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What changed in CITIZENS, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CITIZENS, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+351 added−370 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-13)

Top changes in CITIZENS, INC.'s 2025 10-K

351 paragraphs added · 370 removed · 249 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

50 edited+27 added−29 removed32 unchanged
Biggest changeAs 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.
Biggest changeSales 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, 2025, we had insurance policies in force in over 80 foreign countries and receive the majority of our premiums from Colombia, Taiwan, Ecuador, Venezuela and Argentina.
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.
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 issued only a few products and had limited distribution channels.
OTHER NON-INSURANCE ENTERPRISES Other Non-Insurance Enterprises includes the results of our parent company, Citizens, Inc., Nexo Global Services LLC, a Puerto Rico holding company ("Nexo"), Nexo Enrollment Services LLC ("NES"), a Puerto Rico company that provides services to the customers of CICA International, and our non-insurance subsidiary, Computing Technology, Inc., which primarily provides the Company's corporate-support and information technology functions to the insurance operations.
NON-INSURANCE ENTERPRISES Non-Insurance Enterprises includes the results of our parent company, Citizens, Inc.; Nexo Global Services LLC, a Puerto Rico holding company ("Nexo"); Nexo Enrollment Services LLC ("NES"), a Puerto Rico company that provides services to the customers of CICA International; and our non-insurance subsidiary, Computing Technology, Inc., which primarily provides the Company's corporate-support and information technology functions to the insurance operations.
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.
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 contract directly with us as independent consultants and receive commission compensation directly from us.
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.
December 31, 2025 | 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.
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.
Because insurance premiums are 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.
In 2024, due to our strategic plan to expand CICA Domestic's business, we entered into a capital maintenance agreement with the Colorado Division of Insurance that specifies that Citizens will infuse capital as needed to ensure that CICA Domestic's RBC ratio remains at or above 350%.
In 2024, due to our strategic plan to expand CLOA's business, we entered into a capital maintenance agreement with the Colorado Division of Insurance that specifies that Citizens will infuse capital as needed to ensure that CLOA's RBC ratio remains at or above 350%.
Item 1A. Risk Factors . U.S. REGULATION In the United States, insurance is primarily regulated at the state level. Our primary regulator in the U.S. is the Colorado Division of Insurance, as both Citizens and CICA Domestic are Colorado companies.
Item 1A. Risk Factors . U.S. REGULATION In the United States, insurance is primarily regulated at the state level. Our primary regulator is the Colorado Division of Insurance, as both Citizens and CLOA are Colorado companies.
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.
Through our international insurance subsidiary, we provide insurance benefits to residents in over 80 different countries, and through our domestic insurance subsidiaries, we are licensed to issue insurance products in 43 U.S. states. We pursue a strategy of offering insurance products in niche markets where we believe we are able to achieve competitive advantages.
In supervising and regulating insurance companies, state insurance departments aim to protect policyholders and the public rather than investors, and enjoy broad authority and discretion in applying applicable insurance laws and regulation for that purpose.
In supervising and regulating insurance companies, state insurance departments aim to protect policyholders and the public rather than our stockholders, and enjoy broad authority and discretion in applying applicable insurance laws and regulation for that purpose.
In a reinsurance transaction, a reinsurer agrees to indemnify another insurer for part or all of its liability under a policy or policies it has issued for an agreed upon premium. We participate in reinsurance activities in order to minimize exposure to significant risks, limit losses, and provide additional capacity for future growth.
In a reinsurance transaction, a reinsurer agrees to indemnify another insurer for part or all of its liability under a policy or policies it has issued for an agreed upon premium. We use reinsurance to minimize exposure to significant risks, limit losses, and provide additional capacity for growth.
Some of the primary federal laws include: • USA Patriot Act and the Bank Secrecy Act, which require us to institute certain measures to detect and prevent money laundering; • Foreign Corrupt Practices Act, which makes it unlawful to bribe foreign officials for the purpose of obtaining or retaining business; • Gramm-Leach-Bliley Act, which requires us to explain our information-sharing practices to our customers and to safeguard sensitive data; • Securities Act, Securities Exchange Act and Sarbanes-Oxley Act, which establish various requirements for Citizens, as a public company, to comply with, including registration of our Class A common stock, reporting and disclosure requirements, and public company audit and internal control requirements; Our U.S.-based insurance products and thus our businesses also are affected by U.S. federal, state and local tax laws.
Some of the primary federal laws include: • USA Patriot Act and the Bank Secrecy Act, which require us to institute certain measures to detect and prevent money laundering; • Foreign Corrupt Practices Act, which makes it unlawful to bribe foreign officials for the purpose of obtaining or retaining business; • Gramm-Leach-Bliley Act, which requires us to explain our information-sharing practices to our customers and to safeguard sensitive data; and • Securities Act, Securities Exchange Act and Sarbanes-Oxley Act, which establish various requirements for Citizens, as a public company, to comply with, including registration of our Class A common stock, reporting and disclosure requirements, and public company audit and internal control requirements.
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).
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).
In the second quarter of 2024, CICA Domestic entered into a coinsurance agreement with RGA Reinsurance Company ("RGA") in order to provide more capacity for growth.
In our Domestic Insurance segment, in the second quarter of 2024, CLOA entered into a coinsurance agreement with RGA Reinsurance Company ("RGA") in order to provide more capacity for growth.
Under this agreement (the "RGA Agreement"), CICA Domestic initially elected for RGA to reinsure 50% of its newly written final expense business, which means that we cede 50% of premiums received and benefits paid in our domestic final expense benefit to RGA. Cessions under reinsurance agreements do not discharge our obligations as the primary insurer.
Under this agreement (the "RGA Agreement"), CLOA initially elected for RGA to reinsure 50% of its newly written final expense business, which means that we cede 50% of premiums received for this business to RGA and they reimburse us for 50% of benefits paid to our policyholders. Cessions under reinsurance agreements do not discharge our obligations as the primary insurer.
We enter into various agreements with reinsurers that cover individual risks, group risks or defined blocks of business, primarily on a coinsurance and yearly renewable term basis. For the majority of our international life insurance business, we generally retain the first $100,000 of risk on any one life and reinsure the remainder of the risk.
We enter into various agreements with reinsurers that cover individual risks, group risks or defined blocks of business, primarily on a coinsurance and yearly renewable term basis. In our International Insurance segment, we generally retain the first $250,000 of risk on any one life and reinsure the remainder of the risk with multiple global reinsurance companies.
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.
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.
Because we maintain sensitive data regarding our customers, we are also subject to additional state regulations in states where we do business, such as data security and state privacy laws. December 31, 2024 | 10-K 9 Table of Contents CITIZENS, INC. While primarily regulated at the state level, our domestic business is subject to various federal laws and regulations.
Because we maintain sensitive data regarding our customers, we are also subject to additional state regulations in states where we do business, such as data security and state privacy laws. While primarily regulated at the state level, our domestic business is subject to various federal laws and regulations.
This allows us to develop a relationship with their associates so if an agency contract is terminated for any reason, we may seek to continue the existing independent consultant marketing arrangements with the associates of such agency.
This allows us to develop a December 31, 2025 | 10-K 4 Table of Contents CITIZENS, INC. relationship with their associates so if an agency contract is terminated for any reason, we may seek to continue the existing independent consultant marketing arrangements with the associates of such agency.
December 31, 2024 | 10-K 7 Table of Contents CITIZENS, INC. REGULATION The insurance industry is heavily regulated and both Citizens and our insurance subsidiaries are subject to regulation and supervision by the U.S. states in which they do business, by U.S. federal laws, and for CICA International, by Puerto Rico.
REGULATION The insurance industry is heavily regulated and both Citizens and our insurance subsidiaries are subject to regulation and supervision by the U.S. states in which they do business, by U.S. federal laws, and for CICA International, by Puerto Rico.
The Insurance Code requires us to file annual U.S. GAAP financial statements with the OIC that include schedules providing information regarding premiums written and reinsurance assumed and ceded, as well as an annual actuarial certification.
The Insurance Code requires us to file annual U.S. GAAP financial statements with the OIC that include schedules providing information regarding premiums written and reinsurance assumed and ceded, as well as an annual actuarial certification. December 31, 2025 | 10-K 7 Table of Contents CITIZENS, INC.
Therefore, under the terms of the reinsurance agreements, the reinsurers December 31, 2024 | 10-K 6 Table of Contents CITIZENS, INC. agree to reimburse us for the ceded amount (i.e., the death benefit amount less our retained risk) in the event a claim is paid.
Under the terms of the reinsurance agreements, the reinsurers agree to reimburse us for the ceded amount (i.e., the death benefit amount less our retained risk) in the event a claim is paid.
In addition to monitoring our financial condition, insurance regulatory authorities (including state law enforcement agencies and attorneys general) periodically make inquiries and regularly conduct examinations regarding compliance with insurance and other laws and regulations regarding the conduct of our insurance businesses.
In addition to monitoring our financial condition, insurance regulatory authorities, including state law enforcement agencies and attorneys general, periodically make inquiries and conduct examinations regarding compliance with insurance and other laws and regulations regarding the conduct of our insurance businesses. It is our practice to fully and consistently cooperate with such inquiries and examinations and take corrective action when warranted.
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.
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.
We are also regulated by the departments of insurance in Louisiana (SPLIC) and Mississippi (Magnolia), as well as each of the 43 states and the District of Columbia in which we conduct insurance business.
We are also regulated by the departments of insurance in Louisiana (SPLIC) and Mississippi (Magnolia), as well as each of the states where we issue insurance.
We have to file our domestic forms in both English and Spanish for separate approvals. We are also subject to laws related to our advertising and may have to file certain marketing documents with state regulators as well.
We are also subject to laws related to our advertising and may have to file certain marketing documents with state regulators as well.
SPLIC issues final expense life insurance and critical illness products to lower-income individuals, primarily through a home service distribution model based in Louisiana. Policies issued by Magnolia are primarily burial policies which are sold and serviced through funeral homes, who are also typically the beneficiaries of the policies.
As a result, in the past two years, we have significantly expanded our domestic premiums and distribution. SPLIC issues final expense life insurance and critical illness products to lower-income individuals, primarily in Louisiana. Policies issued by Magnolia are primarily burial policies which are sold and serviced through funeral homes, who are also typically the beneficiaries of the policies.
The extent of this regulation varies, but most U.S. jurisdictions have laws and regulations based upon the National Association of Insurance Commissioners ("NAIC") model rules governing the financial condition of insurers, including standards of solvency, types and concentration of investments, establishment and maintenance of reserves, credit for reinsurance and requirements of capital adequacy; and the business conduct of insurers, December 31, 2024 | 10-K 8 Table of Contents CITIZENS, INC. including marketing and sales practices and claims handling.
The extent of this regulation varies, but most U.S. jurisdictions have laws and regulations based upon the National Association of Insurance Commissioners ("NAIC") model rules that govern the financial condition of insurers, including standards of solvency, types and concentration of investments, establishment and maintenance of reserves, credit for reinsurance and requirements of capital adequacy.
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.
We had approximately $1.8 billion of assets and over $5.4 billion of direct insurance in force at December 31, 2025. We operate in the following two business segments. International Insurance We sell U.S. dollar-denominated life insurance, endowment and other financial products to non-U.S. residents, located principally in Latin America and the Pacific Rim. CICA Life, A.I.
This investment is foundational to the Company's growth strategy as we pursue new product innovation and provides: • our customers and agents with portals to be able to access account information 24/7; • our policyholder service and claims representatives with a customer account-centric view of our policyholders and beneficiaries, reducing customer inquiry response time and claims processing time; • streamline, automated processes that deliver the scalability needed for continue growth; and • business-to-business solutions.
Our PAS and surrounding systems provide: • our customers and agents with portals to be able to access account information 24/7; • our policyholder service and claims representatives with a customer account-centric view of our policyholders and beneficiaries, reducing customer inquiry response time and claims processing time; • streamlined, automated processes that deliver the scalability needed for continued growth; and • business-to-business solutions.
Some of these companies may have a competitive advantage over us due to their greater financial resources, histories of successful operations and brand recognition, local licensing, partnering with local insurance companies and larger marketing forces. We believe that issuing U.S. dollar-denominated products is a key competitive advantage for us.
Internationally, we compete with a number of life insurance companies, as well as with financial institutions that offer insurance products. Some of these companies may have a competitive advantage over us due to their greater financial resources, histories of successful operations and brand recognition, local licensing, partnering with local insurance companies or larger marketing forces.
Because premiums on our international policies are paid in U.S. dollars, cash value is accumulated in U.S. dollars, and we pay claims and benefits in U.S. dollars.
We believe that issuing U.S. dollar-denominated products is a key competitive advantage for us. Because premiums on our international policies are paid in U.S. dollars, cash value is accumulated in U.S. dollars, and we pay claims and benefits in U.S. dollars.
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.
Item 1. BUSINESS OVERVIEW Incorporated in Colorado and based in Austin, Texas, Citizens, Inc. ("Citizens" or the "Company") is an insurance holding company. Since 1969 it has addressed the life insurance needs of people in the United States, and since 1975, it has extended life insurance offerings to clients worldwide.
All of our reinsurers are rated A- (Excellent) or higher by A.M. Best. We regularly evaluate the financial condition of our reinsurers and monitor concentration risk with our reinsurers.
In the event reinsurers do not meet their obligations under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible. All of our reinsurers are rated A- (Excellent) or higher by A.M. Best. We regularly evaluate the financial condition of our reinsurers and monitor concentration risk with our reinsurers.
December 31, 2024 | 10-K 5 Table of Contents CITIZENS, INC. DOMESTIC LIFE INSURANCE Over the last couple of years, we began our "white label" program to expand our distribution by expanding CICA Domestic's state licenses, developing new final expense and living benefit products, and filing these new products in multiple states.
Products In the last few years, we began our "white label" program to increase our domestic distribution by expanding CLOA's state licenses, developing new final expense and living benefit products, and filing these new products in multiple states. At December 31, 2025, we were licensed in 43 states and had over 5,000 agents appointed to sell our new products.
It is our practice to fully and consistently cooperate with such inquiries and examinations and take corrective action when warranted. In order to sell products in any state, we first have to become licensed in that state. States have various rules for obtaining a license, including capital deposit requirements and seasoning requirements, among others.
In order to sell products in any state, we first have to become licensed in that state. States have various rules for obtaining a license, including capital deposit requirements and seasoning requirements, among others. Once we are licensed in a state, most states require us to file our products for their approval before being able to sell the products.
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.
Security Plan Life Insurance Company ("SPLIC") issues final expense whole life policies throughout Louisiana, Mississippi and Arkansas, which are intended to cover funeral and burial costs. 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.
Each company and block of business we have acquired has been converted onto our PAS. The Company is actively engaged in continued modernization of technology to invest and expand into new opportunities. This modernization allows us to bring new products to market rapidly and automate insurance interactions to enhance user experience.
We are actively engaged in continued modernization of technology to invest and expand into new opportunities, including ongoing research into next generation PAS solutions. We expect that this modernization will allow us to bring new products to market and automate insurance interactions to enhance user experience. This investment is foundational to the Company's growth strategy.
Once we are licensed in a state, most states require us to file our products for their approval before being able to sell the products. The application and product forms must comply with state insurance laws regarding policy requirements. Once an application or product is approved in that state, we must use the approved forms to sell our products.
The application and product forms must comply with state insurance laws regarding policy requirements. December 31, 2025 | 10-K 8 Table of Contents CITIZENS, INC. Once an application or product is approved in that state, we must use the approved forms to sell our products. We have to file our domestic forms in both English and Spanish for separate approvals.
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 .
Additionally, a certain expected retention rate is considered in pricing a product. Accordingly, it is important to preserve policyholder relationships once we have issued a new policy. We are focused on improving the customer experience so they keep their policies longer. • Focus on execution.
We have a proprietary single, centrally-controlled, mainframe-based policy administration system ("PAS") that we use for all of our insurance companies. Our PAS performs various functions to effectively handle our insurance operations. These functions include policy set-up, administration, billing and collections, commission calculation, valuation, automated data edits, storage backup, image management and other related functions.
These functions include policy set-up, administration, billing and collections, commission calculation, valuation, automated data edits, storage backup, image management, and other related functions. Each company and block of business we have acquired has been converted onto our PAS.
In addition, statutes and regulations require the licensing of insurers and agents, the approval of most types of policy forms and related materials (such as advertising) and the approval of rates for certain types of insurance products. Insurance companies are also required to file detailed annual reports with our supervisory agencies.
They also have rules that govern the business conduct of insurers, including marketing and sales practices and claims handling. In addition, statutes and regulations require the licensing of insurers and agents Our insurance companies are also required to file detailed annual reports with our supervisory agencies.
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.
Domestically, most of our historical growth came from the acquisition of blocks of insurance business rather than new policy sales. Internationally, we issued mostly endowment products, which pay a maturity benefit if the insured survives the policy term. This has burdened us with contractual high levels of maturities and until recently, with limited products available to replace the maturing business.
In the event reinsurers do not meet their obligations under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible. Our amounts recoverable from reinsurers represent receivables from and/or reserves ceded to reinsurers. The amount recoverable from reinsurers was $6.9 million as of December 31, 2024. We focus on obtaining reinsurance from a diverse group of well-established reinsurers.
Our amounts recoverable from reinsurers represent receivables from and/or reserves ceded to reinsurers. The amount recoverable from reinsurers was $10.9 million as of December 31, 2025. December 31, 2025 | 10-K 6 Table of Contents CITIZENS, INC.
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.
Because of the focused execution on our strategic goals, in 2025, we issued the second highest amount of insurance ever within a year by Citizens - $1.1 billion and achieved our highest ever total direct insurance in force - $5.4 billion. INTERNATIONAL INSURANCE SEGMENT We operate our International Insurance segment through CICA International.
For the international portion of our Life Insurance segment, certain operations are conducted at our office in Puerto Rico and, starting in 2024, some customer service functions are conducted in the Philippines. The Company is actively engaged in optimizing its operations by seeking opportunities to leverage the global workforce to meet the needs of its international policyholders.
OPERATIONS AND TECHNOLOGY Most of our operations are based at our corporate headquarters in Austin, Texas. Additional key operations for our International Insurance segment are conducted at our office in Puerto Rico, with some customer service functions occurring in the Philippines.
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 2025, our International Insurance segment generated 64% of our total consolidated direct premiums. Products CICA International issues primarily individual whole life insurance and endowment products in U.S. dollar-denominated amounts to non-U.S. residents. In addition to death benefits, our products in this segment have living benefit features.
In 2024, domestic direct life insurance premiums comprised approximately 11% of total direct premiums in the Life Insurance segment and 9% of our consolidated total direct premiums. The average life insurance policy face amount issued in 2024 was approximately $10,800 per policy.
The average life insurance policy face amount issued in 2025 in CLOA was approximately $7,500 per policy and in SPLIC was approximately $13,200 per policy.
OPERATIONS AND TECHNOLOGY Most of our operations are based at our corporate headquarters in Austin, Texas. We also conduct operations for our Home Service Insurance segment from our district offices in Louisiana, Arkansas and Mississippi, as well as our service center in Donaldsonville, Louisiana.
Operations for our Domestic Insurance segment are also conducted in our district offices in Louisiana, Arkansas and Mississippi, and at our service center in Donaldsonville, Louisiana. We have a single, proprietary, centrally controlled, mainframe-based policy administration system ("PAS") that we use for all of our insurance companies. Our PAS performs various functions to effectively handle our insurance operations.
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.
In addition to our employees, a large portion of our sales activity is December 31, 2025 | 10-K 9 Table of Contents CITIZENS, INC. conducted through independent agents and consultants, who are not Company employees but who play an essential role in the marketing and distribution of our life insurance products.
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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").
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("CICA International") issues our international policies. Domestic Insurance We sell life insurance and other financial products in the United States. The majority of first year premiums in our Domestic Insurance segment are generated from final expense whole life products sold through CICA Life Insurance Company of America ("CLOA").
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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").
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One of our primary objectives is to drive growth in first-year sales in order to drive total premium increases. This involves a dual approach: introducing innovative new products and expanding our distribution channels to reach broader customer segments. • Improve Policy Retention (Persistency). We pay certain costs (e.g., commissions, underwriting, marketing expenses) to obtain new policyholders.
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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.
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To improve the efficiency of project execution, we established a detailed roadmap focused on implementing process upgrades and integrating advanced technologies. These measures are expected to expedite product delivery and provide a better experience for our agents as well as our policyholders. • Financial and expense discipline.
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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.
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We have no debt and are focused on controlling costs as we invest in the growth of our business. As a result of these efforts over the last few years, in 2025 we experienced our second straight year of total premium revenue growth. Prior to 2024, our total premium revenue had not grown since 2017.
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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.
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Status of New and Enhanced Products; Trends in Market Demand Market demand for our final expense products continued to grow in 2025 - direct first year premiums in our Domestic Insurance segment increased by 23% in 2025 as compared to 2024.
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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.
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The final expense market is a general product that provides coverage amounts intended not as income replacement for working-age individuals but instead smaller amounts to cover common expenses incurred by spouses or heirs in managing the loss of a loved one.
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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.
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As the percentage of the U.S. population older than age 60 continues to increase, the market for final expense has continued to expand, driving the overall growth of these products. Market demand also necessitated a need to elevate the customer experience through digital tools, as policyholders expect simpler buying experiences that include faster underwriting and digital experiences.
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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.
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Accordingly, our 2025 project roadmap was focused on customer experience enhancements, new technology implementations and regulatory updates. Key efforts focused on improving domestic and international customer processes—including application updates and portal upgrades — while expanding digital capabilities through new QA environments, December 31, 2025 | 10-K 3 Table of Contents CITIZENS, INC.
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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.
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OFAC integrations, document storage phases, claims tools, and authentication enhancements. The year also featured several regulatory and product updates such as reserve rate repricing, form updates, and state compact additions, along with major strategic initiatives like technology modernization projects, and quarterly business enhancements across operations.
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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.
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DOMESTIC INSURANCE SEGMENT We operate our Domestic Insurance segment through CLOA, SPLIC and Magnolia. In 2025, our Domestic Insurance segment generated 36% of our total consolidated direct premiums.
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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.
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Due to the lower risk associated with small face amount polices, most of the policies we issue in this segment are "simplified issue", meaning the underwriting performed on the applications is limited and applicants are not required to undergo a physical exam or lab tests. This leads to faster approval and ability to issue a higher volume of policies.
Removed
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.
Added
Sales and Distribution Our domestic products are distributed primarily through a network of independent licensed agents and brokers who market our life insurance offerings directly to individuals and families across the United States. These independent agents operate as non‑employees and typically represent multiple carriers, allowing them to offer consumers a broad range of product options.
Removed
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.
Added
This distribution model enables us to reach diverse customer segments and geographic markets without maintaining a large captive sales force. Agents are responsible for prospecting customers, conducting needs‑based consultations, and assisting applicants through the underwriting and policy‑issuance process. We provide agents with access to digital tools, training materials, and customer service resources designed to promote consistent and compliant sales practices.
Removed
Internationally, we compete with a number of life insurance companies, as well as with financial institutions that offer insurance products.
Added
We December 31, 2025 | 10-K 5 Table of Contents CITIZENS, INC. support our independent agents through relationships with independent marketing organizations (“IMOs”), brokerage general agencies (“BGAs”), and other intermediaries that provide recruiting, training, compliance oversight, and product‑specific support.
Removed
We face competition from (i) other insurance companies that operate in the same markets and manner as we do, (ii) local companies formed and operated in the country in which an insured resides, and (iii) other foreign companies who issue insurance policies denominated in the local currency of those countries or issue products approved by regulators of those countries.
Added
These distribution partners help ensure that agents receive the tools, resources, and administrative services needed to effectively present, position, and service our products. Compensation for independent agents generally takes the form of commissions, which vary based on product type, premium levels, and policy persistency. Certain distribution partners may also receive override commissions or performance‑based incentives.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

63 edited+7 added−13 removed93 unchanged
Biggest changeOur failure to maintain effective and efficient information systems, or our failure to consolidate our existing systems could have a material adverse effect on our results of operations and financial condition. Our primary policy administration system is a mainframe-based, legacy-type system that requires an ongoing commitment of resources to maintain current standards.
Biggest changeOur primary policy administration system is a mainframe-based, legacy-type system that requires an ongoing commitment of resources to maintain current standards. Our system utilizes proprietary code requiring highly skilled personnel. Shortages of specialized talent and reliance on legacy systems may slow modernization or increase operational risk.
We must maintain and enhance our existing system and develop and integrate new information systems in a cost-effective manner to keep pace with continuing changes in information processing technology, evolving industry and regulatory standards and changing customer preferences.
We must maintain and enhance our existing system and develop and integrate new information systems in a cost-effective manner to keep pace with continuing changes in technology, evolving industry and regulatory standards and changing customer preferences.
Pricing adequacy is necessary to generate sufficient premiums to cover our cost of sales, costs of operations (including payment of policy benefits) and to earn a profit.
Pricing adequacy is necessary to generate sufficient premiums to cover our cost of sales, payment of policy benefits, costs of operations and to earn a profit.
Some of these countries have laws that state that their residents may not purchase life insurance from us or a consultant may not sell life insurance on our behalf unless we become qualified to do business in that country or unless our policies receive prior approval from their insurance regulators.
Some of these countries have laws that state that their residents may not purchase life insurance from us or that a consultant may not sell our life insurance policies unless we become qualified to do business in that country or unless our policies receive prior approval from their insurance regulators.
Because the insureds reside in this country, they may have more trust for a local company. We rely on a small number of foreign agencies, who recruit their own independent consultants, for distribution of our international products.
Because the insureds reside in this country, they may have more trust for a local company. We rely on a small number of foreign agencies that recruit their own independent consultants for distribution of our international products.
The insurance industry is highly vulnerable to money laundering. Money laundering in the insurance industry typically involves the exploitation of various products and mechanisms to obscure the origins of illicit funds. One common method is through the purchase of insurance policies, such as life insurance, with the use of these illicit funds.
Money laundering in the insurance industry typically involves the exploitation of various products and mechanisms to obscure the origins of illicit funds. One common method is through the purchase of insurance policies, such as life insurance, with the use of these illicit funds.
We believe that because of this, we typically have low voter turn-out at our annual meetings and therefore any proposal, such as one related to a merger or an acquisition of our Company, or an amendment to our articles of incorporation, that may require the affirmative vote of a majority of the outstanding shares of our Class A common stock, may be difficult to approve.
We believe that because of this, we typically have low voter turn-out at our annual meetings and therefore any proposal, such as one related to a merger or an acquisition of our Company, or an amendment to our articles of incorporation, that may require the affirmative vote of a majority of the outstanding shares of our Class A common stock, may be difficult to get approved.
If we are unable to borrow money to contribute capital to CICA Domestic, we could be exposed to cash flow strain. Citizens is a holding company that has minimal operations of its own and depends on the ability of our insurance subsidiaries to pay dividends or make service payments to us in sufficient amounts to fund our operations.
If we are unable to borrow money to contribute capital to CLOA, we could be exposed to cash flow strain. Citizens is a holding company that has minimal operations of its own and depends on the ability of our insurance subsidiaries to pay dividends or make service payments to us in sufficient amounts to fund our operations.
On a statutory basis, commission advances are non-admitted assets, which means that our expenses are increased and our statutory capital reduced until the commissions are recouped from premiums paid. This could cause us to have to contribute extra capital to CICA Domestic to maintain the required level of capital and surplus.
On a statutory basis, commission advances are non-admitted assets, which means that our expenses are increased and our statutory capital reduced until the commissions are recouped from premiums paid. This could cause us to have to contribute extra capital to CLOA to maintain the required level of capital and surplus.
In addition, the imposition of U.S. sanctions against foreign countries where our policyholders reside could make it difficult for us to continue to issue new policies and receive premiums from policyholders in those countries. We face significant competition in our international markets.
In addition, the imposition of U.S. sanctions against foreign countries where our policyholders reside could make it difficult for us to continue to issue new policies or receive premiums from policyholders in those countries. We face significant competition for customers and distributors in our international markets.
In March of 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 CICA Domestic's RBC remains above 350%. Any required capital contribution could negatively impact our capital resources and liquidity.
In March of 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%. Any required capital contribution could negatively impact our capital resources and liquidity.
In our CICA Domestic business, we pay advance commissions on some of our insurance products, meaning we pay an agent a portion of their first year commission immediately upon sale of a policy, rather than "as earned", or when premiums are received by us.
In our CLOA business, we pay advance commissions on some of our insurance products, meaning we pay an agent a portion of their first year commission immediately upon sale of a policy, rather than "as earned", or when premiums are received by us.
We may seek options, such as loans at the holding company level (from the Credit Facility or otherwise) that would allow us to reduce the liquidity risk should CICA Domestic's commission payments exceed current resources or require additional capital contributions from Citizens.
We may seek 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 CLOA's commission payments exceed current resources or require additional capital contributions from Citizens.
Unauthorized parties, whether within or outside our company, may disrupt or gain access to our systems, or those of third parties with whom we do business, through human error, misfeasance, fraud, trickery, or other forms of deceit, including break-ins, use of stolen credentials, social engineering, phishing, or other cyber attacks, computer viruses, malicious codes, and similar means of unauthorized and destructive tampering.
Unauthorized parties may disrupt or gain access to our systems, or those of third parties with whom we do business, through human error, misfeasance, fraud, trickery, or other forms of deceit, including break-ins, use of stolen credentials, social engineering, phishing, or other cyber attacks, computer viruses, malicious codes, and similar means of unauthorized and destructive tampering.
The ability of people living in these countries to purchase and continue to make premium payments on our insurance policies and our ability to sell our policies in those countries through our independent consultants or otherwise may be adversely affected by political instability.
The ability of people living in these countries to purchase and continue to make premium payments to us and our ability to sell our policies in those countries through our independent consultants or otherwise may be adversely affected by political instability.
The availability of financing December 31, 2024 | 10-K 18 Table of Contents CITIZENS, INC. will depend on a variety of factors such as market conditions, the general availability of credit, the overall availability of credit to the financial services industry, and the possibility that customers or lenders could develop a negative perception of our financial prospects.
The availability of financing will depend on a variety of factors such as market conditions, the general availability of credit, the overall availability of credit to the financial services industry, and the possibility that customers or lenders could develop a negative December 31, 2025 | 10-K 16 Table of Contents CITIZENS, INC. perception of our financial prospects.
December 31, 2024 | 10-K 21 Table of Contents CITIZENS, INC. We and our third-party providers may experience information security incidents from time to time. There is no assurance that our security systems and measures will be able to prevent, mitigate, or remediate cyber attacks.
December 31, 2025 | 10-K 19 Table of Contents CITIZENS, INC. We and our third-party providers may experience information security incidents from time to time. There is no assurance that our security systems and measures will be able to prevent, mitigate, or remediate cyber attacks.
Item 1. Business , these policies are issued by our Puerto Rico subsidiary, CICA International, which is licensed as an international insurer in Puerto Rico. Our products are sold by independent consultants who are located in the foreign countries in which the policies are sold.
Item 1. Business , these policies are issued by our Puerto Rico subsidiary, CICA International, which is licensed as an international insurer in Puerto Rico. Our products are sold by independent consultants who generally reside in the foreign countries in which the policies are sold.
The Class A common stock sold under the SIP is registered with the SEC pursuant to a Form S-3 registration statement under the Securities Act of 1933 but is not registered under the laws of any foreign jurisdiction.
Our Class A common stock is not registered in any foreign country. Our Class A common stock sold under the SIP is registered with the SEC pursuant to a Form S-3 registration statement under the Securities Act of 1933, but is not registered under the laws of any foreign jurisdiction.
December 31, 2024 | 10-K 17 Table of Contents CITIZENS, INC. Our insurance subsidiaries are subject to minimum capital and surplus requirements in the U.S. and Puerto Rico.
December 31, 2025 | 10-K 15 Table of Contents CITIZENS, INC. Our insurance subsidiaries are subject to minimum capital and surplus requirements in the U.S. and Puerto Rico.
Global or regional changes in the financial markets or economic conditions could adversely affect our business in many ways, including the following: • Inflation, recession, an increase in unemployment rates or declines in consumer confidence could lead people to conserve cash, thereby causing a decrease in new sales and renewal premiums, or an December 31, 2024 | 10-K 19 Table of Contents CITIZENS, INC. increase in surrenders and lapses, which would cause a decline in our premium revenue or increase in benefit expenses paid out. • Market volatility, specifically declining equity markets, negatively impact the fair market value of our equity securities, leading to investment-related losses that negatively affect our GAAP operating revenue and profitability. • We are subject to credit risk in our investment portfolio.
Global or regional changes in the financial markets or economic conditions could adversely affect our business in many ways, including the following: • Inflation, recession, an increase in unemployment rates or declines in consumer confidence could lead people to conserve cash, thereby causing a decrease in new sales and renewal premiums, or an increase in surrenders and lapses, which would cause a decline in our premium revenue or increase in benefit expenses paid out. • Market volatility, specifically declining equity markets, negatively impacts the fair market value of our equity type securities, leading to investment-related losses that negatively affect our GAAP operating revenue and profitability. • We are subject to credit risk in our investment portfolio.
If we are unable to compete effectively for customers or distributors in these markets, our business, results of operations and profitability may be adversely affected.
If we are unable to compete effectively in these markets, our business, results of operations and profitability may be adversely affected.
However, early withdrawal and surrender levels may differ from anticipated levels for a variety of reasons, including changes in economic conditions, changes in policyholder behavior or financial needs, changes in relationships with our independent consultants, efforts by foreign governments to tax policyholders or increases in surrenders of policies that no longer remain subject to surrender charges.
However, early withdrawal and surrender levels may differ from anticipated levels for a variety of reasons, including changes in economic conditions, changes in policyholder behavior or financial needs, changes in relationships with our independent consultants, efforts by foreign governments to tax policyholders or increases in December 31, 2025 | 10-K 13 Table of Contents CITIZENS, INC. surrenders of policies that no longer remain subject to surrender charges.
We collect, maintain and use information, including proprietary and personally identifiable information ("PII"), of our applicants, policyholders, independent agents and others.
As an insurer, we collect, maintain and use proprietary and personally identifiable information ("PII") of our applicants, policyholders, independent agents and others.
Although the Company believes that these foreign regulators do not have jurisdiction over the Company and that any actions, including fines, may be unenforceable against the Company, any regulatory action could otherwise December 31, 2024 | 10-K 12 Table of Contents CITIZENS, INC. absorb Company time and resources (including independent consultants) away from its business operations or the Company may choose to pay such fines in order to do business in a particular country.
Although the Company believes that these foreign regulators do not have jurisdiction over the Company and that any actions, including fines, may be unenforceable against the Company, any regulatory action could otherwise absorb Company time and resources (including independent consultants) away from its business operations or the Company may choose to pay such fines in order to do business in a particular country.
We compete with other insurers for marketing agencies, agents and independent consultants primarily on the basis of our compensation, products and support services. Any reduction in our ability to attract and retain effective sales representatives could materially adversely affect our revenues, results of operations and financial condition.
We compete with other insurers for marketing agencies, agents and independent consultants primarily on the basis of our compensation, products and support services. Any reduction in our ability to attract and retain effective sales representatives could materially adversely affect our revenues, results of operations and financial condition. December 31, 2025 | 10-K 14 Table of Contents CITIZENS, INC.
As a result, our shareholders may be prevented from receiving the benefit from any premium to the market price of our Class A common stock that may be offered by a bidder in a takeover context or such regulatory approval requirement may delay, deter, render more difficult or prevent a takeover attempt or a change in control. Item 1B.
As a result, our shareholders December 31, 2025 | 10-K 20 Table of Contents CITIZENS, INC. may be prevented from receiving the benefit from any premium to the market price of our Class A common stock that may be offered by a bidder in a takeover context or such regulatory approval requirement may delay, deter, render more difficult or prevent a takeover attempt or a change in control.
Many of the countries in which we operate have a history of political instability, including regime changes, political uprisings, and anti-democratic or anti-U.S. policies.
Many of the countries in which we operate, including Venezuela, which is one of our biggest international markets, have a history of political instability, including regime changes, political uprisings, and anti-democratic or anti-U.S. policies.
INSURANCE RISKS BECAUSE MOST OF OUR REVENUE DERIVES FROM COLLECTION OF PREMIUMS ON OUR PRODUCTS AND OUR LARGEST EXPENSE IS PAYMENT OF INSURANCE BENEFITS, OUR OVERALL FINANCIAL PERFORMANCE DEPENDS UPON THE ACCURACY OF THE ASSUMPTIONS THAT UNDERLIE OUR PRODUCT PRICING.
INSURANCE RISKS BECAUSE MOST OF OUR REVENUE DERIVES FROM PREMIUMS AND OUR LARGEST EXPENSE IS PAYMENT OF INSURANCE BENEFITS, OUR FINANCIAL PERFORMANCE DEPENDS UPON THE ACCURACY OF OUR PRICING ASSUMPTIONS.
Such risks may result in the Company’s pricing being based on outdated, inadequate, or inaccurate data, or inappropriate analyses, assumptions, or methodologies, and may cause the Company to estimate incorrectly future changes in the frequency or severity of claims.
December 31, 2025 | 10-K 12 Table of Contents CITIZENS, INC. Such risks may result in the Company’s pricing being based on outdated, inadequate, or inaccurate data, or inappropriate analyses, assumptions, or methodologies, and may cause the Company to estimate incorrectly future changes in the frequency or severity of claims.
Insurance laws in the jurisdictions in which our insurance subsidiaries are domiciled require regulatory actions for certain transactions, such as a merger or acquisition of our Company, that our shareholders might consider in their December 31, 2024 | 10-K 22 Table of Contents CITIZENS, INC. best interests.
Insurance laws in the jurisdictions in which our insurance subsidiaries are domiciled require regulatory actions for certain transactions, such as a merger or acquisition of our Company, that our shareholders might consider in their best interests.
Any shortcomings in the process used to evaluate and price our policies, or significant inaccuracies in the life expectancy estimates relating to those policies, could have a material and adverse effect on our results of operations and financial condition. Policyholder claims is one of our largest expenses.
Any shortcomings in the process used to evaluate and price our policies, deviations in mix of business from what is expected, or significant inaccuracies in the life expectancy estimates relating to those policies, could have a material and adverse effect on our results of operations and financial condition.
A ratings downgrade or other negative action by a rating agency could materially affect our business, financial condition, and results of operations. A.M. Best reviews CICA Domestic and publishes its financial strength rating as an indicator of our ability to fulfill our contractual obligations. This rating is important to maintaining public confidence in our insurance products.
Best reviews CLOA and publishes its financial strength rating as an indicator of our ability to fulfill our contractual obligations. This rating is important to maintaining public confidence in our insurance products. A downgrade or other negative action by A.M.
The following information should be read in conjunction with Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and accompanying notes in Part II. Item 8. Financial Statements and Supplementary Data of this report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and accompanying notes in Part II. Item 8. Financial Statements and Supplementary Data of this report.
CYBERSECURITY RISKS, THE FAILURE OF OUR SYSTEMS TO OPERATE PROPERLY AND/OR THE FAILURE TO MAINTAIN THE CONFIDENTIALITY, INTEGRITY, AND AVAILABILITY OF POLICYHOLDER AND CLAIMS DATA, INCLUDING December 31, 2024 | 10-K 20 Table of Contents CITIZENS, INC. PERSONAL IDENTIFYING INFORMATION, COULD RESULT IN A MATERIALLY ADVERSE EFFECT ON OUR BUSINESS, REPUTATION, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
CYBERSECURITY RISKS, THE FAILURE OF OUR SYSTEMS TO OPERATE PROPERLY AND/OR THE FAILURE TO MAINTAIN THE CONFIDENTIALITY, INTEGRITY, AND AVAILABILITY OF POLICYHOLDER AND CLAIMS DATA, INCLUDING PERSONAL IDENTIFYING INFORMATION, COULD RESULT IN A MATERIALLY ADVERSE EFFECT ON OUR BUSINESS, REPUTATION, FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Our failure to maintain effective information systems could adversely affect our business.
It is uncertain how policyholders will react in response to these maturities. If a large number of policyholders elect lump sum distributions, the Company could be exposed to liquidity risk in years of high maturities.
If a large number of policyholders elect lump sum distributions, the Company could be exposed to liquidity risk in years of high maturities.
A significant loss of sales in these foreign markets would have a material adverse effect on our results of operations and financial condition. International Regulatory Risks. A substantial majority of our direct insurance premiums, approximately 67% at December 31, 2024, are from policyholders in foreign countries, primarily those in Latin America and the Pacific Rim. As described in Part I.
A significant loss of sales in these foreign markets would have a material adverse effect on our results of operations and financial condition. International Regulatory Risks. As of December 31, 2025, policyholders in international markets - mainly within Latin America and the Pacific Rim - accounted for approximately 64% of our direct insurance premiums. As described in Part I.
December 31, 2024 | 10-K 16 Table of Contents CITIZENS, INC. Because we sell our products through independent agents, we have less control over the manner in which they sell our products. As described above in Part I. Item 1. Business - Re gulation , insurance regulators focus on market conduct, i.e., the way we sell our products.
Because we sell our products through independent agents, we have less control over the manner in which they sell our products. As described above in Part I. Item 1. Business - Regulation , insurance regulators focus on market conduct, i.e., the way we sell our products.
Our failure to maintain effective information systems could adversely affect our business. Our policyholder administration system allows us to administer almost all of our business, including issuing policies, crediting premiums to such policies, and payment of commissions to our agents.
Our policyholder administration system allows us to administer almost all of our business, including issuing policies, crediting premiums, and payment of commissions to our agents.
Criminals may overpay premiums, surrender policies prematurely, or make fictitious claims to cycle the illicit December 31, 2024 | 10-K 13 Table of Contents CITIZENS, INC. funds back as legitimate payout. To combat global financial crime, governments and international authorities implement a range of anti-money laundering and countering of terrorist financing (AML/CFT) regulations that impact the insurance sector.
Criminals may overpay premiums, surrender policies prematurely, or make fictitious claims to cycle the illicit funds back as legitimate payout. To combat global financial crime, governments and international authorities implement a range of anti-money laundering and countering of terrorist financing (AML/CFT) regulations that impact the insurance sector. Failure to comply with these regulations can result in penalties or heavy fines.
Our whole life and endowment products provide the policyholder with alternatives once the policy matures. The policyholder can choose to take a lump sum payout or leave the money on deposit at interest with the Company. The Company has a significant amount of aging endowment products that have begun reaching their maturities and policyholder election behavior is not known.
The policyholder can choose to take a lump sum payout or leave the money on deposit at interest with the Company. The Company has a significant amount of aging endowment products that have begun reaching their maturities and policyholder election behavior is not known. It is uncertain how policyholders will react in response to these maturities.
We experience considerable competition for sales of our policies, primarily from the following types of companies, many of which have substantially greater financial, marketing and other resources than we have: • Companies that operate in the same manner as we do and sell similar U.S. dollar-denominated products; • Companies that are foreign to a particular jurisdiction, but register locally operated subsidiaries.
We experience competition for customers and distributors, primarily from the following types of companies, many of which have substantially greater financial, marketing and other resources than we have: • Companies that operate in the same manner as we do and sell U.S. dollar-denominated products; • Foreign insurers using locally regulated subsidiaries.
The fact we are not a local or admitted company, regulations or licensing requirements imposed upon our Company or these consultants, may impact our ability to attract and retain effective sales representatives, who may choose to distribute products of our competitors. We face a greater risk of money laundering activity associated with sales derived from residents of certain foreign countries.
The fact that we are not a local or admitted company may reduce our ability to attract and retain producers, who may choose to distribute products of our competitors. We face a greater risk of money laundering activity associated with sales derived from residents of certain foreign countries. The insurance industry is highly vulnerable to money laundering.
Item 1A. RISK FACTORS As a smaller reporting company, we are not required to disclose information required by this Item 1A. However, we have elected to provide the foll owing discussion of risks as we feel it is important to provide adequate information to our investors regarding the risks of investing in our securities .
Item 1A. RISK FACTORS As a smaller reporting company, we are not required to provide risk factors. However, we believe it is important to disclose the material risks of investing in our securities .
This arrangement creates a competitive advantage for these companies because they can cross-sell the U.S. dollar-denominated policies through established distributors who sell high-need local insurance policies, such as health insurance; and • Companies who are local to a particular jurisdiction and sell local currency policies.
This arrangement creates a competitive advantage for these companies because they can December 31, 2025 | 10-K 11 Table of Contents CITIZENS, INC. cross-sell the U.S. dollar-denominated policies through established distributors who sell high-need local insurance policies, such as health insurance; and • Local carriers.
These changes in surrender activity may result in remeasurement gains or losses which could increase volatility in our results of operations. December 31, 2024 | 10-K 15 Table of Contents CITIZENS, INC. In addition, we face potential liquidity risks if policyholders with mature policies elect to receive lump sum distributions at greater levels than anticipated.
These changes in surrender activity may result in remeasurement gains or losses which could increase volatility in our results of operations. In addition, we face potential liquidity risks if policyholders with mature policies elect to receive lump sum distributions at greater levels than anticipated. Our whole life and endowment products provide the policyholder with alternatives once the policy matures.
Failure to comply with these regulations can result in penalties or heavy fines. Some of our top international markets, such as Colombia and Venezuela, are countries that have been identified by the U.S. Department of the Treasury as jurisdictions of high risk for money laundering.
Some of our top international markets, such as Venezuela, are countries that have been identified by the U.S. Department of the Treasury as jurisdictions of high risk for money laundering.
Actuarial assumptions are continually monitored and updated at least annually to reflect overall experience as well as emerging trends. December 31, 2024 | 10-K 14 Table of Contents CITIZENS, INC. The Company’s success depends on its ability to accurately underwrite risks in order to charge adequate premiums to policyholders.
Actuarial assumptions are continually monitored and updated at least annually to reflect overall experience as well as emerging trends. The Company’s success depends on its ability to accurately underwrite risks in order to charge adequate premiums to policyholders. The Company’s financial results largely depend on the Company’s ability to underwrite and set premiums accurately for the risks it faces.
If any of these risks develop into actual events, our business, financial condition, results of operations or cash flows could be materially and adversely affected, and, as a result, the trading price of our Class A common stock could decline. These risk factors may also be important to understanding other statements in this Form 10-K.
If any of these risks develop into actual events, our business, financial condition, results of operations or cash flows could be materially and adversely affected, and, as a result, the trading price of our Class A common stock could decline. You should read these risk factors together with Part II. Item 7.
A downgrade or other negative action by A.M. Best with respect to the financial strength rating of CICA Domestic could negatively affect us by limiting or restricting the ability of CICA Domestic to attract independent insurance agencies to distribute our products or reduce the attractiveness of our products to consumers.
Best with respect to the financial strength rating of CLOA could negatively affect us by limiting or restricting the ability of CLOA to attract independent insurance agencies to distribute our products or reduce the attractiveness of our products to consumers. ECONOMIC ENVIRONMENT RISKS INVESTMENT INCOME IS A MATERIAL PORTION OF OUR TOTAL REVENUES.
Generally, the foreign countries in which we offer insurance products require either us and/or our independent consultants to obtain a license or register to conduct insurance business in that country. Some of these countries also require that local regulatory authorities approve the terms and rates of any insurance product sold to residents of that country.
In most cases, the foreign countries in which we offer insurance products require either us and/or our independent consultants to obtain a license or register to conduct insurance business in that country.
Many of these shareholders are located in Latin America and the Pacific Rim, where most of our policies are sold, and English may not be their native language.
Stock Investment Plan (the "SIP"), we have almost 81,000 shareholders and approximately 40% of our shareholders hold less than 100 shares each. Many of these shareholders are located in Latin America and the Pacific Rim, where most of our policies are sold, and English may not be their native language.
RISKS RELATED TO HOLDING OUR SECURITIES The number and location of our shareholders may make it difficult to obtain approval of certain corporate actions.
RISKS RELATED TO HOLDING OUR SECURITIES The number and location of our shareholders may make it difficult to obtain approval of certain corporate actions. Because we allow our policyholders to use their policy dividends to purchase our Class A common stock through our Citizens, Inc.
As interest rates decrease, issuers are more likely to pre-pay, which could cause us to have to re-invest the pre-paid cash at lower interest rates, reducing our yields and net investment income. CYBERSECURITY AND TECHNOLOGY RISKS THE COMPANY RELIES ON OUR INFORMATION TECHNOLOGY SYSTEMS, AND THE DATA MAINTAINED WITHIN THOSE SYSTEMS, TO MANAGE MANY ASPECTS OF OUR BUSINESS.
As interest rates decrease, issuers are more likely to pre-pay, which could cause us to have to re-invest the pre-paid cash at lower interest rates, reducing our yields and net investment income. December 31, 2025 | 10-K 18 Table of Contents CITIZENS, INC.
ECONOMIC ENVIRONMENT RISKS INVESTMENT INCOME IS A MATERIAL PORTION OF OUR TOTAL REVENUES. CHANGING FINANCIAL CONDITIONS SUCH AS MARKET VOLATILITY, CHANGES IN INTEREST RATES, OR INFLATION MAY ADVERSELY AFFECT OUR REVENUES, OUR RESULTS OF OPERATIONS AND OUR FINANCIAL CONDITION.
CHANGING FINANCIAL CONDITIONS SUCH AS MARKET VOLATILITY, CHANGES IN INTEREST RATES, OR INFLATION MAY December 31, 2025 | 10-K 17 Table of Contents CITIZENS, INC. ADVERSELY AFFECT OUR REVENUES, OUR RESULTS OF OPERATIONS AND OUR FINANCIAL CONDITION.
International Currency Risks. While we only sell U.S. dollar denominated products, currency control laws or other currency exchange restrictions in foreign countries could materially adversely affect our revenues by limiting the ability of our policyholders in such countries to pay premiums in U.S. dollars or to receive U.S. dollar benefits.
International Currency Risks. While we only sell U.S. dollar denominated products, currency control laws or other restrictions could limit our policyholders' ability to remit premiums in U.S. dollars or to receive U.S. dollar benefits, increasing costs and reducing product attractiveness. International Political Risks.
Despite our efforts to prevent money laundering through our companies, there can be no assurance that these enhanced controls will entirely mitigate money laundering risk associated with our insurance products, whether in these foreign countries or in the United States.
Despite our efforts to prevent money laundering through our companies, our controls may not fully mitigate money laundering risk associated with our insurance products, whether in these foreign countries or in the United States, which could expose us to regulatory scrutiny, penalties, litigation, operational burden, and reputational harm.
In addition, in the event that a significant number of our management were unavailable following a disaster, the achievement of our strategic objectives could be negatively impacted. Lower than expected policyholder retention can negatively affect our business operations and liquidity. A primary liquidity concern is the risk of unanticipated or extraordinary early policyholder withdrawals or surrenders.
Lower than expected policyholder retention can negatively affect our business operations and liquidity. A primary liquidity concern is the risk of unanticipated or extraordinary early policyholder withdrawals or surrenders. Some of our insurance policies include provisions, such as surrender charges, that help limit and discourage early withdrawals.
We are continuously evaluating and enhancing systems and creating new systems and processes as our business depends on our ability to maintain and improve our technology.
Competition for qualified personnel and vendor dependencies may delay upgrades, elevate costs, or increase the risk of system failures and control deficiencies. We are continuously enhancing our system and processes and we are licensing new systems as our business depends on our ability to maintain and improve our technology.
Mismanagement of claims handling or increased fraudulent claims could negatively impact our costs and financial condition. Proper claims handling is critical to managing our benefit expenses.
Inadequate claims processes, training, technology, or fraud detection—or higher fraudulent activity—could increase costs, trigger litigation or fines, and harm our reputation. Proper claims handling is critical to managing our benefit expenses.
Any actions by a foreign government to enforce these laws against us could cause disruption to the marketing and sale of our policies in that country or our withdrawal from doing business in that country, which could have a material adverse effect on our premium revenue, our costs and expenses and on our results of operations and financial condition.
If a foreign government takes action to enforce these laws against us, we may face interruptions in marketing or selling our policies in that country or be forced to exit that market. These consequences could materially harm our premium revenue, increase our expenses, adversely affect our results of operations and financial condition, and cause significant damage to our brand.
Our results will be affected to the extent there is a variance between our actuarial assumptions and actual experience. Domestic growth in the Life Insurance segment has significantly expanded in the last 2 years.
