31, 2026 (In thousands) Revenues: Premiums $ 25,198 14,740 — 39,938 Net investment income 12,004 5,113 187 17,304 Investment related gains (losses), net 1,334 ( 345 ) ( 5 ) 984 Other income 1,487 7 — 1,494 Total revenues 40,023 19,515 182 59,720 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 32,111 7,542 — 39,653 Increase (decrease) in future policy benefit reserves ( 7,264 ) 2,561 — ( 4,703 ) Policyholder liability remeasurement (gain) loss 1,125 ( 250 ) — 875 Policyholders' dividends 1,036 66 — 1,102 Total insurance benefits paid or provided 27,008 9,919 — 36,927 Commissions 4,489 6,335 — 10,824 Other general expenses 5,602 5,106 2,664 13,372 Capitalization of deferred policy acquisition costs ( 4,233 ) ( 4,711 ) — ( 8,944 ) Amortization of deferred policy acquisition costs 3,552 1,427 — 4,979 Amortization of cost of insurance acquired — 188 — 188 Total benefits and expenses 36,418 18,264 2,664 57,346 Income (loss) before federal income tax $ 3,605 1,251 ( 2,482 ) 2,374 March 31, 2026 | 10-Q 30 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) International Insurance Domestic Insurance Other Non-Insurance Enterprises Consolidated Three Months Ended March 31, 2025 (In thousands) Revenues: Premiums $ 25,608 14,189 — 39,797 Net investment income 12,131 5,059 187 17,377 Investment related gains (losses), net ( 2,766 ) ( 129 ) 1 ( 2,894 ) Other income 1,365 7 — 1,372 Total revenues 36,338 19,126 188 55,652 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 33,034 7,064 — 40,098 Increase (decrease) in future policy benefit reserves ( 6,856 ) 3,210 — ( 3,646 ) Policyholder liability remeasurement (gain) loss 93 ( 265 ) — ( 172 ) Policyholders' dividends 1,185 110 — 1,295 Total insurance benefits paid or provided 27,456 10,119 — 37,575 Commissions 5,103 6,172 — 11,275 Other general expenses 5,295 5,060 2,338 12,693 Capitalization of deferred policy acquisition costs ( 4,787 ) ( 4,062 ) — ( 8,849 ) Amortization of deferred policy acquisition costs 3,466 1,181 — 4,647 Amortization of cost of insurance acquired — 98 — 98 Total benefits and expenses 36,533 18,568 2,338 57,439 Income (loss) before federal income tax $ ( 195 ) 558 ( 2,150 ) ( 1,787 ) The Company categorizes premiums in two categories - first year premiums are premiums received within the first 12 months of a policy's issuance and any premiums received thereafter are renewal premiums. A summary of the premiums for the International Insurance segment is detailed below. (In thousands) Three Months Ended March 31, 2026 2025 Direct premiums: First year $ 3,290 3,392 Renewal 22,292 22,687 Total direct premiums 25,582 26,079 Reinsurance ( 384 ) ( 471 ) Total premiums $ 25,198 25,608 March 31, 2026 | 10-Q 31 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) A summary of the Domestic Insurance segment premium breakout is detailed below. (In thousands) Three Months Ended March 31, 2026 2025 Direct premiums: First year $ 5,680 5,425 Renewal 12,670 10,846 Total direct premiums 18,350 16,271 Reinsurance ( 3,610 ) ( 2,082 ) Total premiums $ 14,740 14,189 The table below summarizes assets by segment. (In thousands) March 31, 2026 December 31, 2025 Assets: Segments: International Insurance $ 1,178,768 1,190,736 Domestic Insurance 529,478 529,357 Total Segments 1,708,246 1,720,093 Other Non-Insurance Enterprises 31,254 34,667 Total assets $ 1,739,500 1,754,760 GEOGRAPHIC INFORMATION The following table sets forth the Company's annual total of earned premiums by country of policyholder residence for the periods indicated. Three Months Ended March 31, (In thousands) 2026 2025 Area: United States $ 18,521 16,500 Colombia 6,825 6,554 Taiwan 3,406 3,886 Venezuela 3,178 3,350 Ecuador 2,996 3,200 Argentina 2,602 2,096 Other foreign countries 9,125 9,702 Reinsurance and change in premium accruals ( 6,715 ) ( 5,491 ) Total premiums $ 39,938 39,797 (11) INCOME TAXES The effective tax rate is the ratio of tax expense or tax benefit over pre-tax income. The tax effective rate was 4.5 % for the three months ended March 31, 2026, compared to an effective tax benefit rate of 9.2 % for the same period in March 31, 2026 | 10-Q 32 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) 2025. CICA International is considered a controlled foreign corporation for federal income tax purposes. As a result, the insurance activity of CICA International is subject to Subpart F of the Internal Revenue Code and is included in Citizens’ taxable income. The Government of Puerto Rico approved a tax exemption decree for CICA International which freezes the income tax rate at 0 % on taxable earnings up to $ 1.2 million and 4 % on taxable earnings in excess of $ 1.2 million for a minimum of 15 years. The effective tax rate varies from the prevailing corporate federal income tax rate of 21% mainly due to the impact of Subpart F and the reduced Puerto Rico income tax rate. At March 31, 2026 and 2025, we determined it was more likely than not that a portion of our capital deferred tax assets would not be realized in their entirety. The Company recorded valuation allowances of $ 4.7 million at March 31, 2026 and 2025, in accumulated other comprehensive income (loss) on the consolidated balance sheets. (12) OTHER COMPREHENSIVE INCOME (LOSS) The changes in the components of other comprehensive income (loss) are reported net of the effects of income taxes of 21% for domestic entities and 4 % for Puerto Rican entities for the three months ended March 31, 2026 and 2025. The following table provides a rollforward of accumulated other comprehensive income (loss) for the periods indicated below. (In thousands) Unrealized Gains and Losses on Available for Sale Securities Discount Rate for Liability for Future Policy Benefits Other Comprehensive Income (Loss) Balance at December 31, 2025, net of tax $ ( 136,344 ) 47,923 ( 88,421 ) Other comprehensive income (loss) before reclassification, before tax ( 16,295 ) 17,135 840 Amounts reclassified from other comprehensive income (loss), before tax 412 — 412 Income tax benefit (expense) 1,191 ( 1,505 ) ( 314 ) Balance at March 31, 2026, net of tax $ ( 151,036 ) 63,553 ( 87,483 ) Balance at December 31, 2024, net of tax $ ( 169,599 ) 73,634 ( 95,965 ) Other comprehensive income (loss) before reclassification, before tax 18,334 ( 8,589 ) 9,745 Amounts reclassified from other comprehensive income (loss), before tax 83 — 83 Income tax benefit (expense) ( 1,379 ) 442 ( 937 ) Balance at March 31, 2025, net of tax $ ( 152,561 ) 65,487 ( 87,074 ) (13) RELATED PARTY TRANSACTIONS The Company has various routine related party transactions in conjunction with our holding company structure, such as management service agreements related to costs incurred, a tax sharing agreement between entities, and inter-company dividends and capital contributions. There were no changes related to these relationships during the three months ended March 31, 2026. See our 2025 Form 10-K for a comprehensive discussion of related party transactions. (14) SUBSEQUENT EVENTS The Company has evaluated the impact of subsequent events as defined by the accounting guidance through the date this report was issued and determined that no other significant subsequent events need to be recognized or disclosed at this time. March 31, 2026 | 10-Q 33 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS