What changed in CITIZENS, INC.'s 10-K — 2023 vs 2024

Item 1. BUSINESS OVERVIEW Citizens, Inc. ("Citizens" or the "Company") is an insurance holding company incorporated in Colorado and with its headquarters in Austin, Texas, serving the life insurance needs of individuals in the United States since 1969 and internationally since 1975.

Through our domestic insurance subsidiaries, we are licensed to issue insurance products in 43 U.S. states and through our international subsidiaries, we provide insurance benefits to residents in almost 80 different countries. We pursue a strategy of offering traditional insurance products in niche markets where we believe we are able to achieve competitive advantages.

We had approximately $1.7 billion of assets and over $5.2 billion of direct insurance in force at December 31, 2024. We operate in two business segments: • Life Insurance - Internationally, we sell U.S. dollar-denominated whole life insurance, endowment and critical illness policies to non-U.S. residents, located principally in Latin America and the Pacific Rim.

In the U.S. we primarily sell whole life final expense insurance and insurance with living benefits. • Home Service Insurance - We sell affordable life insurance policies to lower-income households in Louisiana, Mississippi and Arkansas. Our Principal Brands LIFE INSURANCE SEGMENT Internationally, we conduct our Life Insurance segment business through CICA Life, A.I., a Puerto Rico company ("CICA International").

Domestically, we conduct our Life Insurance segment business through CICA Life Insurance Company of America ("CICA Domestic"). HOME SERVICE INSURANCE SEGMENT We conduct our Home Service Insurance segment through Security Plan Life Insurance Company ("SPLIC") and Magnolia Guaranty Life Insurance Company ("Magnolia").

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, maturities, surrenders and policyholder dividends. Accordingly, we derive our revenues principally from: (1) life insurance premiums, and (2) net investment income.

In addition to paying and reserving for insurance benefits that we pay to our policyholders and their beneficiaries, our expenses consist primarily of the costs of selling our insurance products, operating expenses and income taxes.

Because collection of premiums is the primary source of our revenues, our overall financial performance depends primarily upon the successful development, distribution and persistency of our products. A key to product development is the accuracy of our pricing assumptions as profitability is affected by actual experience deviations from the established assumptions.

We seek to price our insurance policies such that insurance premiums and future net investment income earned on premiums received will cover the ultimate cost of paying claims on our policies, our expenses and will also yield a profit margin.

Pricing adequacy depends on a number of factors, including the ability to project future claims based on historical claim experience adjusted for known trends, proper evaluation of underwriting risks, the Company’s response to competitors, commission payments for selling our products, expectations about interest rates, regulatory or legal developments, and expense levels.

December 31, 2024 | 10-K 2 Table of Contents CITIZENS, INC. In addition to insurance premiums, the investment return, or yield, on invested assets is an important element of the Company’s earnings since life insurance products are priced with the assumption that premiums received can be invested for a long period of time before benefits are paid.

Pursuant to regulatory guidelines, most of the Company’s invested assets are held in available-for-sale ("AFS") fixed maturity securities, primarily in asset classes of corporate bonds, municipal bonds, and government obligation bonds. The interest rate environment has a significant impact on the determination of insurance contract liabilities, our investment rates and yields, and our asset/liability management.

The profitability of our "spread-based" product features depends largely on the Company’s ability to earn higher returns on invested assets than the interest we credit to policyholders.

The primary investment objective for the Company is to maximize economic value, consistent with acceptable risk parameters, including the management of credit risk and interest rate sensitivity of invested assets, while generating sufficient after-tax income to meet policyholder and corporate obligations.

The Company maintains a prudent investment strategy that may vary based on a variety of factors including business needs, regulatory requirements and tax considerations. STRATEGIC INITIATIVES The Pursuit of Profitable Growth Historically, our insurance companies have only issued a few products and had limited distribution channels.

Domestically, most of our historical growth came from the acquisition of assets rather than new sales. Internationally, our limited products, which were mostly endowment products, burdened us with known high levels of maturities after a certain period with limited products to replace the business. As a result, from 2017 through 2021, our total premium revenue fell by over $20 million.

In 2021, we became a non-controlled company for the first time in over 20 years and under new leadership, our strategy shifted to the pursuit of long-term profitable growth through a 4-pronged strategy: • Grow first year sales to reverse the decline in our total revenue.

We do this through the introduction of new products and by expanding our distribution. • Products . Our product development process focuses on our customer needs by developing new products tailored to our specific markets, working with partners to develop products tailored to their markets, and enhancing existing products.

Our management team meets regularly to ensure we are bringing the right products to market at the right time. • Distribution. New products help our sales force, as they can sell additional products to existing customers and offer a broader portfolio of products to entice prospective customers. A broader product portfolio also helps attract new distributors.

We are also focused on implementing sales promotions and campaigns in order to align our sales consultant compensation opportunities with our premium revenue goals and our growth and retention initiatives. • Slow the decline of premiums through retention efforts. We pay certain costs (e.g., commissions, underwriting, marketing expenses) to obtain new policyholders.

First year commissions paid to our agents are significantly higher than renewal commissions. Accordingly, it is important to preserve policyholder relationships once we have issued a new policy. We are focused on improving the customer experience and policyholder retention. • Focus on execution. • Processes .

We are implementing process improvements and new technologies not only to speed up product delivery but also to improve the experience for both our policyholders and our agents. We have also implemented new processes and technologies to help our employees work more effectively and efficiently. • Financial and expense discipline. We believe these factors will lead to growth and profitability.

As a result of these efforts over the last few years, in 2024, our total premium revenue grew for the first time since 2017. December 31, 2024 | 10-K 3 Table of Contents CITIZENS, INC.

Status of New and Enhanced Products; Trends in Market Demand As mentioned above, offering new and enhanced products and expanding our distribution are key to achieving our strategic goals.

In 2024, we issued the highest amount of insurance ever in a year by Citizens - $1.1 billion and achieved our highest ever total direct insurance in force - $5.2 billion. • Following the filing of 3 new products in our domestic markets in 2023, we continued growing our domestic business in 2024: ◦ we became licensed in 8 additional states.

CICA Domestic is licensed in 43 states, up from 35 states at 2023 year-end and up from 32 states at 2022 year-end; and ◦ we expanded our domestic distribution network, growing from over 2,000 agents at December 31, 2023 to over 5,000 agents at December 31, 2024.

This led to direct first year premium revenue growth of 106% in our Life Insurance segment. • We maintained our A.M. Best rating. ◦ CICA Domestic is rated as a B++ with a "Very Strong" balance sheet.

We believe this will help us expand our distribution networks and the appeal of our products to consumers. • We introduced a new product in our international markets designed to allow policyholders with maturing endowments to use some or all of the funds to purchase a new life insurance policy.

This led to increased first year premiums in the international business. LIFE INSURANCE SEGMENT INTERNATIONAL LIFE INSURANCE Products CICA International issues primarily individual whole life insurance and endowment products in U.S. dollar-denominated amounts to non-U.S. residents. The products accumulate guaranteed cash values beginning in the first policy year and provide lifetime income guarantees for an insured or for surviving beneficiaries.

In addition to death benefits, our international products have living benefit features. Most policies contain guaranteed cash values that can be used during an insured's lifetime by taking a loan or advance on the death benefit, have options for annual premium benefits, and are participating (i.e . , provide for cash dividends).

Our policyowners have several options with regards to the policy dividends and annual premium benefits, which include, among other things, electing to receive cash, crediting such amounts towards the payment of premiums on the policy, leaving such amounts on deposit with the Company to accumulate at a specified interest rate or assigning them to a third party, Computershare Trust Company, N.A.

( an affiliate of Computershare, Inc., our transfer agent), who facilitates their purchase of our Class A common stock, through the Citizens, Inc. Stock Investment Plan (the "SIP") . The SIP is a direct stock purchase plan available to policyowners, shareholders, our employees and directors, independent consultants, and other potential investors through Computershare Trust Company, as administrator of the SIP.

The Company has registered the shares of Class A common stock issuable to participants under the SIP on a Form S-3 registration statement under the Securities Act of 1933, as amended, (the "Securities Act") that is on file with the SEC.

Computershare administers the SIP in accordance with the terms and conditions of the SIP, which is available on the Computershare website and as part of the Company’s registration statement on file with the SEC.

We believe positive attributes of our international insurance business typically include: • larger face amount policies issued compared to our U.S. operations, which results in lower underwriting and administrative costs per dollar of coverage; • high persistency (retention) and low mortality charges due to our customer demographics; and • premiums paid annually at the beginning of each policy year rather than monthly or quarterly, which reduces our administrative expenses, accelerates cash flow and results in lower policy lapse rates than premium payment options with more frequently scheduled payments.

December 31, 2024 | 10-K 4 Table of Contents CITIZENS, INC. Sales and Distribution We sell our international products through independent marketing agencies and consultants located primarily in Latin America and the Pacific Rim.

As of December 31, 2024, we had insurance policies in force in almost 80 foreign countries and receive the majority of our premiums from Colombia, Taiwan, Venezuela, Ecuador and Argentina. International direct premiums comprised approximately 89% of total direct premiums in the Life Insurance segment and 67% of our total consolidated direct premiums in 2024.

The independent marketing agencies and consultants who sell our products specialize in life insurance products. We enter into contracts with the independent marketing agencies pursuant to which they recruit, train and supervise their managers and associates in the sales and service of our products.

These agencies receive commissions for products they sell and service, as well as commission overrides on the business that their agents produce and, in return for the override, they guarantee any debt their agents owe to us. Their agents also contract directly with us as independent consultants and receive commission compensation directly from us.