Our results will be affected to the extent there is a variance between our actuarial assumptions and actual experience. As we continue to experience growth in CLOA, emerging data trends will allow us to refine our assumptions. To the extent that emerging experience differs from previously set assumptions, adjustments to reserve levels may be required.
They may surrender their policies or make early withdrawals to increase their returns, requiring us to liquidate investments and realize an actual loss. • Some of our investments, such as mortgage-backed and other asset-backed securities, carry prepayment risk.
They may surrender their policies or make early withdrawals to increase their returns, requiring us to liquidate investments and realize an actual loss. • Our international business is founded on the basis that having U.S. dollar-denominated products provides additional value and security in countries where we sell business.
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Difficulties in transferring funds from or converting currencies to U.S. dollars in certain countries could cause an increase in fees and costs associated with such payments or receipt of benefits and therefore make our products less attractive to such policyholders. International Political Risks.
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Some of these countries also require that local regulatory authorities December 31, 2025 | 10-K 10 Table of Contents CITIZENS, INC. approve the terms and rates of insurance products sold to residents of that country.
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Given the nature of our products, in an economic environment characterized by higher unemployment, lower personal income and reduced consumer spending, new product sales may be adversely affected.
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This change in business mix over time places additional pressure on the assumptions underlying our non-fully-underwritten business, which may lead to volatility in business results if our underwriting classifications are not aligned in practice with what was assumed when pricing these products.
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During such periods, we may also experience higher claims, longer claims duration, increase in policy lapses and/or increase in surrenders, any of which could have a material adverse effect on our results of operations or financial condition.
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Targeted improvements to accounting for long‑duration contracts (LDTI) may increase earnings volatility and reporting complexity. LDTI requires more frequent unlocking of assumptions for future policy benefits, quarterly discount‑rate updates, fair‑value measurement for certain market risk benefits, and expanded disclosures.
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Our current profitability is affected by the level of reserves we have to hold for this new business, and how closely actual experience matches our actuarial assumptions. The actuarial assumptions that underlie our reserves are based upon our best estimates and are inherently more difficult to predict for a new product line.
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These changes could increase earnings and OCI volatility, necessitate additional systems, internal controls, and actuarial processes, and may affect comparability of our results with prior periods. A ratings downgrade or other negative action by a rating agency could materially affect our business, financial condition, and results of operations. A.M.
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The Company’s financial results largely depend on the Company’s ability to underwrite and set premiums accurately for the risks it faces.
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The relationship between the strength of the U.S. dollar and its position as a reserve currency relative to economic, political, and currency environments within the various countries where we do business is complex and opaque.
Removed
Higher than expected policyholder claims related to unforeseen events may negatively impact our premium revenues and increase our benefits and expense costs, thus negatively affecting our financial condition. Our life and health insurance products are particularly exposed to risks of catastrophic mortality, such as a pandemic or other events that result in a large number of policyholder claims.
Added
To the extent that the value proposition of holding U.S. dollar-denominated products erodes relative to local options, it could have a material impact on our business within a given country or region at a given point in time. • Some of our investments, such as mortgage-backed and other asset-backed securities, carry prepayment risk.
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In addition, the occurrence of such an event in a concentrated geographic area could have a severe disruptive effect on our workforce and business operations. The likelihood and severity of such events cannot be predicted and are difficult to estimate.
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CYBERSECURITY AND TECHNOLOGY RISKS THE COMPANY RELIES ON OUR INFORMATION TECHNOLOGY SYSTEMS, AND THE DATA MAINTAINED WITHIN THOSE SYSTEMS, TO MANAGE MANY ASPECTS OF OUR BUSINESS.
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In such an event, the impact to our operations could have a material adverse impact on our ability to conduct business and on our results of operations and financial condition, particularly if those problems affect employees performing operational tasks and supporting computer-based data processing, or destroy the capability to transmit, store, and retrieve valuable data.
Removed
Some of our insurance policies include provisions, such as surrender charges, that help limit and discourage early withdrawals.
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Our system utilizes proprietary code requiring highly skilled personnel.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeHis experience includes work in the fields of security, application development, and internal audit at a Fortune 100 company. Our CISO is a Certified Information Security Manager ("CISM"), Certified Information Systems Auditor ("CISA"), and a member of the ISACA and ISSA organizations. He received his bachelors’ degree from Middle Tennessee State University and served in the United States Marine Corps.
Biggest changeHis experience includes work in the fields of security, application development, and internal audit at a Fortune 100 company. Our CISO is a Certified Information Security Manager ("CISM"), Certified Information Systems Auditor ("CISA"), and a member of the ISACA and ISSA organizations.
To defend, detect and respond to cybersecurity incidents, we, among other things perform penetration testing using external third-party tools and techniques to test security controls and conduct employee training.
To defend, detect and respond to cybersecurity incidents, we, among other things, periodically perform penetration testing using external third-party tools and techniques to test security controls and conduct employee training.
Our Audit Committee Charter tasks this committee with oversight of the Company's major enterprise risk exposure, including risks related to cybersecurity, and the steps management takes to monitor and control such exposures.
Our Audit Committee Charter tasks its committee with oversight of the Company's major enterprise risk exposure, including risks related to cybersecurity, and the steps management takes to monitor and control such exposures.
Item 1C. CYBERSECURITY Like other firms in the financial services sector, insurers like us are particularly vulnerable to cybercrime due to our large amounts of customer data. Insurance-related data is particularly interesting to cybercriminals because of its inherent confidentiality. Often linked to policyholders, sensitive data helps insurers customize their policies, products, and prices for each client.
Item 1C. CYBERSECURITY Like other firms in the financial services sector, insurers like us are particularly vulnerable to cybercrime due to the nature and volume of customer data we maintain. Insurance-related data is particularly interesting to cybercriminals because of its inherent confidentiality. Often linked to policyholders, sensitive data helps insurers customize their policies, products, and prices for each client.
Identification and management of the Company's key risks, including cybersecurity, starts with the executive management team, who is responsible for identifying key strategic, insurance, financial, regulatory and operational risks to the Company and managing them on a day-to-day basis.
Identification and management of the Company's key risks, including cybersecurity, starts with the executive management team, who December 31, 2025 | 10-K 21 Table of Contents CITIZENS, INC. is responsible for identifying key strategic, insurance, financial, regulatory and operational risks to the Company and managing them on a day-to-day basis.
The Audit Committee holds its regular meetings on a quarterly basis and at each of those meetings receives an information security update report from the Company's CISO, which report includes cybersecurity events that may have impacted the Company as well as an overview of the Company's security program and efforts to prevent, detect, mitigate, and remediate issues.
The Audit Committee meets quarterly and receives an information security update report from the Company's CISO, which includes cybersecurity events that may have impacted the Company as well as an overview of the Company's security program and efforts to prevent, detect, mitigate, and remediate issues.
December 31, 2024 | 10-K 23 Table of Contents CITIZENS, INC. Cyber Governance Cybersecurity is a key element of the Company's enterprise risk management ("ERM").
Cyber Governance Cybersecurity is a key element of the Company's enterprise risk management ("ERM").
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Additionally, Gerald W. Shields, our former Chief Executive Officer and now a member of the Board of Directors, has experience in assessing and managing cybersecurity risk and, in addition to his former roles as Chief Information Officer at several companies, has a Cyber Security Oversight Certificate from Carnegie Mellon Institute.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. PROPERTIES We lease our principal office at the Domain in Austin, Texas to service all business entities and operations. We lease space in Puerto Rico for CICA International and in Louisiana, Arkansas and Mississippi related to our Home Service Insurance operations. We also own properties in Louisiana related to our Home Service Insurance operations.
Biggest changeItem 2. PROPERTIES We lease our principal office at the Domain in Austin, Texas. We also lease space in Puerto Rico for CICA International and offices in Louisiana, Arkansas and Mississippi related to our SPLIC opera tions. We also own a small amount of property in Louisiana.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeDecember 31, 2024 | 10-K 24 Table of Contents CITIZENS, INC. We have appealed the judgment against us and the appeal is currently pending in the Court of Appeals, Third District of Texas, case number 03-24-00745-CV.
Biggest changeWe have appealed the judgment against us and the appeal is currently pending in the Court of Appeals, Third District of Texas.
(Bermuda) and CICA Life Insurance Company of America (collectively, the “Citizens Companies,” “we,” "us" or "our") against certain former employees and independent consultants who we alleged unlawfully took Citizens’ confidential information in order to unfairly compete with us. Our claims against these parties included various unfair competition, tortious interference, breach of contract and other related claims.
("CICA Bermuda") and CICA Life Insurance Company of America ("CLOA") (collectively, the “Citizens Companies,” “we,” "us" or "our") against certain former employees and independent consultants who we alleged unlawfully took Citizens’ confidential information in order to unfairly compete with us. Our claims against these parties included various unfair competition, tortious interference, breach of contract and other related claims.
We also do not believe that Riley or Buchweitz are entitled to legal fees because they were found to have breached the contracts whose fee shifting provisions they sought to invoke. On September 17, 2024, we filed an appeal bond with the trial court in order to stay any execution of the judgment against us.
We also do not believe that Riley and Buchweitz are entitled to legal fees because they were found to have breached the contracts whose fee shifting provisions they sought to invoke. On September 17, 2024, we filed an appeal bond with the trial court in order to stay any execution of the judgment against us.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe hold 100% of our Class B common stock in treasury and thus there are no Class B shares outstanding. Holders. The number of stockholders of record as of March 10, 2025 was as follows: • Class A Common Stock - 82,505 • Class B Common Stock - — Dividend Policy.
Biggest changeWe hold 100% of our Class B common stock in treasury and thus there are no Class B shares outstanding. Holders. The number of stockholders of record as of March 6, 2026 was as follows: • Class A Common Stock - 80,442 • Class B Common Stock - — Dividend Policy.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYears ended December 31, (In thousands) 2024 2023 Income before federal income taxes: Segments: Life Insurance $ 22,946 28,621 Home Service Insurance 2,480 3,013 Total Segments 25,426 31,634 Other Non-Insurance Enterprises (10,446) (5,460) Total income before federal income taxes $ 14,980 26,174 LIFE INSURANCE Detailed results of operations for the Life Insurance segment for the periods indicated are as follows: Years ended December 31, (In thousands) 2024 2023 Revenues: Premiums: Life insurance $ 129,426 121,424 Accident and health insurance 763 721 Net investment income 54,666 54,352 Investment related gains (losses), net (2,185) 301 Other income 4,483 3,605 Total revenues 187,153 180,403 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 123,020 113,428 Increase (decrease) in future policy benefit reserves (10,501) (10,931) Policyholder liability remeasurement (gain) loss 5,380 4,153 Policyholders' dividends 5,332 5,512 Total insurance benefits paid or provided 123,231 112,162 Commissions 35,795 22,896 Other general expenses 25,898 23,969 Capitalization of deferred policy acquisition costs (35,404) (20,251) Amortization of deferred policy acquisition costs 14,584 12,895 Amortization of cost of insurance acquired 103 111 Total benefits and expenses 164,207 151,782 Income (loss) before federal income taxes $ 22,946 28,621 In our Life Insurance segment, income before federal income tax was $22.9 million in 2024, as compared to $28.6 million in 2023 as $8.0 million in higher premium revenue was offset by an increase in total insurance benefits paid or provided and the investment related losses due to the BlackRock write-off.
