Item 1. Financial Statements
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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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 )
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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
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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
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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
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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
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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,
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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.
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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.
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CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.