CITIZENS, INC. 10-Q

cia-20260630 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2026 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to COMMISSION FILE NUMBER: 000-16509 CITIZENS, INC. (Exact name of registrant as specified in its charter) Colorado 84-0755371 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 11815 Alterra Pkwy, Floor 15 , Austin , TX 78758 (Current Address) Registrant's telephone number, including area code: ( 512 ) 837-7100 Securities registered pursuant to Section 12(b) of the Act Class A Common Stock CIA NYSE (Title of each class) (Trading symbol(s)) (Name of each exchange on which registered) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act: Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No As of July 31, 2026, the Registrant had 50,643,108 shares of Class A common stock outstanding. THIS PAGE INTENTIONALLY LEFT BLANK TABLE OF CONTENTS Page Number Part I. FINANCIAL INFORMATION Item 1. Financial Statements 2 Consolidated Balance Sheets, June 30, 2026 (Unaudited) and December 31, 2025 2 Consolidated Statements of Operations and Comprehensive Income (Loss), Six Months Ended June 30, 2026 and 2025 (Unaudited) 4 Consolidated Statements of Stockholders' Equity, Six Months Ended June 30, 2026 and 2025 (Unaudited) 5 Consolidated Statements of Cash Flows, Six Months Ended June 30, 2026 and 2025 (Unaudited) 6 Notes to Consolidated Financial Statements (Unaudited) 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 38 Item 3. Quantitative and Qualitative Disclosures about Market Risk 60 Item 4. Controls and Procedures 60 Part II. OTHER INFORMATION Item 1. Legal Proceedings 61 Item 1A. Risk Factors 61 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 61 Item 3. Defaults Upon Senior Securities 61 Item 4. Mine Safety Disclosures 61 Item 5. Other Information 61 Item 6. Exhibits 62 June 30, 2026 | 10-Q 1 Table of Contents PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets (In thousands) June 30, 2026 December 31, 2025 (Unaudited) Assets: Investments: Fixed maturity securities available-for-sale, at fair value (amortized cost: $ 1,438,702 and $ 1,432,454 in 2026 and 2025, respectively) $ 1,282,060 1,287,861 Equity securities, at fair value 1,233 1,356 Policy loans 66,146 67,455 Other long-term investments (portion measured at fair value $ 82,979 and $ 85,157 in 2026 and 2025, respectively) 83,260 85,439 Total investments 1,432,699 1,442,111 Cash and cash equivalents (restricted portion: $ 1,554 in both 2026 and 2025) 16,960 22,976 Accrued investment income 19,545 18,241 Receivable for securities — 90 Reinsurance recoverable 15,175 10,874 Deferred policy acquisition costs 229,198 220,537 Cost of insurance acquired 8,664 8,995 Current federal income tax receivable 1,001 624 Property and equipment, net 9,167 9,835 Due premiums 9,968 11,299 Other assets (less allowance for losses of $ 732 and $ 740 in 2026 and 2025, respectively) 9,683 9,178 Total assets $ 1,752,060 1,754,760 See accompanying Notes to Consolidated Financial Statements. June 30, 2026 | 10-Q 2 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets, Continued (In thousands, except share amounts) June 30, 2026 December 31, 2025 (Unaudited) Liabilities and Stockholders' Equity: Liabilities: Policy liabilities: Future policy benefit reserves: Life insurance $ 1,181,083 1,188,089 Accident and health insurance 1,509 1,338 Total future policy benefit reserves 1,182,592 1,189,427 Policyholders' funds: Annuities 183,995 175,569 Dividend accumulations 53,230 51,360 Premiums paid in advance 29,198 29,055 Policy claims payable 10,052 8,772 Other policyholders' funds 8,134 7,955 Total policyholders' funds 284,609 272,711 Total policy liabilities 1,467,201 1,462,138 Commissions payable 4,810 4,186 Deferred federal income tax liability 5,035 5,996 Other liabilities 39,850 47,455 Total liabilities 1,516,896 1,519,775 Commitments and contingencies ( Notes 7 and 8 ) Stockholders' Equity: Common stock: Class A, no par value, 100,000,000 shares authorized, 54,968,998 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 273,304 272,294 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 73,496 71,653 Accumulated other comprehensive income (loss) ( 91,095 ) ( 88,421 ) Treasury stock, at cost ( 23,725 ) ( 23,725 ) Total stockholders' equity 235,164 234,985 Total liabilities and stockholders' equity $ 1,752,060 1,754,760 See accompanying Notes to Consolidated Financial Statements. June 30, 2026 | 10-Q 3 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, (In thousands, except per share amounts) 2026 2025 2026 2025 Revenues: Premiums $ 43,703 43,388 83,641 83,185 Net investment income 17,031 17,169 34,335 34,546 Investment related gains (losses), net ( 1,494 ) 2,408 ( 510 ) ( 486 ) Other income 1,168 2,121 2,662 3,493 Total revenues 60,408 65,086 120,128 120,738 Benefits and Expenses: Insurance benefits paid or provided: Claims and surrenders 33,751 40,220 73,404 80,318 Increase (decrease) in future policy benefit reserves 3,192 ( 4,554 ) ( 1,511 ) ( 8,200 ) Policyholder liability remeasurement (gain) loss 1,712 1,351 2,587 1,179 Policyholders' dividends 1,393 1,315 2,495 2,610 Total insurance benefits paid or provided 40,048 38,332 76,975 75,907 Commissions 11,352 11,409 22,176 22,684 Other general expenses 14,090 13,459 27,462 26,152 Capitalization of deferred policy acquisition costs ( 9,717 ) ( 9,720 ) ( 18,661 ) ( 18,569 ) Amortization of deferred policy acquisition costs 5,021 4,613 10,000 9,260 Amortization of cost of insurance acquired 143 79 331 177 Total benefits and expenses 60,937 58,172 118,283 115,611 Income (loss) before federal income tax ( 529 ) 6,914 1,845 5,127 Federal income tax expense (benefit) ( 104 ) 455 2 291 Net income (loss) ( 425 ) 6,459 1,843 4,836 Per Share Amounts: Basic and diluted earnings (loss) per share of Class A common stock ( 0.01 ) 0.13 0.04 0.10 Other Comprehensive Income (Loss): Unrealized gains (losses) on fixed maturity securities: Unrealized holding gains (losses) arising during period 3,867 243 ( 12,428 ) 18,577 Reclassification adjustment for (gains) losses included in net income (loss) ( 34 ) 168 378 251 Unrealized gains (losses) on fixed maturity securities, net 3,833 411 ( 12,050 ) 18,828 Change in current discount rate for liability for future policy benefits ( 8,393 ) 4,003 8,742 ( 4,586 ) Income tax expense (benefit) on other comprehensive income items ( 948 ) 995 ( 634 ) 1,932 Other comprehensive income (loss) ( 3,612 ) 3,419 ( 2,674 ) 12,310 Total comprehensive income (loss) $ ( 4,037 ) 9,878 ( 831 ) 17,146 See accompanying Notes to Consolidated Financial Statements. June 30, 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 Comprehensive income (loss): Net income (loss) — — ( 425 ) — — ( 425 ) Other comprehensive income (loss) — — — ( 3,612 ) — ( 3,612 ) Total comprehensive income (loss) — — ( 425 ) ( 3,612 ) — ( 4,037 ) Stock-based compensation 533 — — — — 533 Balance at June 30, 2026 $ 273,304 3,184 73,496 ( 91,095 ) ( 23,725 ) 235,164 Balance at December 31, 2024 $ 269,799 3,184 57,062 ( 95,965 ) ( 23,725 ) 210,355 Comprehensive income (loss): Net income (loss) — — ( 1,623 ) — — ( 1,623 ) Other comprehensive income (loss) — — — 8,891 — 8,891 Total comprehensive income (loss) — — ( 1,623 ) 8,891 — 7,268 Stock-based compensation 516 — — — — 516 Balance at March 31, 2025 270,315 3,184 55,439 ( 87,074 ) ( 23,725 ) 218,139 Comprehensive income (loss): Net income (loss) — — 6,459 — — 6,459 Other comprehensive income (loss) — — — 3,419 — 3,419 Total comprehensive income (loss) — — 6,459 3,419 — 9,878 Stock-based compensation 1,009 — — — — 1,009 Balance at June 30, 2025 $ 271,324 3,184 61,898 ( 83,655 ) ( 23,725 ) 229,026 See accompanying Notes to Consolidated Financial Statements. June 30, 2026 | 10-Q 5 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, (In thousands) 2026 2025 Cash flows from operating activities: Net income (loss) $ 1,843 4,836 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 510 486 Net deferred policy acquisition costs ( 8,661 ) ( 9,309 ) Amortization of cost of insurance acquired 331 177 Depreciation 351 343 Amortization of premiums and discounts on investments 1,932 2,379 Stock-based compensation 1,009 1,797 Deferred federal income tax expense (benefit) ( 327 ) ( 375 ) Change in: Accrued investment income ( 1,304 ) 23 Reinsurance recoverable ( 4,301 ) ( 2,447 ) Due premiums 1,331 986 Future policy benefit reserves 1,907 ( 6,335 ) Other policyholders' liabilities 13,206 14,670 Federal income tax receivable ( 377 ) ( 995 ) Commissions payable and other liabilities ( 6,313 ) ( 1,417 ) Other, net 587 ( 601 ) Net cash provided by (used in) operating activities 1,724 4,218 Cash flows from investing activities: Purchases of fixed maturity securities, available-for-sale ( 53,373 ) ( 34,375 ) Sales of fixed maturity securities, available-for-sale 16,569 14,569 Maturities and calls of fixed maturity securities, available-for-sale 28,365 14,723 Principal payments on mortgage loans 5 4 Change in policy loans 1,309 1,568 Sales of other long-term investments 2,601 2,031 Purchases of other long-term investments ( 1,547 ) ( 4,872 ) Purchases of property and equipment ( 361 ) ( 283 ) Net cash used in investing activities ( 6,432 ) ( 6,635 ) See accompanying Notes to Consolidated Financial Statements. June 30, 2026 | 10-Q 6 Table of Contents CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows, Continued (Unaudited) Six Months Ended June 30, (In thousands) 2026 2025 Cash flows from financing activities: Annuity deposits $ 995 4,434 Annuity withdrawals ( 2,303 ) ( 8,345 ) Other share repurchases — ( 272 ) Net cash used in financing activities ( 1,308 ) ( 4,183 ) Net increase (decrease) in cash and cash equivalents ( 6,016 ) ( 6,600 ) Cash and cash equivalents at beginning of year 22,976 29,271 Cash and cash equivalents at end of period $ 16,960 22,671 SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: During the six months ended June 30, 2026 and 2025, various fixed maturity issuers exchanged securities with book values of $ 7.2 million and $ 6.5 million, respectively, for securities of equal value. See accompanying Notes to Consolidated Financial Statements. June 30, 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 June 30, 2026, the consolidated statements of operations and comprehensive income (loss) and stockholders' equity for the three and six months ended June 30, 2026 and June 30, 2025 and the consolidated statements of cash flows for the six months ended June 30, 2026 and June 30, 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 June 30, 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. During the three months ended June 30, 2026, the Company’s wholly-owned subsidiary, CICA Bermuda, was removed from the Register of Companies in Bermuda and dissolved pursuant to applicable Bermuda law. The dissolution did not have any impact on the Company’s consolidated financial statements. 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 amounts of 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. June 30, 2026 | 10-Q 8 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) 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 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 are expected to have, a material impact on our consolidated financial statements. (3) INVESTMENTS The Company invests primarily in fixed maturity securities as shown below. Carrying Value (In thousands, except for %) June 30, 2026 December 31, 2025 Amount % Amount % Cash and invested assets: Fixed maturity securities $ 1,282,060 88.4 % 1,287,861 87.9 % Equity securities 1,233 0.1 1,356 0.1 Policy loans 66,146 4.6 67,455 4.6 Other long-term investments 83,260 5.7 85,439 5.8 Cash and cash equivalents 16,960 1.2 22,976 1.6 Total cash and invested assets $ 1,449,659 100.0 % 1,465,087 100.0 % June 30, 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 June 30, 2026 (In thousands) Fixed maturity securities: U.S. Treasury securities $ 5,667 18 113 5,572 U.S. Government-sponsored enterprises 1,261 53 — 1,314 States and political subdivisions 285,103 1,368 28,086 258,385 Corporate: Financial 326,003 2,144 29,825 298,322 Consumer 249,191 492 40,120 209,563 Utilities 140,695 399 20,882 120,212 Energy 84,244 215 7,791 76,668 Communications 74,475 320 9,561 65,234 All other 123,430 392 16,376 107,446 Commercial mortgage-backed 10,368 1 99 10,270 Residential mortgage-backed 106,044 5 9,130 96,919 Asset-backed 32,221 597 663 32,155 Total fixed maturity securities $ 1,438,702 6,004 162,646 1,282,060 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 June 30, 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) June 30, 2026 December 31, 2025 Equity securities: Bond mutual funds $ 217 219 Common stocks 1,009 1,130 Non-redeemable preferred stock 7 7 Total equity securities $ 1,233 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 losses of $ 0.2 million and $ 0.1 million for the three and six months ended June 30, 2026 and losses of $ 16 thousand and gains of $ 31 thousand for the same periods in 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 and six months ended June 30, 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 June 30, 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: June 30, 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 $ 406 4 1 875 109 7 1,281 113 8 States and political subdivisions 45,410 615 55 133,801 27,471 171 179,211 28,086 226 Corporate: Financial 56,766 1,041 86 142,796 28,784 177 199,562 29,825 263 Consumer 29,360 673 55 159,785 39,447 213 189,145 40,120 268 Utilities 18,502 472 40 80,867 20,410 152 99,369 20,882 192 Energy 25,290 424 45 40,629 7,367 53 65,919 7,791 98 Communications 17,495 470 26 40,927 9,091 49 58,422 9,561 75 All Other 25,831 292 39 67,261 16,084 88 93,092 16,376 127 Commercial mortgage-backed 8,473 97 2 73 2 1 8,546 99 3 Residential mortgage-backed 8,367 165 12 87,476 8,965 71 95,843 9,130 83 Asset-backed 6,417 93 9 12,431 570 14 18,848 663 23 Total fixed maturity securities $ 242,317 4,346 370 766,921 158,300 996 1,009,238 162,646 1,366 June 30, 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 unlikely that the Company will be required to sell the investments before recovery of their amortized cost bases. As of June 30, 2026 and December 31, 2025, 98.7 % of the fair value of our fixed maturity securities portfolio were rated investment grade. While the losses are currently unrealized, we continue to monitor all fixed maturity securities on an on-going basis as future information may become available which could result in an allowance being recorded. These unrealized losses on fixed maturity securities are due to noncredit-related factors, including changes in credit spreads and rising interest rates since purchase, which have little bearing on the recoverability of our investments, hence they are not recognized as credit losses. The fair value is expected to recover as the securities approach maturity or if market yields for such investments decline. The amortized cost and fair value of fixed maturity securities at June 30, 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. June 30, 2026 Amortized Cost Fair Value (In thousands) Fixed maturity securities: Due in one year or less $ 16,462 16,466 Due after one year through five years 118,766 118,344 Due after five years through ten years 313,575 308,914 Due after ten years 989,899 838,336 Total fixed maturity securities $ 1,438,702 1,282,060 June 30, 2026 | 10-Q 12 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The Company uses the specific identification method of each individual security to determine the cost basis used in the calculation of realized gains and losses related to fixed maturity security sales. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Fixed maturity securities, available-for-sale: Proceeds $ 4,718 14,504 16,479 14,569 Gross realized gains $ 104 91 159 92 Gross realized losses $ 53 438 421 442 (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. June 30, 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. June 30, 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 $ 5,572 1,314 — 6,886 States and political subdivisions — 258,385 — 258,385 Corporate 40 877,405 — 877,445 Commercial mortgage-backed — 10,270 — 10,270 Residential mortgage-backed — 96,919 — 96,919 Asset-backed — 32,155 — 32,155 Total fixed maturity securities 5,612 1,276,448 — 1,282,060 Equity securities: Bond mutual funds 217 — — 217 Common stocks 1,009 — — 1,009 Non-redeemable preferred stock 7 — — 7 Total equity securities 1,233 — — 1,233 Other long-term investments (1) — — — 82,979 Total financial assets $ 6,845 1,276,448 — 1,366,272 (1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets. June 30, 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 June 30, 2026, fixed maturity securities, valued using a third-party pricing source, totaled $ 1.3 billion for Level 2 assets and comprised 93.4 % of total reported fair value of our total 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 June 30, 2026. For the three and six months ended June 30, 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 June 30, 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 $ 0.3 million and $ 0.4 million for the three and six months ended June 30, 2026, respectively, related to changes in fair value. These investments are included in other long-term investments on the consolidated balance sheets. As of June 30, 2026, we are committed to funding this structured note investment up to $ 4.1 million over the next nine years . June 30, 2026 | 10-Q 15 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) 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 related to our investments in limited partnerships that calculate NAV per share. For these investments, which are measured at fair value on a recurring basis, we use the NAV per share to measure fair value. The Company recognized net investment related losses of $ 2.4 million and $ 0.6 million and gains of $ 2.9 million and $ 1.4 million on limited partnerships held for the three and six months ended June 30, 2026 and 2025, respectively, related to changes in fair value. These investments are included in other long-term investments on the consolidated balance sheets. June 30, 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 $ 29,369 — 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 35,969 1,316 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 15,081 2,383 7 15,013 4,052 8 Total limited partnerships $ 80,419 3,699 $ 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 value and fair value for the financial assets and liabilities on the consolidated financial statements not otherwise disclosed for the periods indicated were as follows: June 30, 2026 December 31, 2025 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Financial assets: Policy loans $ 66,146 66,146 67,455 67,455 Residential mortgage loan 20 19 24 24 Cash and cash equivalents 16,960 16,960 22,976 22,976 Financial liabilities: Annuity - investment contracts 70,547 64,415 68,975 64,066 June 30, 2026 | 10-Q 16 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) Policy loans. Policy loans had a weighted average annual interest rate of 7.7 % at both June 30, 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 approximates the carrying value reflected on the consolidated balance sheets and is considered a Level 3 asset 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 June 30, 2026 and December 31, 2025. At June 30, 2026, the remaining loan matures in two years . Management estimated the fair value using an annual interest rate of 6.25 % at both June 30, 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 June 30, 2026 and December 31, 2025 using discounted cash flows based upon spot rates adjusted for various risk adjustments ranging from 3.73 % to 5.01 % 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 values of these investments. Carrying Value (In thousands ) June 30, 2026 December 31, 2025 Other long-term investments: Limited partnerships $ 80,419 82,592 Structured note 2,560 2,565 FHLB common stock 226 222 All other investments 55 60 Total other long-term investments $ 83,260 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 six months ended June 30, 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 June 30, 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. Six Months Ended June 30, 2026 (In thousands) Permanent Permanent Limited Pay Other Business Total International Insurance: Balance, beginning of year $ 113,915 18,585 538 133,038 Capitalizations 7,611 978 108 8,697 Amortization expense ( 6,367 ) ( 624 ) ( 109 ) ( 7,100 ) Balance, end of period 115,159 18,939 537 134,635 Domestic Insurance: Balance, beginning of year 74,622 11,683 1,194 87,499 Capitalizations 9,389 469 106 9,964 Amortization expense ( 2,583 ) ( 223 ) ( 94 ) ( 2,900 ) Balance, end of period 81,428 11,929 1,206 94,563 Consolidated: Balance, beginning of year 188,537 30,268 1,732 220,537 Capitalizations 17,000 1,447 214 18,661 Amortization expense ( 8,950 ) ( 847 ) ( 203 ) ( 10,000 ) Balance, end of period $ 196,587 30,868 1,743 229,198 Six Months Ended June 30, 2025 (In thousands) Permanent Permanent Limited Pay Other Business Total International Insurance: Balance, beginning of year $ 108,742 16,370 572 125,684 Capitalizations 8,064 1,534 149 9,747 Amortization expense ( 6,212 ) ( 561 ) ( 155 ) ( 6,928 ) Balance, end of period 110,594 17,343 566 128,503 Domestic Insurance: Balance, beginning of year 61,639 11,169 1,143 73,951 Capitalizations 8,274 442 106 8,822 Amortization expense ( 2,064 ) ( 213 ) ( 55 ) ( 2,332 ) Balance, end of period 67,849 11,398 1,194 80,441 Consolidated: Balance, beginning of year 170,381 27,539 1,715 199,635 Capitalizations 16,338 1,976 255 18,569 Amortization expense ( 8,276 ) ( 774 ) ( 210 ) ( 9,260 ) Balance, end of period $ 178,443 28,741 1,760 208,944 June 30, 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 six months ended June 30, 2026 and 2025 on a consolidated basis by reporting cohort are shown below. (In thousands) Permanent Permanent Limited Pay Other Business Total Six Months Ended June 30, 2026 Balance, beginning of year $ 7,036 764 1,195 8,995 Amortization expense ( 186 ) ( 20 ) ( 125 ) ( 331 ) Balance, end of period $ 6,850 744 1,070 8,664 Six Months Ended June 30, 2025 Balance, beginning of year $ 7,424 809 1,213 9,446 Amortization expense ( 199 ) ( 25 ) 47 ( 177 ) Balance, end of period $ 7,225 784 1,260 9,269 (6) POLICYHOLDERS’ LIABILITIES LIABILITY FOR FUTURE POLICY BENEFITS The following tables summarize balances of and changes in the liability for future policy benefits for our reporting cohorts: Permanent, which summarizes insurance policies with premiums payable over the lifetime of the policy, June 30, 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. June 30, 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 3,559 317 3,876 ( 26,934 ) ( 1,071 ) ( 28,005 ) Adjusted beginning of year balance 246,471 20,722 267,193 165,137 12,375 177,512 Issuances 13,488 1,539 15,027 56,315 968 57,283 Interest accrual 4,948 400 5,348 4,260 244 4,504 Net premiums collected ( 21,553 ) ( 3,193 ) ( 24,746 ) ( 14,010 ) ( 231 ) ( 14,241 ) Derecognition and other 421 130 551 ( 3,875 ) ( 6 ) ( 3,881 ) Ending balance at original discount rate 243,775 19,598 263,373 207,827 13,350 221,177 Effect of changes in discount rates ( 4,020 ) — ( 4,020 ) ( 3,980 ) ( 458 ) ( 4,438 ) Balance, end of period $ 239,755 19,598 259,353 203,847 12,892 216,739 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 6,167 1,616 7,783 ( 27,148 ) ( 916 ) ( 28,064 ) Adjusted beginning of year balance 938,410 175,691 1,114,101 312,673 151,859 464,532 Issuances 13,790 1,616 15,406 56,304 972 57,276 Interest accrual 20,264 3,459 23,723 7,751 3,576 11,327 Benefit payments ( 46,664 ) ( 8,368 ) ( 55,032 ) ( 11,884 ) ( 3,626 ) ( 15,510 ) Derecognition and other 112 177 289 ( 3,892 ) 46 ( 3,846 ) Ending balance at original discount rate 925,912 172,575 1,098,487 360,952 152,827 513,779 Effect of changes in discount rates ( 31,518 ) ( 9,574 ) ( 41,092 ) ( 16,671 ) ( 13,867 ) ( 30,538 ) Balance, end of period $ 894,394 163,001 1,057,395 344,281 138,960 483,241 Net liability for future policy benefits $ 654,639 143,403 798,042 140,434 126,068 266,502 Plus: Flooring impact 2 — 2 — — — Less: Reinsurance recoverable — — — 9,408 — 9,408 Net liability for future policy benefits, after reinsurance recoverable $ 654,641 143,403 798,044 131,026 126,068 257,094 June 30, 2026 | 10-Q 20 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) June 30, 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 1,478 978 2,456 ( 20,452 ) ( 1,259 ) ( 21,711 ) Adjusted beginning of year balance 248,757 16,785 265,542 144,214 12,846 157,060 Issuances 14,578 1,840 16,418 48,645 1,140 49,785 Interest accrual 4,929 316 5,245 3,769 249 4,018 Net premiums collected ( 21,513 ) ( 2,731 ) ( 24,244 ) ( 11,529 ) ( 60 ) ( 11,589 ) Derecognition and other ( 44 ) 152 108 ( 4,304 ) 3 ( 4,301 ) Ending balance at original discount rate 246,707 16,362 263,069 180,795 14,178 194,973 Effect of changes in discount rates ( 5,763 ) ( 20 ) ( 5,783 ) ( 5,959 ) ( 657 ) ( 6,616 ) Balance, end of period $ 240,944 16,342 257,286 174,836 13,521 188,357 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 2,406 2,143 4,549 ( 20,358 ) ( 450 ) ( 20,808 ) Adjusted beginning of year balance 967,954 173,054 1,141,008 284,142 153,452 437,594 Issuances 14,911 1,994 16,905 48,631 1,135 49,766 Interest accrual 20,972 3,387 24,359 7,100 3,593 10,693 Benefit payments ( 53,633 ) ( 9,693 ) ( 63,326 ) ( 9,753 ) ( 3,706 ) ( 13,459 ) Derecognition and other ( 425 ) ( 3 ) ( 428 ) ( 4,299 ) 4 ( 4,295 ) Ending balance at original discount rate 949,779 168,739 1,118,518 325,821 154,478 480,299 Effect of changes in discount rates ( 41,513 ) ( 9,928 ) ( 51,441 ) ( 22,525 ) ( 15,838 ) ( 38,363 ) Balance, end of period $ 908,266 158,811 1,067,077 303,296 138,640 441,936 Net liability for future policy benefits $ 667,322 142,469 809,791 128,460 125,119 253,579 Less: Reinsurance recoverable — — — 3,986 — 3,986 Net liability for future policy benefits, after reinsurance recoverable $ 667,322 142,469 809,791 124,474 125,119 249,593 June 30, 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 for the periods indicated below. June 30, 2026 June 30, 2025 (In thousands) International Insurance Domestic Insurance Consolidated International Insurance Domestic Insurance Consolidated Life Insurance: Permanent $ 654,641 131,026 785,667 667,322 124,474 791,796 Permanent limited pay 143,403 126,068 269,471 142,469 125,119 267,588 Deferred profit liability 28,235 39,881 68,116 25,466 37,192 62,658 Other 31,761 26,068 57,829 30,827 17,247 48,074 Total life insurance 858,040 323,043 1,181,083 866,084 304,032 1,170,116 Accident & Health Insurance: Other 796 713 1,509 631 609 1,240 Total future policy benefit reserves $ 858,836 323,756 1,182,592 866,715 304,641 1,171,356 The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefit payments for long-term duration contracts. June 30, 2026 June 30, 2025 (In thousands) International Insurance Domestic Insurance International Insurance Domestic Insurance Undiscounted: Permanent: Expected future gross premiums $ 578,192 781,473 580,254 689,888 Expected future benefit payments 1,414,021 794,891 1,431,555 717,050 Permanent Limited Pay: Expected future gross premiums 47,577 73,805 45,154 77,106 Expected future benefit payments 262,885 398,367 248,128 396,728 Discounted: Permanent: Expected future gross premiums $ 445,892 487,160 448,987 422,988 Expected future benefit payments 894,394 344,281 908,266 303,296 Permanent Limited Pay: Expected future gross premiums 42,462 47,161 40,627 49,770 Expected future benefit payments 163,001 138,960 158,811 138,640 June 30, 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 June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In thousands) Gross Premiums Interest Expense Gross Premiums Interest Expense Gross Premiums Interest Expense Gross Premiums Interest Expense International Insurance: Life Insurance: Permanent $ 22,672 7,624 21,958 7,962 43,914 15,316 43,725 16,043 Permanent Limited Pay 4,238 1,829 3,891 1,763 9,009 3,596 8,352 3,527 Other 1,803 — 3,268 — 1,219 — 2,932 — Less: Reinsurance 516 — 428 — 900 — 899 — Total, net of reinsurance 28,197 9,453 28,689 9,725 53,242 18,912 54,110 19,570 Accident & Health Insurance: Other 172 — 189 — 325 — 376 — Total $ 28,369 9,453 28,878 9,725 53,567 18,912 54,486 19,570 Domestic Insurance: Life Insurance: Permanent $ 17,207 1,758 14,017 1,679 32,873 3,491 27,406 3,331 Permanent Limited Pay 1,983 2,134 2,040 2,117 3,956 4,267 4,163 4,224 Other ( 228 ) — 776 — 225 — 1,273 — Less: Reinsurance 3,885 — 2,584 — 7,495 — 4,666 — Total, net of reinsurance 15,077 3,892 14,249 3,796 29,559 7,758 28,176 7,555 Accident & Health Insurance: Other 258 — 262 — 516 — 524 — Less: Reinsurance 1 — 1 — 1 — 1 — Total, net of reinsurance 257 — 261 — 515 — 523 — Total $ 15,334 3,892 14,510 3,796 30,074 7,758 28,699 7,555 The following table provides the weighted-average durations of the liability for future policy benefits. June 30, 2026 June 30, 2025 (In years) International Insurance Domestic Insurance International Insurance Domestic Insurance Permanent: Duration at original discount rate 8.2 17.4 7.7 16.0 Duration at current discount rate 8.0 16.3 7.7 15.0 Permanent Limited Pay: Duration at original discount rate 7.7 13.8 5.9 15.8 Duration at current discount rate 7.3 12.9 5.6 15.0 June 30, 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. June 30, 2026 June 30, 2025 International Insurance Domestic Insurance International Insurance Domestic Insurance Permanent: Interest rate at original discount rate 4.81 % 4.99 % 4.67 % 5.03 % Interest rate at current discount rate 5.10 % 5.53 % 4.92 % 5.82 % Permanent Limited Pay: Interest rate at original discount rate 4.23 % 4.85 % 3.48 % 5.67 % Interest rate at current discount rate 5.12 % 5.49 % 4.23 % 6.50 % LIABILITY FOR POLICYHOLDERS’ ACCOUNT BALANCES The following table presents the policyholders' account balances by range of guaranteed minimum crediting rates and the related range of the difference, in basis points, between rates being credited and the respective guaranteed minimums. At Guaranteed Minimum 1 Basis Point-50 Basis Points Above 51 Basis Points-150 Basis Points Above Greater Than 150 Basis Points Above Total June 30, 2026 (In thousands) Range of Guaranteed Minimum Crediting Rates: 0.00 % - 1.49 % $ 933 — — 31,355 32,288 1.50 % - 2.99 % 3,795 170 6 41,515 45,486 3.00 % - 4.49 % 126,834 390 26,221 — 153,445 Greater or equal to 4.50 % 30,815 — — — 30,815 Total $ 162,377 560 26,227 72,870 262,034 At Guaranteed Minimum 1 Basis Point-50 Basis Points Above 51 Basis Points-150 Basis Points Above Greater Than 150 Basis Points Above Total June 30, 2025 (In thousands) Range of Guaranteed Minimum Crediting Rates: 0.00 % - 1.49 % $ 851 — — 33,465 34,316 1.50 % - 2.99 % 3,905 180 6 33,683 37,774 3.00 % - 4.49 % 104,553 381 26,989 — 131,923 Greater or equal to 4.50 % 31,349 — — — 31,349 Total $ 140,658 561 26,995 67,148 235,362 June 30, 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. June 30, 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 14,966 2,616 326 1,647 Premiums received 146 2,565 2,886 412 Interest credited 1,710 1,520 1,062 395 Less: Surrenders and withdrawals — 5,139 2,404 3,469 Benefit payments 9,961 — — — Balance, end of period $ 92,643 89,859 53,230 26,302 Weighted-average crediting rates 4.13 % 3.97 % 3.98 % 3.36 % Cash surrender value $ 92,643 89,859 53,230 26,302 June 30, 2025 (In thousands, except for %) Supplemental Contracts Without Life Contingencies Fixed Annuity Dividend Accumulations Premiums Paid in Advance Balance, beginning of year $ 60,414 88,080 47,768 29,897 Issuances 15,737 1,887 348 2,453 Premiums received 93 2,315 2,855 425 Interest credited 1,308 1,496 966 421 Less: Surrenders and withdrawals — 7,967 2,656 4,281 Benefit payments 6,197 — — — Balance, end of period $ 71,355 85,811 49,281 28,915 Weighted-average crediting rates 4.09 % 3.97 % 3.84 % 3.21 % Cash surrender value $ 71,355 85,811 49,281 28,915 June 30, 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 for the periods indicated below. (In thousands) June 30, 2026 June 30, 2025 Annuities: Supplemental contracts without life contingencies $ 92,643 71,355 Fixed annuity 89,859 85,811 Unearned revenue reserve 1,493 1,486 Total annuities $ 183,995 158,652 Premiums paid in advance: Premiums paid in advance $ 26,302 28,915 Other 2,896 2,148 Total premiums paid in advance $ 29,198 31,063 (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) June 30, 2026 December 31, 2025 Life insurance in force: Direct life insurance in force $ 5,539,881 5,431,721 Aggregate assumed life insurance in force 3,119 3,193 Aggregate ceded life insurance in force ( 943,581 ) ( 910,226 ) Net life insurance in force $ 4,599,419 4,524,688 June 30, 2026 | 10-Q 26 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) The Company's reinsurance recoverable on ceded reinsurance was $ 15.2 million and $ 10.9 million as of June 30, 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 Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Premiums from short duration contracts: Direct $ 429 451 841 900 Ceded — — ( 1 ) ( 1 ) Net premiums earned 429 451 840 899 Premiums from long duration contracts: Direct 47,676 45,950 91,196 87,851 Assumed 12 14 27 25 Ceded ( 4,414 ) ( 3,027 ) ( 8,422 ) ( 5,590 ) Net premiums earned 43,274 42,937 82,801 82,286 Total premiums earned $ 43,703 43,388 83,641 83,185 Claims and surrenders assumed $ 19 45 39 51 Claims and surrenders ceded $ ( 1,513 ) ( 275 ) ( 2,257 ) ( 952 ) Commissions assumed and ceded $ ( 3,257 ) ( 3,281 ) ( 6,228 ) ( 6,406 ) Other general expenses ceded $ ( 905 ) ( 695 ) ( 1,708 ) ( 1,283 ) (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 six months ended June 30, 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 June 30, 2026, we committed to funding investments up to $ 7.8 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 June 30, 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 June 30, 2026, the Company had no t borrowed any funds against the Credit Facility and was in compliance with the 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 Six Months Ended June 30, (In thousands) Common Stock Class A Treasury Stock Common Stock Class A Treasury Stock Balance at beginning of year 54,626 5,330 54,235 5,330 Stock issued for compensation 343 — 331 — Balance at end of period 54,969 5,330 54,566 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 June 30, (In thousands, except per share amounts) 2026 2025 Basic and diluted earnings per share: Net income (loss) $ ( 425 ) 6,459 Weighted average shares of Class A outstanding - basic 50,521 50,112 Weighted average shares of Class A outstanding - diluted (1) 51,824 50,985 Basic and diluted earnings (loss) per share of Class A common stock $ ( 0.01 ) 0.13 (1) Because the Company reported a net loss for the three months ended June 30, 2026, the effect of all potentially dilutive securities was excluded from the calculation of diluted earnings per share as it would be anti-dilutive June 30, 2026 | 10-Q 28 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) Six Months Ended June 30, (In thousands, except per share amounts) 2026 2025 Basic and diluted earnings per share: Net income (loss) $ 1,843 4,836 Weighted average shares of Class A outstanding - basic 50,426 50,024 Weighted average shares of Class A outstanding - diluted 51,714 50,897 Basic and diluted earnings (loss) per share of Class A common stock $ 0.04 0.10 . STATUTORY CAPITAL AND SURPLUS Each of our domestic regulated insurance subsidiaries is required to meet stipulated regulatory capital requirements imposed by the U.S. National Association of Insurance Commissioners ("NAIC"). All domestic insurance subsidiaries exceeded the minimum capital requirements at June 30, 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 June 30, 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 June 30, 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 segment operating results to assess financial performance, allocate resources and make operating and strategic decisions. 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 products 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 include rider benefits and annuity features that enhance policy 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 CODM evaluates the profitability of the International Insurance and Domestic Insurance segments based on the income (loss) before federal income tax, or segment profit (loss), which is measured as revenues less directly attributable total benefits and expenses. This measure reflects the operating performance of each insurance segment and is the primary measure used by the CODM to evaluate segment results and allocate resources. The significant expense categories regularly provided to the CODM and included in the measure of segment profit (loss) are presented in the tables below. The International Insurance and Domestic Insurance operations constitute separate businesses. In addition to these reportable segments, the Company also captures other corporate-related non-insurance income and expenses associated with operating the Company. These amounts are not included in the segment profit (loss) and are June 30, 2026 | 10-Q 29 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) reported separately below to reconcile to the consolidated income (loss) before federal income tax on the consolidated statements of operations and other comprehensive income (loss). The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies included in our 2025 Form 10-K and are prepared in accordance with U.S. GAAP. The tables below present segment revenues, segment profit (loss) and the significant expense categories included in the measure of segment profitability reviewed by the CODM. Three Months Ended June 30, 2026 International Insurance Domestic Insurance Total (In thousands) Revenues: Premiums $ 28,369 15,334 43,703 Net investment income 11,725 5,102 16,827 Investment related gains (losses), net ( 1,559 ) 67 ( 1,492 ) Other income 1,161 7 1,168 Total segment revenues 39,696 20,510 60,206 Other non-insurance revenues 202 Total consolidated revenues $ 60,408 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 25,907 7,844 Increase (decrease) in future policy benefit reserves 189 3,003 Policyholder liability remeasurement (gain) loss 1,966 ( 254 ) Policyholders' dividends 1,341 52 Total insurance benefits paid or provided 29,403 10,645 Commissions 4,892 6,460 Other general expenses 5,193 5,428 Capitalization of deferred policy acquisition costs ( 4,464 ) ( 5,253 ) Amortization of deferred policy acquisition costs 3,548 1,473 Amortization of cost of insurance acquired — 143 Total segment benefits and expenses 38,572 18,896 Segment profit (loss) $ 1,124 1,614 2,738 Other non-insurance revenues 202 Stock-based compensation expense ( 776 ) Other non-insurance expenses ( 2,693 ) Income (loss) before federal income tax $ ( 529 ) June 30, 2026 | 10-Q 30 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) International Insurance Domestic Insurance Total Six Months Ended June 30, 2026 (In thousands) Revenues: Premiums $ 53,567 30,074 83,641 Net investment income 23,729 10,215 33,944 Investment related gains (losses), net ( 225 ) ( 278 ) ( 503 ) Other income 2,648 14 2,662 Total segment revenues 79,719 40,025 119,744 Other non-insurance revenues 384 Total consolidated revenues $ 120,128 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 58,018 15,386 Increase (decrease) in future policy benefit reserves ( 7,075 ) 5,564 Policyholder liability remeasurement (gain) loss 3,091 ( 504 ) Policyholders' dividends 2,377 118 Total insurance benefits paid or provided 56,411 20,564 Commissions 9,381 12,795 Other general expenses 10,795 10,534 Capitalization of deferred policy acquisition costs ( 8,697 ) ( 9,964 ) Amortization of deferred policy acquisition costs 7,100 2,900 Amortization of cost of insurance acquired — 331 Total segment benefits and expenses 74,990 37,160 Segment profit (loss) $ 4,729 2,865 7,594 Other non-insurance revenues 384 Stock-based compensation expense ( 1,314 ) Other non-insurance expenses ( 4,819 ) Income (loss) before federal income tax $ 1,845 June 30, 2026 | 10-Q 31 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) International Insurance Domestic Insurance Total Three Months Ended June 30, 2025 (In thousands) Revenues: Premiums $ 28,878 14,510 43,388 Net investment income 12,076 4,919 16,995 Investment related gains (losses), net 2,834 ( 427 ) 2,407 Other income 2,113 8 2,121 Total segment revenues 45,901 19,010 64,911 Other non-insurance revenues 175 Total consolidated revenues $ 65,086 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 34,399 5,821 Increase (decrease) in future policy benefit reserves ( 6,965 ) 2,411 Policyholder liability remeasurement (gain) loss 1,106 245 Policyholders' dividends 1,229 86 Total insurance benefits paid or provided 29,769 8,563 Commissions 5,185 6,224 Other general expenses 5,318 5,125 Capitalization of deferred policy acquisition costs ( 4,960 ) ( 4,760 ) Amortization of deferred policy acquisition costs 3,462 1,151 Amortization of cost of insurance acquired — 79 Total segment benefits and expenses 38,774 16,382 Segment profit (loss) $ 7,127 2,628 9,755 Other non-insurance revenues 175 Stock-based compensation expense ( 1,209 ) Other non-insurance expenses ( 1,807 ) Income (loss) before federal income tax $ 6,914 June 30, 2026 | 10-Q 32 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) International Insurance Domestic Insurance Total Six Months Ended June 30, 2025 (In thousands) Revenues: Premiums $ 54,486 28,699 83,185 Net investment income 24,207 9,978 34,185 Investment related gains (losses), net 68 ( 556 ) ( 488 ) Other income 3,478 15 3,493 Total segment revenues 82,239 38,136 120,375 Other non-insurance revenues 363 Total consolidated revenues $ 120,738 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 67,433 12,885 Increase (decrease) in future policy benefit reserves ( 13,821 ) 5,621 Policyholder liability remeasurement (gain) loss 1,199 ( 20 ) Policyholders' dividends 2,414 196 Total insurance benefits paid or provided 57,225 18,682 Commissions 10,288 12,396 Other general expenses 10,613 10,185 Capitalization of deferred policy acquisition costs ( 9,747 ) ( 8,822 ) Amortization of deferred policy acquisition costs 6,928 2,332 Amortization of cost of insurance acquired — 177 Total segment benefits and expenses 75,307 34,950 Segment profit (loss) $ 6,932 3,186 10,118 Other non-insurance revenues 363 Stock-based compensation expense ( 1,781 ) Other non-insurance expenses ( 3,573 ) Income (loss) before federal income tax $ 5,127 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 June 30, Six Months Ended June 30, 2026 2025 2026 2025 Direct premiums: First year $ 3,541 3,814 6,831 7,206 Renewal 25,344 25,492 47,636 48,179 Total direct premiums 28,885 29,306 54,467 55,385 Reinsurance ( 516 ) ( 428 ) ( 900 ) ( 899 ) Total premiums $ 28,369 28,878 53,567 54,486 June 30, 2026 | 10-Q 33 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 June 30, Six Months Ended June 30, 2026 2025 2026 2025 Direct premiums: First year $ 6,218 5,621 11,898 11,046 Renewal 13,002 11,474 25,672 22,320 Total direct premiums 19,220 17,095 37,570 33,366 Reinsurance ( 3,886 ) ( 2,585 ) ( 7,496 ) ( 4,667 ) Total premiums $ 15,334 14,510 30,074 28,699 The tables below provide a reconciliation of assets by reportable segment to total consolidated assets as presented on the consolidated balance sheets as of the periods indicated. Assets not directly attributable to the Company's reportable segments are reflected as other corporate assets. June 30, 2026 (In thousands) International Domestic Total Assets: Segment Assets: Cash, cash equivalents and investments $ 1,018,612 409,479 1,428,091 DAC and COIA 134,635 103,227 237,862 Other assets 30,870 22,521 53,391 Total segment assets $ 1,184,117 535,227 1,719,344 Other corporate assets 32,716 Total assets $ 1,752,060 December 31, 2025 (In thousands) International Domestic Total Assets: Segment Assets: Cash, cash equivalents and investments $ 1,026,980 415,464 1,442,444 DAC and COIA 133,038 96,494 229,532 Other assets 30,718 17,399 48,117 Total segment assets $ 1,190,736 529,357 1,720,093 Other corporate assets 34,667 Total assets $ 1,754,760 June 30, 2026 | 10-Q 34 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) GEOGRAPHIC INFORMATION The following table sets forth the Company's annual total of earned premiums by country of policyholder residence for the periods indicated. Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Area: United States $ 19,167 16,983 37,688 33,483 Colombia 6,752 6,461 13,577 13,015 Taiwan 3,047 3,167 6,453 7,053 Venezuela 3,159 3,322 6,337 6,672 Ecuador 3,268 3,366 6,264 6,566 Argentina 3,214 2,923 5,816 5,019 Other foreign countries 9,160 8,995 18,285 18,697 Reinsurance and change in premium accruals ( 4,064 ) ( 1,829 ) ( 10,779 ) ( 7,320 ) Total premiums $ 43,703 43,388 83,641 83,185 (11) INCOME TAXES The effective tax rate is the ratio of federal income tax expense or tax benefit over pre-tax income. For the three and six months ended June 30, 2026, the effective tax benefit rate was 19.7 % and effective tax expense rate was 0.1 %, respectively, compared to an effective tax expense rate of 6.6 % and 5.7 % for the same periods in 2025, respectively. CICA International is considered a controlled foreign corporation for federal income tax purposes. As a result, the insurance activity of CICA International is subject to Subpart F of the Internal Revenue Code and is included in Citizens’ taxable income. The Government of Puerto Rico approved a tax exemption decree for CICA International which freezes the income tax rate at 0 % on taxable earnings up to $ 1.2 million and 4 % on taxable earnings in excess of $ 1.2 million for a minimum of 15 years. The effective tax rate varies from the prevailing corporate federal income tax rate of 21% mainly due to the impact of Subpart F and the reduced Puerto Rico income tax rate. At June 30, 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 $ 4.5 million and $ 4.8 million at June 30, 2026 and 2025, respectively, 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 and six months ended June 30, June 30, 2026 | 10-Q 35 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) 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 ) Other comprehensive income (loss) before reclassification, before tax 3,867 ( 8,393 ) ( 4,526 ) Amounts reclassified from other comprehensive income (loss), before tax ( 34 ) — ( 34 ) Income tax benefit (expense) ( 225 ) 1,173 948 Balance at June 30, 2026, net of tax $ ( 147,428 ) 56,333 ( 91,095 ) (In thousands) Unrealized Gains and Losses on Available for Sale Securities Discount Rate for Liability for Future Policy Benefits Other Comprehensive Income (Loss) Balance at December 31, 2024, net of tax $ ( 169,599 ) 73,634 ( 95,965 ) Other comprehensive income (loss) before reclassification, before tax 18,334 ( 8,589 ) 9,745 Amounts reclassified from other comprehensive income (loss), before tax 83 — 83 Income tax benefit (expense) ( 1,379 ) 442 ( 937 ) Balance at March 31, 2025, net of tax ( 152,561 ) 65,487 ( 87,074 ) Other comprehensive income (loss) before reclassification, before tax 243 4,003 4,246 Amounts reclassified from other comprehensive income (loss), before tax 168 — 168 Income tax benefit (expense) ( 213 ) ( 782 ) ( 995 ) Balance at June 30, 2025, net of tax $ ( 152,363 ) 68,708 ( 83,655 ) (13) RELATED PARTY TRANSACTIONS The Company has various routine related party transactions in conjunction with our holding company structure, such as management service agreements related to costs incurred, a tax sharing agreement between entities, and inter-company dividends and capital contributions. There were no changes related to these relationships during the six months ended June 30, 2026. See our 2025 Form 10-K for a comprehensive discussion of related party transactions. June 30, 2026 | 10-Q 36 Table of Contents CITIZENS, INC . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited ) (14) SUBSEQUENT EVENTS The Company has evaluated the impact of subsequent events as defined by the accounting guidance through the date this report was issued and determined that no other significant subsequent events need to be recognized or disclosed at this time. June 30, 2026 | 10-Q 37 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This section and other parts of this Quarterly Report on Form 10-Q ("Form 10-Q") contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions including those factors discussed in the "Risk Factors" contained in our Annual Report on Form 10-K for the year ended December 31, 2025, which is incorporated herein by reference. The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q, as well as in conjunction with MD&A and the consolidated financial statements and notes thereto that are included in our Form 10-K . The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law. The U.S. 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 incorporated 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, 2025 to June 30, 2026 and the material changes in our results of operations for the three and six months ended June 30, 2026 as compared to the same periods in 2025. We also discuss in the MD&A any trends that we believe may materially affect our future operations or financial condition. OVERVIEW 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 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. As an insurance provider, we collect premiums on an ongoing basis from our policyholders and invest the majority of the premiums to pay future benefits, including claims, surrenders and policyholder dividends. Accordingly, the Company derives its revenues principally from: (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 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". Our Domestic June 30, 2026 | 10-Q 38 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS 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 From time-to-time, certain events may affect our business in ways that cause current or future results to differ from past results. See (1) the factors described in Part 1. Item 1A. Risk Factors in our Annual Report on Form 10-K for the period ended December 31, 2025 ("2025 Form 10-K"); and (2) the events described in Part 1. Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Events that Impacted Our Business" in the 2025 Form 10-K . Venezuela Earthquakes May Impact Insurance Premiums and Claims Venezuela represents one of our most significant markets in the International Insurance segment. The earthquakes that occurred in Venezuela in June 2026 may adversely affect this segment by hindering policyholders' capacity to submit timely premium payments and driving higher-than-expected claims activity. Due to the magnitude and breadth of the disaster, the full count of impacted policyholders will likely emerge gradually, as missed payments and submitted claims are tracked and confirmed. As an immediate measure, a $0.5 million death claim liability has been recorded. While current data does not point to a material effect on our operations, we will maintain diligent oversight and update our projections as new information becomes available. FINANCIAL HIGHLIGHTS Summary Q2: Net loss before federal income tax in the three months ended June 30, 2026 of $0.5 million decreased from income before federal income tax of $6.9 million in the same prior year period. The primary factors that drove this change were: • $3.9 million decline in investment related gains and losses primarily related to the change in fair market value for certain of our limited partnership investments that we have not sold; • $1.7 million increase in insurance benefits paid or provided due to: ◦ $6.5 million decrease in claims and surrenders benefits due to the expected contractual decreases of matured endowments; more than offset by; and ◦ $7.7 million increase in future policy benefit reserves primarily due to the increased business in our Domestic Insurance segment and the large amount of reserves released in the prior year period as we paid out matured endowment and released the corresponding reserves. YTD: Net income before federal income tax in the six months ended June 30, 2026 decreased to $1.8 million from $5.1 million in the same year period. The factors that drove this decrease were: • $1.1 million increase in insurance benefits paid or provided due to: ◦ $6.9 million decrease in claims and surrenders as described above; more than offset by ◦ $6.7 million increase in future policy benefit reserves as described above; and • $1.3 million increase in general operating expenses to support our growth initiatives. Financial Condition at June 30, 2026 • Total assets of $1.8 billion • Total direct insurance in force of $5.5 billion • Total investments of $1.4 billion; fixed maturity securities comprised 89% of total investments • No debt • Book value per share of Class A common stock of $4.64 June 30, 2026 | 10-Q 39 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS • Adjusted book value per share of Class A common stock of $6.44 1 • Diluted earnings per share of Class A common stock for the six months ended of $0.04 The Factors that Drive our Operating Results We see the following as the primary factors that drive our operating results. • Sales of our products and the premiums we receive from these sales • Investments and the income that they generate • Claims and surrenders • Operating expenses • Actuarial assumptions Sales of our Products. We believe sales statistics are meaningful to gain an understanding of, among other things, the attractiveness of our products, how expansion of our distribution channels affects our revenue, customer retention and the performance of our business from period-to-period. Throughout the MD&A, we describe the actions and initiatives we are taking to increase sales and improve retention, sales performance in each period and as compared to prior year periods, and how we view trends with respect to sales and retention. One sales factor that is key to our profitability is product mix. We offer a competitive product mix designed to meet the needs of our specific customer demographics and actively manage new product margins and in-force profitability. Product mix can have an impact on profitability; when we sell a higher volume of lower-margin products, we may receive more premiums but may not be as profitable as in periods when we sell a greater percentage of higher-margin products. Our product mix 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 Insurance segment to continue due to the anticipated volumes of endowment maturities being replaced by higher volumes of whole life products. Customer retention, or persistency, is another key factor influencing both revenue and profitability. Persistency refers to the extent to which policyholders keep their insurance policies in force over time rather than allowing them to lapse, surrender, or terminate. Persistency is a key measure because we spend a significant amount of money acquiring a policyholder upfront ( e.g. , commissions, underwriting, marketing) and expect to recover those costs over many years. A highly persistent block of business is one where policyholders continue paying premiums and maintaining coverage for many years. Unfavorable persistency is characterized by higher than expected policy lapses, surrenders, or terminations, which can negatively impact profitability by reducing the in-force block of business generating premiums, coupled with an increase in reserves resulting from less projected future premiums, as well as an acceleration in the recognition of deferred acquisition costs. We actively monitor persistency trends across our product lines and customer segments, and where unfavorable persistency is observed, we may take targeted retention actions; however, there can be no assurance that such efforts will fully offset the financial impact of higher than expected policy terminations. 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 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 and six months ended June 30, 2026 to $48.1 million and $92.0 million, respectively, from $46.4 million and $88.8 million in the three and six months ended June 30, 2025, respectively. This increase was driven by sales and renewal premiums in our Domestic Insurance segment. 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. June 30, 2026 | 10-Q 40 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS First Year Premiums. Direct first year premiums increased 3% in the three and six months ended June 30, 2026 to $9.8 million and $18.7 million, respectively, from $9.4 million and $18.3 million in the three and six months ended June 30, 2025, respectively, driven by sales in our Domestic Insurance segment and from an increased number of producing agents. First year premium growth primarily resulted from our CLOA final expense business. Renewal Premiums. Our direct renewal premiums in the three and six months ended June 30, 2026 increased primarily due to strong sales in prior periods in our Domestic Insurance segment, leading to higher number of policies paying renewal premiums in the current period. Premium growth was constrained by unfavorable persistency in our Domestic Insurance segment, as well as the high level of surrenders and matured endowments in our International Insurance segment during the last few years, both of which have lowered the number of policies remaining in force and paying renewal premiums. Investment Income. Our net investment income decreased slightly for the three and six months ended June 30, 2026 compared to the same prior year periods. Total investment income increased for the three and six months ended June 30, 2026 compared to the same prior year periods, as we have been investing in investment grade private placement fixed income securities, where we expect higher returns. However, this increase was offset by higher fund fees. June 30, 2026 | 10-Q 41 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS 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 by $0.6 million and $1.3 million in the three and six months ended June 30, 2026, respectively, as compared to the prior year periods due to continued investment in supporting the growth of our business. Actuarial Assumptions. The actuarial assumptions that underlie our reserves are based upon our best estimates of certain factors such as mortality, lapses, morbidity and discount rates. Our results will be affected to the extent there is a variance between our actuarial assumptions and actual experience. 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. 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 June 30, 2026 | 10-Q 42 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS 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 $0.4 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. 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. Six Months Ended June 30, 2026 2025 Amount of Insurance Issued Number of Policies Issued Average Policy Face Amount Issued Amount of Insurance Issued Number of Policies Issued Average Policy Face Amount Issued International $ 199,814,892 1,793 $ 111,442 $ 229,176,095 1,970 $ 116,333 Domestic 319,795,393 37,692 8,484 288,086,170 30,277 9,515 Total $ 519,610,285 39,485 $ 517,262,265 32,247 In the first six months of 2026, we issued $519.6 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 six months ended June 30, 2026 as compared to the prior year period due to lower volume and product mix. During the first six 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. 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. June 30, 2026 | 10-Q 43 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS CONSOLIDATED RESULTS OF OPERATIONS REVENUES Our revenues are generated primarily by life insurance premiums and investment income from invested assets. Total revenues declined in the three months ended June 30, 2026 primarily due to the $3.9 million decline in investment related gains (losses) resulting from changes in market value of the underlying assets. The decline in other income also contributed to the decline in the three month-period, as well as the six months ended June 30, 2026. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Revenues: Premiums $ 43,703 43,388 83,641 83,185 Net investment income 17,031 17,169 34,335 34,546 Investment related gains (losses), net (1,494) 2,408 (510) (486) Other income 1,168 2,121 2,662 3,493 Total revenues $ 60,408 65,086 120,128 120,738 Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Direct premiums: First year $ 9,759 9,435 18,729 18,252 Renewal 38,346 36,966 73,308 70,499 Total direct premiums 48,105 46,401 92,037 88,751 Reinsurance (4,402) (3,013) (8,396) (5,566) Total premiums $ 43,703 43,388 83,641 83,185 Our first year direct premiums increased 3% in the three and six months ended June 30, 2026 compared to the same periods in 2025, due to sales and expanded distribution in our Domestic Insurance segment. Renewal premiums also increased from strong first year sales in prior periods 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 and six months ended June 30, 2026 compared to the same periods 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. June 30, 2026 | 10-Q 44 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS Net Investment Income. A summary of our net investment income performance is as follows: Three Months Ended Six Months Ended June 30, June 30, (In thousands, except for %) 2026 2025 2026 2025 Gross investment income: Fixed maturity securities $ 16,054 15,538 32,412 30,966 Equity securities 12 72 23 147 Policy loans 1,226 1,297 2,493 2,666 Other long-term investments 762 1,041 1,583 2,205 Total investment income 18,054 17,948 36,511 35,984 Investment expenses (1,023) (779) (2,176) (1,438) Net investment income $ 17,031 17,169 34,335 34,546 Net investment income, annualized $ 68,670 69,093 Average invested assets, at amortized cost $ 1,555,692 1,534,610 Annualized yield on average invested assets 4.41 % 4.50 % Fixed maturity securities constitute the vast majority, or 89%, of our investment portfolio based on fair value and thus provide the majority of our net investment income. Our fixed maturity investment portfolio, primarily invested in callable securities, has faced challenges due to the sustained low interest rate environment 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 and our annualized yield are down for the three and six months ended June 30, 2026 as a result of higher investment expenses when compared to prior year periods. Investment Related Gains (Losses), Net. We recorded investment related losses of $1.5 million and $0.5 million during the three and six months ended June 30, 2026, respectively, compared to investment related gains of $2.4 million and losses of $0.5 million during the same prior year periods, respectively, primarily in our International Insurance segment. The gain or loss between periods is attributable to changes in the estimated fair market value of our limited partnership investments, which can vary considerably based on market conditions and underlying fund performance. Other Income. Other income is derived mainly from 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. We expect other income to decline as our matured endowments decline, as this income is primarily related to supplemental contracts issued to policyholders when their endowments mature. The net impact from these supplemental contracts on the consolidated financial statements is minimal as the reserve liability setup for these policies offsets any recognized income. June 30, 2026 | 10-Q 45 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS BENEFITS AND EXPENSES Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders $ 33,751 40,220 73,404 80,318 Increase (decrease) in future policy benefit reserves 3,192 (4,554) (1,511) (8,200) Policyholder liability remeasurement (gain) loss 1,712 1,351 2,587 1,179 Policyholders' dividends 1,393 1,315 2,495 2,610 Total insurance benefits paid or provided 40,048 38,332 76,975 75,907 Commissions 11,352 11,409 22,176 22,684 Other general expenses 14,090 13,459 27,462 26,152 Capitalization of deferred policy acquisition costs (9,717) (9,720) (18,661) (18,569) Amortization of deferred policy acquisition costs 5,021 4,613 10,000 9,260 Amortization of cost of insurance acquired 143 79 331 177 Total benefits and expenses $ 60,937 58,172 118,283 115,611 Payments of claims and surrenders benefits, which constitute the vast majority of our expenses, declined in both the three- and six-month periods ended June 30, 2026. Claims and Surrenders. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Claims and surrenders: Death claim benefits $ 7,495 4,861 14,164 10,928 Surrender benefits 12,174 13,076 24,033 25,977 Endowment benefits 1,358 1,542 2,806 3,221 Matured endowment benefits 10,199 18,528 27,647 35,879 A&H and other policy benefits 2,525 2,213 4,754 4,313 Total claims and surrenders $ 33,751 40,220 73,404 80,318 Death claim benefits increased in the three and six months ended June 30, 2026 compared to the same periods in 2025 due to a higher volume of claims, especially in our expanding Domestic Insurance business. While we maintain diligent oversight of claims activities, we expect this rise in line with the expansion of our business. Additionally, as discussed above, the Venezuela earthquakes in June 2026 have had a direct impact on our International Insurance segment's claims experience. Although the impact is immaterial at this time, we have established a $0.5 million death claim liability given the number of people still missing as we expect the total impact to be determined over time as claims are reported and verified. We will continue to monitor developments related to this event and update our estimates as additional information becomes available. Many of these death claims may be partially offset by our reinsurance coverage. June 30, 2026 | 10-Q 46 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS 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 7% in the three and six months ended June 30, 2026 compared to the prior year periods and can vary from one period to another. We continue to focus efforts on retention initiatives. As we have previously disclosed, 2025 was the year in which the highest number of our endowment policies reached their contractual maturity dates and thus matured endowment benefits decreased in the three and six months ended June 30, 2026 compared to the prior year periods. Compared to peak endowment activity in 2025, we expect maturity benefits to continue to decrease throughout 2026. Increase (Decrease) in Future Policy Benefit Reserves. 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 and six months ended June 30, 2026, the change in future policy benefit reserves increased compared to the prior year periods from the increase to inforce business and due to the high level of reserves released in the prior year periods in connection with policyholder benefits payouts. Policyholder Liability Remeasurement (Gain) Loss. Most of our products are long-duration contracts that provide a specified, fixed amount of insurance benefit in exchange for a fixed premium. When a policy is initially issued, we establish a "net premium ratio" ("NPR") using assumptions regarding expected premiums and policyholder benefit liabilities. On a quarterly basis, we review actual versus expected experience in such quarter, which is reported as a policyholder liability remeasurement gain (if better performance than assumptions) or loss (if lower performance than assumptions). Additionally, 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 three and six months ended June 30, 2026, the remeasurement (gain) loss was negatively affected by unfavorable experience in our International Insurance segment. Commissions. 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 six months ended June 30, 2026 as compared to the same period in 2025, commissions decreased in the three and six months ended June 30, 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 $0.6 million and $1.3 million in the three and six months ended June 30, 2026, respectively, as compared to the prior year periods due to continued investment in supporting the growth of our business. Capitalization of Deferred Policy Acquisition Costs ("DAC"). We capitalize costs related to successful sales of our insurance products, which include certain commissions, policy issuance costs, and underwriting and agency expenses. These costs vary based upon amounts of premiums received and ceded related to new and renewal business. Amortization of Deferred Policy Acquisition Costs. 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. As described above, unfavorable persistency leads to accelerated amortization of deferred policy acquisition costs, which contributed to the increased costs in both the three- and six-month periods ended June 30, 2026. Federal Income Tax. We reported federal income tax benefit in the three months ended June 30, 2026 as compared to a federal income tax expense in the same prior year period, reflecting lower taxable income. See Part I, Item 1, Note 11. Income Taxes in the notes to our consolidated financial statements herein. June 30, 2026 | 10-Q 47 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS SEGMENT OPERATIONS We operate in two business segments: International Insurance and Domestic Insurance. These segments are reported in accordance with U.S. GAAP. The Company evaluates profit and loss performance based on U.S. GAAP income (loss) before federal income tax for these segments. The Company's other non-insurance operations include non-insurance activities and corporate-support functions, which are presented in the table presented below to reconcile 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 Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Income (loss) before federal income tax: Segments: International Insurance $ 1,124 7,127 4,729 6,932 Domestic Insurance 1,614 2,628 2,865 3,186 Total segments 2,738 9,755 7,594 10,118 Other non-insurance operations (3,267) (2,841) (5,749) (4,991) Total income (loss) before federal income tax $ (529) 6,914 1,845 5,127 June 30, 2026 | 10-Q 48 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS INTERNATIONAL INSURANCE Detailed results of operations in the International Insurance segment for the periods indicated are as follows: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Revenues: Premiums $ 28,369 28,878 53,567 54,486 Net investment income 11,725 12,076 23,729 24,207 Investment related gains (losses), net ( 1,559 ) 2,834 ( 225 ) 68 Other income 1,161 2,113 2,648 3,478 Total revenues 39,696 45,901 79,719 82,239 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 25,907 34,399 58,018 67,433 Increase (decrease) in future policy benefit reserves 189 ( 6,965 ) ( 7,075 ) ( 13,821 ) Policyholder liability remeasurement (gain) loss 1,966 1,106 3,091 1,199 Policyholders' dividends 1,341 1,229 2,377 2,414 Total insurance benefits paid or provided 29,403 29,769 56,411 57,225 Commissions 4,892 5,185 9,381 10,288 Other general expenses 5,193 5,318 10,795 10,613 Capitalization of deferred policy acquisition costs ( 4,464 ) ( 4,960 ) ( 8,697 ) ( 9,747 ) Amortization of deferred policy acquisition costs 3,548 3,462 7,100 6,928 Total benefits and expenses 38,572 38,774 74,990 75,307 Income before federal income tax $ 1,124 7,127 4,729 6,932 In the three months ended June 30, 2026, premiums were $28.4 million, while our total insurance benefits paid or provided were $29.4 million. This reflects a $0.5 million decrease in premiums compared to the prior-year period with only a $0.4 million decrease in total insurance benefits paid or provided. The lower premiums are mainly due to the impact from the level of surrenders and matured endowments in prior years, which has lowered the number of policies remaining in force and paying renewal premiums in this segment. In the six months ended June 30, 2026, premiums received were $53.6 million, while our total insurance benefits paid or provided were $56.4 million. This reflects a $0.9 million decrease in premiums compared to the prior-year period with only a $0.8 million decrease in total insurance benefits paid or provided for the reasons described above. June 30, 2026 | 10-Q 49 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS Premium breakout is detailed below. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Direct premiums: First year $ 3,541 3,814 6,831 7,206 Renewal 25,344 25,492 47,636 48,179 Total direct premiums 28,885 29,306 54,467 55,385 Reinsurance ( 516 ) ( 428 ) ( 900 ) ( 899 ) Total premiums $ 28,369 28,878 53,567 54,486 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 and six months ended June 30, 2026 and 2025. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Premiums: Colombia $ 6,752 6,461 13,577 13,015 Taiwan 3,047 3,167 6,453 7,053 Venezuela 3,159 3,322 6,337 6,672 Ecuador 3,268 3,366 6,264 6,566 Argentina 3,214 2,923 5,816 5,019 Other 9,291 9,121 18,569 19,032 Reinsurance and change in premium accruals (362) 518 (3,449) (2,871) Total premiums $ 28,369 28,878 53,567 54,486 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. Most notably, the Venezuela earthquakes of June 2026 may impair policyholders' ability to make timely premium payments. The strength of the U.S. dollar, combined with policyholders' difficulties in obtaining dollars, may further constrain their ability to remit premiums. The recent political instability may cause further decline in this business. We continue to closely monitor emerging trends in our Venezuela business. June 30, 2026 | 10-Q 50 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS Benefits and Expenses. Claims and surrender benefits breakout is detailed below. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Claims and surrenders: Death claim benefits $ 1,605 470 2,564 936 Surrender benefits 10,746 12,038 21,145 23,888 Endowment benefits 1,357 1,541 2,803 3,219 Matured endowment benefits 9,935 18,305 27,174 35,499 A&H and other policy benefits 2,264 2,045 4,332 3,891 Total claims and surrenders $ 25,907 34,399 58,018 67,433 As discussed, the majority of our claims and surrender benefits in this segment are related to payment of matured endowment and surrender benefits. Matured endowment benefits peaked in 2025 and has decreased in the three and six months ended June 30, 2026 compared to the prior year periods, as contractually expected. 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. Accordingly, as our block of maturing endowments decreases, surrenders will generally decrease as well. Increase (Decrease) in Future Policy Benefit Reserves. In the three and six months ended June 30, 2026, the change in future policy benefit reserves was higher compared to the prior year periods, reflecting reserve growth on our inforce block of business. In contrast, the prior year periods were impacted by a greater level of reserves released in connection with surrender benefits and higher matured endowment benefit payments. Commissions. Commissions decreased due to strong sales of our single premium product offered to policyholders with maturing endowments, which has a lower commission rate than other products. June 30, 2026 | 10-Q 51 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS DOMESTIC INSURANCE Detailed results of operations for the Domestic Insurance segment for the periods indicated are as follows: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Revenues: Premiums $ 15,334 14,510 30,074 28,699 Net investment income 5,102 4,919 10,215 9,978 Investment related gains (losses), net 67 ( 427 ) ( 278 ) ( 556 ) Other income 7 8 14 15 Total revenues 20,510 19,010 40,025 38,136 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 7,844 5,821 15,386 12,885 Increase (decrease) in future policy benefit reserves 3,003 2,411 5,564 5,621 Policyholder liability remeasurement (gain) loss ( 254 ) 245 ( 504 ) ( 20 ) Policyholders' dividends 52 86 118 196 Total insurance benefits paid or provided 10,645 8,563 20,564 18,682 Commissions 6,460 6,224 12,795 12,396 Other general expenses 5,428 5,125 10,534 10,185 Capitalization of deferred policy acquisition costs ( 5,253 ) ( 4,760 ) ( 9,964 ) ( 8,822 ) Amortization of deferred policy acquisition costs 1,473 1,151 2,900 2,332 Amortization of cost of insurance acquired 143 79 331 177 Total benefits and expenses 18,896 16,382 37,160 34,950 Income before federal income tax $ 1,614 2,628 2,865 3,186 In the three months ended June 30, 2026, premiums in our Domestic Insurance segment were $15.3 million, while total insurance benefits paid or provided were $10.6 million. This reflects an increase in premiums of $0.8 million from the prior year period, while total insurance benefits paid or provided increased by $2.1 million. Premiums increased due to sustained first year sales and increase in renewal year premiums due to strong prior year sales, while the total benefits and expenses paid increased due to higher claims and surrenders paid. We expect death benefit payments to increase in the Domestic Insurance segment as our business has significantly grown in this segment over the last several years. In the six months ended June 30, 2026, premiums in our Domestic Insurance segment were $30.1 million, while total insurance benefits paid or provided were $20.6 million. This reflects an increase in premiums of $1.4 million from the prior year period, while total insurance benefits paid or provided increased by $1.9 million for the reasons described above. June 30, 2026 | 10-Q 52 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS Premium breakout is detailed below. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Direct premiums: First year $ 6,218 5,621 11,898 11,046 Renewal 13,002 11,474 25,672 22,320 Total direct premiums 19,220 17,095 37,570 33,366 Reinsurance ( 3,886 ) ( 2,585 ) ( 7,496 ) ( 4,667 ) Total premiums $ 15,334 14,510 30,074 28,699 Benefits and Expenses. Claims and surrender benefits breakout is detailed below. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Claims and surrenders: Death claim benefits $ 5,890 4,391 11,600 9,992 Surrender benefits 1,428 1,038 2,888 2,089 Endowment benefits 1 1 3 2 Matured endowment benefits 264 223 473 380 A&H and other policy benefits 261 168 422 422 Total claims and surrenders $ 7,844 5,821 15,386 12,885 In our Domestic Insurance segment, the majority of claims and surrender benefits are death claim benefits. Death claim benefits increased in the three and six months ended June 30, 2026 compared to the same prior year periods 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. OTHER NON-INSURANCE OPERATIONS Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Loss before federal income tax $ (3,267) (2,841) (5,749) (4,991) This operating unit represents the administrative support functions for the insurance operations. Its revenues are primarily intercompany and have been eliminated in consolidation under U.S. GAAP, which typically results in a loss. Revenue in this operating unit consists primarily of net investment income and investment related gains or losses, while expenses consist of other general expenses related to corporate functions. For the three and six months ended June 30, 2026, the elevated loss before federal income tax compared to the same periods in 2025 is mainly due to higher general expenses to support our growth initiatives. June 30, 2026 | 10-Q 53 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS INVESTMENTS 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 June 30, 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. 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 June 30, 2026 December 31, 2025 (In thousands, except for %) Amount % Amount % Cash, cash equivalents and invested assets: Fixed maturity securities: U.S. Treasury and U.S. Government-sponsored enterprises $ 6,886 0.5 % $ 7,008 0.5 % Corporate 877,445 60.5 866,870 59.2 States and political subdivisions (1) 258,385 17.8 268,792 18.3 Mortgage-backed (2) 107,189 7.4 111,982 7.6 Asset-backed 32,155 2.2 33,209 2.3 Total fixed maturity securities 1,282,060 88.4 1,287,861 87.9 Cash and cash equivalents 16,960 1.2 22,976 1.6 Other investments: Policy loans 66,146 4.6 67,455 4.6 Equity securities 1,233 0.1 1,356 0.1 Other long-term investments 83,260 5.7 85,439 5.8 Total cash, cash equivalents and invested assets $ 1,449,659 100.0 % $ 1,465,087 100.0 % (1) Includes $97.6 million and $106.9 million of securities guaranteed by third parties at June 30, 2026 and December 31, 2025, respectively. (2) Includes $90.4 million and $101.1 million of U.S. Government-sponsored enterprises at June 30, 2026 and December 31, 2025, respectively. The carrying value of the Company’s fixed maturity securities investment portfolio at June 30, 2026 was $1.28 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 June 30, 2026 did not materially change from December 31, 2025 – the weighted average was “A” at both dates. Cash and cash equivalents decreased as of June 30, 2026 from December 31, 2025 and fluctuate from period to period primarily due to the timing of operating and investing activities. As of June 30, 2026, other long-term investments decreased by $2.2 million compared to December 31, 2025, primarily due to the impact of changes in the fair market value of our limited partnership holdings partially offset by additional funding of our commitments of other investments. Obligations of States and Political Subdivisions 20% of the Company’s fixed maturity securities investment portfolio at June 30, 2026 consists of municipal bonds, which are securities that are obligations of states and political subdivisions. A portion of these municipal bonds June 30, 2026 | 10-Q 54 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS 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 Cost (In thousands, except for %) Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost State and political subdivision fixed maturity securities including third-party guarantees: AAA $ 12,001 11,826 12,621 12,941 3,326 3,235 27,948 28,002 9.8 % AA 36,775 37,065 112,086 128,256 4,879 5,106 153,740 170,427 59.8 A 2,733 3,021 62,328 71,217 2,130 2,117 67,191 76,355 26.8 BBB 91 93 6,993 7,692 — — 7,084 7,785 2.7 BB and other 2,422 2,534 — — — — 2,422 2,534 0.9 Total $ 54,022 54,539 194,028 220,106 10,335 10,458 258,385 285,103 100.0 % State and political subdivision fixed maturity securities excluding third-party guarantees: AA $ 30,638 30,615 38,410 44,201 1,022 1,067 70,070 75,883 26.6 A 10,276 10,573 75,274 84,205 2,948 3,093 88,498 97,871 34.3 BBB 2,393 2,569 20,447 21,976 46 55 22,886 24,600 8.6 BB and other 10,715 10,782 59,897 69,724 6,319 6,243 76,931 86,749 30.5 Total $ 54,022 54,539 194,028 220,106 10,335 10,458 258,385 285,103 100.0 % 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 June 30, 2026. (In thousands, except for %) Fair Value Amortized Cost % of Total Fair Value Utilities $ 41,721 45,620 16.1 % Education 38,720 44,843 15.0 Transportation 32,549 39,517 12.6 The Company's municipal bond portfolio consists of bonds from states and political subdivisions in many states; however, as of June 30, 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 June 30, 2026. June 30, 2026 | 10-Q 55 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in Texas at June 30, 2026. General Obligation Special Revenue Other Total (In thousands) Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Texas state and political subdivision fixed maturity securities including third-party guarantees: AAA $ 11,499 11,325 2,461 2,496 — — 13,960 13,821 AA 13,043 13,031 17,137 19,699 46 55 30,226 32,785 A — — 10,858 14,730 — — 10,858 14,730 BBB — — 2,948 2,920 — — 2,948 2,920 Total $ 24,542 24,356 33,404 39,845 46 55 57,992 64,256 Texas state and political subdivision fixed maturity securities excluding third-party guarantees: AA $ 20,224 20,041 5,006 5,549 — — 25,230 25,590 A 3,092 3,090 12,966 14,889 — — 16,058 17,979 BBB — — 6,183 6,282 46 55 6,229 6,337 BB and other 1,226 1,225 9,249 13,125 — — 10,475 14,350 Total $ 24,542 24,356 33,404 39,845 46 55 57,992 64,256 The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in California at June 30, 2026. General Obligation Special Revenue Other Total (In thousands) Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost California state and political subdivision fixed maturity securities including third-party guarantees: AA $ 2,123 2,122 32,543 38,798 4,523 4,744 39,189 45,664 A 1,323 1,650 5,929 6,807 — — 7,252 8,457 Total $ 3,446 3,772 38,472 45,605 4,523 4,744 46,441 54,121 California state and political subdivision fixed maturity securities excluding third-party guarantees: AA $ 452 446 5,111 6,767 712 760 6,275 7,973 A 2,994 3,326 18,757 21,800 1,819 1,976 23,570 27,102 BB and other — — 14,604 17,038 1,992 2,008 16,596 19,046 Total $ 3,446 3,772 38,472 45,605 4,523 4,744 46,441 54,121 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 and six months ended June 30, 2026 or 2025. Gross unrealized losses on AFS fixed maturity securities amounted to $162.6 million as of June 30, 2026 and $154.3 million as of December 31, 2025. This increase in gross unrealized losses during 2026 was a result of the increase in average market interest rates in 2026 as compared to 2025. June 30, 2026 | 10-Q 56 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS Information on both unrealized and realized gains and losses by category is set forth in Part I, Item 1, Note 3. Investments of the notes to our consolidated financial statements herein. LIQUIDITY AND CAPITAL RESOURCES Below are our primary capital resources (based on carrying value of each) as of the periods indicated. (In thousands) June 30, 2026 December 31, 2025 Fixed maturity securities $ 1,282,060 1,287,861 Cash and cash equivalents 16,960 22,976 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. In the six months ended June 30, 2026, our operations provided $1.7 million of net cash. 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 June 30, 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. We purchased $53.4 million of fixed maturity securities and we also used $1.5 million to purchase other long-term investments in the first six months of 2026. PARENT COMPANY LIQUIDITY AND CAPITAL RESOURCES Citizens is a holding company and has minimal operations of its own. Our assets consist of the capital stock of our subsidiaries, cash and investments. Our liquidity requirements are met primarily from two sources: cash generated from our operating subsidiaries and our invested assets. Our ability to obtain cash from our insurance subsidiaries depends primarily upon the availability of statutorily permissible payments, including payments we receive from service agreements with our insurance subsidiaries and dividends from the subsidiaries. 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 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. 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. In addition to the above-mentioned sources of cash, we offer a Stock Investment Plan ("SIP"), which allows investors, policyholders, independent contractors and agents, employees and directors to directly purchase our stock. 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. We renewed our Credit Facility with Regions Bank on May 3, 2024 for an additional three years. See Part I, Item 1, Note 8. Commitments and Contingencies in the notes to our consolidated financial statements herein for a June 30, 2026 | 10-Q 57 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS description of the Credit Facility. The Credit Facility provides additional liquidity to the Company for short-term or longer-term needs. We have not borrowed any money under the Credit Facility. INSURANCE COMPANY SUBSIDIARY LIQUIDITY AND CAPITAL RESOURCES The liquidity requirements of our insurance operations are primarily met by premium revenues, investment income and proceeds from investment maturities, calls or sales. Primary cash needs are for payments of policyholder benefits, investment purchases, and operating expenses. 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 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, 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. FHLB membership provides the insurance subsidiaries with access to various low-cost collateralized borrowings and funding agreements. While not the only source of additional liquidity, the FHLB could provide the insurance subsidiaries with an additional source of liquidity, if needed. We believe that we have adequate capital resources and ability to obtain additional capital if needed to support the short-term and longer-term liquidity requirements of our insurance operations. See Contractual Obligations and Off-balance Sheet Arrangements in our 2025 Form 10-K and below for a discussion of known and estimated cash needs. Cash flow projections and cash flow tests under various market interest rate scenarios are performed annually to assist in evaluating liquidity needs and adequacy. Trends, Demands and Restrictions on our Uses of Cash 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 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 June 30, 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. Meeting these distributions could require the Company to sell its investments at inopportune times to pay policyholder withdrawals. 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, 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. Surrenders. Surrender benefits, which have been high the last several years, slightly decreased during 2025 and continued to decrease the first six 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. We believe that surrenders have been high due to other reasons, including the loss of one of our biggest distributors in Venezuela in 2018, increasing interest rates, which may encourage policyholders to seek higher rates of return in different investment products, post-pandemic beliefs that life insurance may not be as important as it was during the pandemic, and inflationary pressures, which may cause policyholders to want the cash values of their policies due to decreased purchasing power elsewhere. To the June 30, 2026 | 10-Q 58 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS 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 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. Commissions. Another significant use of cash is payment of commissions. 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. 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. Commitments and Contingencies , as well as Legal Proceedings - Trade Secret Lawsuit in our 2025 Form 10-K for a discussion of the trade secret lawsuit, which could negatively impact our cash if we do not succeed in our appeal. 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 insurance 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 "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 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 June 30, 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. 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 OIC that includes proposed minimum capital and surplus. CICA International is required to maintain a minimum of $750,000 in capital and maintain a premium to surplus ratio of 7 to 1. At June 30, 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. June 30, 2026 | 10-Q 59 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS As of June 30, 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 . We do not utilize special purpose entities as investment vehicles, nor are there any such entities in which we have an investment that engage in speculative activities of any nature, and we do not use such investments to hedge our investment positions. CRITICAL ACCOUNTING POLICIES We believe that the accounting policies set forth in Part I, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - "Critical Accounting Policies" and Part IV, Item 15, Note 1. Summary of Significant Accounting Policies of our consolidated financial statements in our 2025 Form 10-K continue to describe the significant judgments and estimates used in the preparation of our consolidated financial statements. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, we are not required to provide the information required by this Item. Item 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of June 30, 2026. Based on such evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2026 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and such information is accumulated and reported to management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding disclosure. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING During the three months ended June 30, 2026, there were no changes in the Company's internal control over financial reporting (as defined in rules 13a-15(f) and 15d-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. June 30, 2026 | 10-Q 60 Table of Contents CITIZENS, INC. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS Part I, Item 3. Legal Proceedings of our 2025 Form 10-K includes a discussion of our legal proceedings. There have been no material developments in the three months ended June 30, 2026 from the legal proceedings described in our 2025 Form 10-K . Item 1A. RISK FACTORS Part I, Item 1A. Risk Factors of our 2025 Form 10-K includes a discussion of our risk factors. There have been no material changes in the three months ended June 30, 2026 from the risk factors included in our 2025 Form 10-K . Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. Item 3 . DEFAULTS UPON SENIOR SECURITIES Not applicable. Item 4. MINE SAFETY DISCLOSURES Not applicable. Item 5. OTHER INFORMATION Item 5(a) None. Item 5(b) None. Item 5(c) During the three months ended June 30, 2026, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Citizens, Inc. securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.” Additionally, Citizens did not adopt or terminate any Rule 10b5-1 trading arrangement during the three months ended June 30, 2026. June 30, 2026 | 10-Q 61 Table of Contents CITIZENS, INC. Item 6. EXHIBITS Exhibit Number The following exhibits are filed herewith: 3.1 Restated and Amended Articles of Incorporation dated March 4, 2004 (incorporated herein by reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the Year Ended December 31, 2003, filed on March 15, 2004) 3.2 Amended and Restated Bylaws dated June 2, 2021 (incorporated herein by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed on June 7, 2021) 31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act* 31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act* 32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act* 32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act* 101* Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part I, Item 1, Financial Statements of this Quarterly Report on Form 10-Q* 104* Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set* * Filed herewith. June 30, 2026 | 10-Q 62 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CITIZENS, INC. By: /s/ Jon Stenberg Jon Stenberg President & Chief Executive Officer By: /s/ Jeffery P. Conklin Jeffery P. Conklin Chief Financial Officer, Chief Investment Officer & Treasurer Date: August 6, 2026 June 30, 2026 | 10-Q 63