Biggest changeYears ended December 31, (In thousands) 2025 2024 Income before federal income taxes: Segments: International $ 14,382 23,512 Domestic 12,133 1,914 Total Segments 26,515 25,426 Other Non-Insurance Enterprises (9,045) (10,446) Total income before federal income taxes $ 17,470 14,980 INTERNATIONAL INSURANCE Detailed results of operations for the International Insurance segment for the periods indicated are as follows: Years ended December 31, (In thousands) 2025 2024 Revenues: Premiums: Life insurance $ 117,646 118,042 Accident and health insurance 709 761 Net investment income 50,869 49,174 Investment related gains (losses), net (478) (1,929) Other income 6,913 4,534 Total revenues 175,659 170,582 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 139,017 117,730 Increase (decrease) in future policy benefit reserves (27,310) (15,364) Policyholder liability remeasurement (gain) loss 7,175 4,400 Policyholders' dividends 5,214 4,891 Total insurance benefits paid or provided 124,096 111,657 Commissions 22,381 22,333 Other general expenses 22,154 20,818 Capitalization of deferred policy acquisition costs (21,371) (21,232) Amortization of deferred policy acquisition costs 14,017 13,494 Total benefits and expenses 161,277 147,070 Income (loss) before federal income taxes $ 14,382 23,512 In our International Insurance segment, income before federal income tax was $14.4 million in 2025, as compared to $23.5 million in 2024.
Operating expenses are our second largest expense and thus also drive our operating results. Operating expenses are meaningful to gaining an understanding of how we manage our business, including among other things, salaries, benefits, and spending on growth initiatives.
Operating Expenses. Operating expenses are our second largest expense and thus also drive our operating results. Operating expenses are meaningful to gaining an understanding of how we manage our business, including among other things, salaries, benefits, and spending on growth initiatives.
We currently anticipate that our available operating cash flow and capital resources will be adequate to meet our needs for funds, but we are closely monitoring our policyholder behavior patterns, and in 2024, introduced a new product designed to allow policyholders with maturing endowments to purchase a new life insurance policy. Surrenders .
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 .
Other income consists primarily of supplemental contracts issued to international policyholders in our Life Insurance segment upon the surrender or maturity of their original policies. Supplemental contracts offer our policyholders the opportunity to leave their cash with us and be paid interest at a guaranteed rate or receive an annuity, at their option.
Other income consists primarily of supplemental contracts issued to policyholders in our International Insurance segment upon the surrender or maturity of their original policies. Supplemental contracts offer our policyholders the opportunity to leave their cash with us and be paid interest at a guaranteed rate or receive an annuity, at their option.
Cash provided by or used in operating activities is an important liquidity metric because it reflects, during a given period, the amount of cash generated that is available to pay our operating expenses, invest in our business or make strategic acquisitions.
Cash provided by operating activities 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 then discuss in more detail our results of operations for the year ended December 31, 2024 so an investor or potential investor understands the various line items of our profit and loss statements from management’s perspective. Since our investments are one of two principal sources of our revenues, we describe them in detail.
We then discuss in more detail our results of operations for the year ended December 31, 2025 so an investor or potential investor understands the various line items of our profit and loss statements from management’s perspective. Since our investments are one of two principal sources of our revenues, we describe them in detail.
Future policy benefit reserves reflect the liability established to provide for the payment of policy benefits that we expect to pay in the future and thus generally increase when we have a larger in force block of business due to higher sales and persistency (i.e., more policies on which we expect to pay future benefits) and decrease when we have lower sales and persistency.
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.
The remaining 7% are attributed to other costs that vary with and are directly related to the successful acquisition of new insurance business. Those costs generally include costs related to the production, underwriting and issuance of new business. DAC is amortized on a constant level basis over the expected term of the related contracts to approximate straight-line amortization.
The remaining 8% are attributed to other costs that vary with and are directly related to the successful acquisition of new insurance business. Those costs generally include costs related to the production, underwriting and issuance of new business. DAC is amortized on a constant level basis over the expected term of the related contracts to approximate straight-line amortization.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section of this Annual Report on Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report.
The amount of insurance, number of policies, and average face amounts for life policies issued during the periods indicated are shown below.
The amount of direct insurance, number of policies, and average face amounts for life policies issued during the periods indicated are shown below.
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 have reached the age where surrender charges have expired or significantly decreased, we have experienced high levels of surrenders.
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.
Commitments and Contingencies in the notes to our consolidated financial statements, herein, for a description of the Credit Facility. The Credit Facility provides additional liquidity to the Company for short-term or longer-term needs. As of December 31, 2024, we have not borrowed any money under the Credit Facility.
Commitments and Contingencies in the notes to our consolidated financial statements, herein, for a description of the Credit Facility. The Credit Facility provides additional liquidity to the Company for short-term or longer-term needs. As of December 31, 2025, we have not borrowed any money under the Credit Facility.
These current assumptions are based on judgements that consider the Company’s historical experience, industry data, and other factors. Annually, the Company completes experience studies to evaluate mortality and lapse assumptions. The results of these studies are used to update current year best estimate assumptions used in establishing benefit liabilities and DAC.
These current assumptions are based on judgments that consider the Company’s historical experience, industry data, and other factors. Annually, the Company completes experience studies to evaluate mortality and lapse assumptions. The results of these studies are used to update current year best estimate assumptions used in establishing benefit liabilities and DAC.
Inherent in the capitalization and amortization of DAC are certain management judgments about what acquisition costs are deferred, the ending asset balance and the annual amortization. Approximately 93% of our capitalized DAC are attributed to first year and renewal excess commissions.
Inherent in the capitalization and amortization of DAC are certain management judgments about what acquisition costs are deferred, the ending asset balance and the annual amortization. Approximately 92% of our capitalized DAC are attributed to first year and renewal excess commissions.
In our CICA Domestic business, we pay advance commissions on some of our insurance products, meaning we pay an agent a portion of their first-year commission immediately upon sale of a policy, rather than "as earned", or when premiums are received by us.
In our Domestic Insurance segment, we pay advance commissions on some of our insurance products, meaning we pay an agent a portion of their first-year commission immediately upon sale of a policy, rather than "as earned", or when premiums are received by us.
Additionally, we have a Capital Maintenance Agreement between Citizens and CICA Domestic, Citizens' wholly-owned subsidiary domiciled in Colorado, that would require Citizens to contribute capital to CICA Domestic in order to maintain a RBC level above 350%. At December 31, 2024, our domestic insurance subsidiaries were above the required minimum RBC levels and CICA Domestic was above 350%.
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 a RBC level above 350%. At December 31, 2025, our domestic insurance subsidiaries were above the required minimum RBC levels and CLOA was above 350%.
Commitments and Contingencies , as well as Part I. Item 3. Legal Proceedings - Trade Secret Lawsuit, for a discussion of the trade secret lawsuit, which could negatively impact our cash if we do not succeed in our appeal.
Commitments and Contingencies , as well as Part I. Item 3. Legal Proceedings - Trade Secret Lawsuit for a discussion of the trade secret lawsuit, which impacted our results of operations in 2024 and could negatively impact our cash if we do not succeed in our appeal.
Accordingly, the Company derives its revenues principally from: (1) life insurance premiums earned for insurance coverages provided to insureds in our two operating segments – Life Insurance and Home Service Insurance; and (2) net investment income.
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.
Approximately 18% of the endowments in force will mature in the next five years, totaling approximately 6% of our in force business as of December 31, 2024. 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.
Approximately 15% of the endowments in force will mature in the next five years, totaling approximately 5% of our in force business as of December 31, 2025. 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.
As evidenced, investment related gains and losses can cause significant fluctuations from period to period and while they are included in our operating revenue, we do not believe they are indicative of our operating results. In December 2024, BlackRock, Inc.
Investment related gains and losses can cause significant fluctuations from period to period and while they are included in our operating revenue, we do not believe they are indicative of our operating results. As discussed in our 2024 Form 10-K , in December 2024, BlackRock, Inc.
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 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.
As discussed above, 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 December 31, 2024 did not materially change from December 31, 2023 – the weighted average was “A” at both dates.
This increase primarily reflects the impact of interest rate sensitivity on the fair value of our fixed maturity securities. The distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value as of December 31, 2025 did not materially change from December 31, 2024 – the weighted average was “A” at both dates.
The Company currently does not hold any fixed maturity securities classified as held-to-maturity. Fixed maturity securities classified as AFS are carried at fair value, with the unrealized holding gains and losses, net of tax, reported in other comprehensive income (loss) and are not reported in earnings until realized. Our fixed maturity securities consist primarily of bonds classified as AFS.
Fixed maturity securities classified as AFS are carried at fair value, with the unrealized holding gains and losses, net of tax, reported in other comprehensive income (loss) and are not reported in earnings until realized. Our fixed maturity securities consist primarily of bonds classified as AFS.
(2) Includes $92.8 million and $96.1 million of U.S. Government-sponsored enterprises at December 31, 2024 and 2023, respectively. The carrying value of the Company’s fixed maturity securities investment portfolio at December 31, 2024 was $1.22 billion compared to $1.24 billion at December 31, 2023.
(2) Includes $101.1 million and $92.8 million of U.S. Government-sponsored enterprises at December 31, 2025 and 2024, respectively. The carrying value of the Company’s fixed maturity securities investment portfolio at December 31, 2025 was $1.3 billion compared to $1.2 billion at December 31, 2024.
Such costs include the incremental direct costs of contract acquisition, such as sales commissions; the portion of employees’ total compensation and payroll-related fringe benefits related directly to time spent performing acquisition activities, such as underwriting, issuing, and processing policies for contracts that have actually been acquired; and other costs related directly to acquisition activities that would not have been incurred if the contract had not been acquired.
Such costs include the incremental direct costs of contract acquisition, such as sales commissions; the portion of employees’ total compensation and payroll-related fringe benefits related directly to time spent performing acquisition activities, such as underwriting, issuing, and processing December 31, 2025 | 10-K 48 Table of Contents CITIZENS, INC. policies for contracts that have actually been acquired; and other costs related directly to acquisition activities that would not have been incurred if the contract had not been acquired.
The primary reason for the increase in 2024 was the accrual of $3.5 million in legal fees awarded to certain defendants in the trade secret lawsuit. We have not paid any fees and have appealed the judgment against us. See Part IV. Item 15. Note 8. Commitments and Contingencies , as well as Part I. Item 3.
Operating expenses in 2024 were negatively impacted by the accrual of $3.5 million in legal fees awarded to certain defendants in the trade secret lawsuit. We have not paid any fees and have appealed the judgment against us. See Part IV. Item 15. Note 8. Commitments and Contingencies , as well as Part I. Item 3.
If those assumptions are updated, the DAC amortization basis is recalculated and the impact of the assumption change will be reflected in the cohort level amortization in future periods. December 31, 2024 | 10-K 52 Table of Contents CITIZENS, INC. POLICY LIABILITIES As premium revenue is recognized, a liability for future policy benefits is accrued.
If those assumptions are updated, the DAC amortization basis is recalculated and the impact of the assumption change will be reflected in the cohort level amortization in future periods. POLICY LIABILITIES As premium revenue is recognized, a liability for future policy benefits is accrued.
The Company did not record any credit valuation allowances on fixed maturity securities in 2024 or 2023. Gross unrealized losses on AFS fixed maturity securities amounted to $185.7 million as of December 31, 2024 and $158.7 million as of December 31, 2023.
We did not record any credit valuation allowances on fixed maturity securities in either 2025 or 2024. Gross unrealized losses on AFS fixed maturity securities amounted to $154.3 million as of December 31, 2025 and $185.7 million as of December 31, 2024.
From time to time we may raise capital by selling shares in our SIP (as defined below) and we may also access our Credit Facility if needed (also as described below). Citizens had no debt at December 31, 2024. December 31, 2024 | 10-K 47 Table of Contents CITIZENS, INC. Cash from Operating Activities.
Additionally, we may raise capital by selling shares in our SIP (as defined below) and may access our Credit Facility if needed (also as described below). Citizens had no debt at December 31, 2025. December 31, 2025 | 10-K 44 Table of Contents CITIZENS, INC.
VALUATION OF INVESTMENTS IN FIXED MATURITY SECURITIES Based upon current accounting guidance, investment securities must be classified as held-to-maturity, available-for-sale ("AFS") or trading. Management determines the appropriate classification at the time of purchase.
VALUATION OF INVESTMENTS IN FIXED MATURITY SECURITIES Based upon current accounting guidance, investment securities must be classified as held-to-maturity, available-for-sale ("AFS") or trading. Management determines the appropriate classification at the time of purchase. The classification of securities is significant since it directly impacts the accounting for unrealized gains and losses on securities.
Securities rated by the SVO are grouped in the equivalent NRSRO category as stated by the SVO, and securities that are not rated by a NRSRO are included in the "other" category. The following table shows the distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value.
Fixed maturity securities that we hold that are rated by the SVO are grouped together with the bonds held in the equivalent NRSRO category, and securities that are not rated by a NRSRO or SVO are included in the "other" category. The following table shows the credit ratings of our fixed maturity securities portfolio by carrying value.
Financial Condition at December 31, 2024 • Total assets of $1.7 billion. • Total direct insurance in force of $5.2 billion. • Total investments of $1.4 billion; fixed maturity securities comprised 88% of total investments. • No debt. • Diluted earnings per share of Class A common stock of $0.29. • Book value per share of Class A common stock of $4.21. • Adjusted book value per share of Class A common stock of $6.14 1 .
Financial Condition at December 31, 2025 • Total assets of $1.8 billion. • Total direct insurance in force of $5.4 billion. • Total investments of $1.4 billion; fixed maturity securities comprised 89% of total investments. • No debt. • Diluted earnings per share of Class A common stock of $0.28. • Book value per share of Class A common stock of $4.67. • Adjusted book value per share of Class A common stock of $6.43 1 .
Years ended December 31, (In millions) 2024 2023 Direct written life insurance in force $ 5,228 4,922 Reinsurance assumed 3 4 Reinsurance ceded (821) (620) Net life insurance in force $ 4,410 4,306 LIQUIDITY AND CAPITAL RESOURCES Below are our primary capital resources (based on carrying value) at December 31, 2024 and 2023.
As of December 31, (In millions) 2025 2024 Direct written life insurance in force $ 5,432 5,228 Reinsurance assumed 3 3 Reinsurance ceded (910) (821) Net life insurance in force $ 4,525 4,410 LIQUIDITY AND CAPITAL RESOURCES Below are our primary capital resources (based on carrying value) at December 31, 2025 and 2024.
We believe sales statistics are meaningful to gaining an understanding of, among other things, the attractiveness of our new 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 and in Part I. Item 1.
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.
We continue to work on managing controllable operating expenses while investing in growth initiatives. 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 related to new and renewal 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.
The Company evaluates profit and loss performance based on U.S. GAAP net income (loss) before federal income taxes for these segments. The Company's Other Non-Insurance enterprises include non-insurance operations such as IT and corporate-support functions, which are included in the table presented below to properly reconcile the segment information with the consolidated financial statements of the Company.
GAAP net income (loss) before federal income taxes for these segments. The Company's Other Non-Insurance enterprises include non-insurance operations such as IT and corporate-support functions, which are included in the table presented below to properly reconcile the segment information with the consolidated financial statements of the Company. December 31, 2025 | 10-K 34 Table of Contents CITIZENS, INC.
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.
There are three primary components of these payments: death claims, surrenders and matured endowments. 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.
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.
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.
As we have discussed, we have been growing our domestic business by developing new products and expanding our distribution channels, which has led to an increase in first year premiums (i.e., new sales) of 71% from 2023 to 2024. When selling new policies, we incur upfront policy acquisition costs, such as agent commission payments.
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 significant increases in first year premiums (i.e., new sales) in our Domestic Insurance segment in the last two years. When selling new policies, we incur upfront policy acquisition costs, such as agent commission payments.
("BlackRock") announced a substantial write-down of its Global Renewable Power Fund III, a $4.8 billion flagship renewable fund, due to the collapse of two key investments: Northvolt and SolarZero.
("BlackRock") announced a substantial write-down of its Global Renewable Power Fund III, a $4.8 billion flagship renewable fund, due to the collapse of two key investments: Northvolt and SolarZero. In 2025, BlackRock continued to review the valuation of this fund and reduced the net asset value further.
A summary of our net investment income and net investment income performance is as follows: Years ended December 31, (In thousands, except for %) 2024 2023 Gross investment income: Fixed maturity securities $ 60,940 60,127 Equity securities 302 630 Policy loans 5,597 6,011 Other long-term investments 4,846 4,509 Other 834 576 Total investment income 72,519 71,853 Investment expenses (2,807) (2,599) Net investment income $ 69,712 69,254 Average invested assets, at amortized cost $ 1,527,356 1,517,685 Yield on average invested assets 4.56 % 4.56 % Fixed maturity securities constitute the vast majority, or 88%, of our investment portfolio based on fair value and thus provide the majority of our net investment income.
A summary of our net investment income and net investment income performance is as follows: Years ended December 31, (In thousands, except for %) 2025 2024 Gross investment income: Fixed maturity securities $ 63,340 60,940 Equity securities 212 302 Policy loans 5,275 5,597 Other long-term investments 5,427 4,846 Other 760 834 Total investment income 75,014 72,519 Investment expenses (2,975) (2,807) Net investment income $ 72,039 69,712 Average invested assets, at amortized cost $ 1,544,033 1,527,356 Yield on average invested assets 4.67 % 4.56 % 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.
Years ended December 31, (In thousands) 2024 2023 Direct premiums $ 178,836 170,557 Reinsurance assumed 67 68 Reinsurance ceded (5,575) (3,586) Net premiums $ 173,328 167,039 Our insurance subsidiaries monitor the solvency of their reinsurers to minimize the risk of loss in the event of default by a reinsurer.
Years ended December 31, (In thousands) 2025 2024 Direct premiums $ 188,766 178,836 Reinsurance assumed 51 67 Reinsurance ceded (12,446) (5,575) Net premiums $ 176,371 173,328 Our insurance subsidiaries monitor the solvency of their reinsurers to minimize the risk of loss in the event of default by a reinsurer.
To offset some of this strain on our capital, we entered into the RGA Agreement in the second quarter of 2024 and elected to cede 50% of our final expense business to RGA, which alleviates some of the strain.
Since 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 RGA Agreement in the second quarter of 2024 and elected to cede 50% of our final expense business to RGA.
We did not sell this investment; however, the changes in fair values of our equity securities are reflected as investment related gains or losses in our income statement, in addition to executed transactions that result in a gain or loss. Other Income .
The changes in fair values of our equity securities are reflected as investment related gains or losses in our Consolidated Statements of Operations and Comprehensive Income, in addition to executed transactions that result in a gain or loss. Other Income .
Year Life Insurance Home Service Insurance Consolidated 2024 4.56 % 4.58 % 4.56 % 2023 4.58 % 4.53 % 4.56 % Yields on invested assets vary between segment operations due to different portfolio mixes and durations in each segment's portfolio. The consolidated yields include our other non-insurance enterprises.
Year International Insurance Domestic Insurance Consolidated 2025 4.70 % 4.59 % 4.67 % 2024 4.59 % 4.49 % 4.56 % Yields on invested assets vary between segment operations due to different portfolio mixes and durations in each segment's portfolio. The consolidated yields include our other non-insurance enterprises.
Item 1. Business for a discussion about the business operations in each segment. December 31, 2024 | 10-K 32 Table of Contents CITIZENS, INC. Our insurance operations are the primary focus of the Company, as these operations generate most of our income. See the discussion under Segment Operations below for detailed analysis.
Business for a discussion about the business operations in each segment. Our insurance operations are the primary focus of the Company, as these operations generate most of our income. See the discussion under Segment Operations below for detailed analysis.
December 31, 2024 | 10-K 33 Table of Contents CITIZENS, INC.
December 31, 2025 | 10-K 32 Table of Contents CITIZENS, INC.
Because of this, another liquidity concern is that rapid growth in first year sales of these products creates a significant increase in commission payments. CICA Domestic sales have increased significantly since the third quarter of 2023.
Because of this, another liquidity concern is that rapid growth in first year sales of these products creates a significant increase in commission payments.
We may also seek other December 31, 2024 | 10-K 49 Table of Contents CITIZENS, INC. options, such as loans at the holding company level (from the Credit Facility or otherwise) that would allow us to reduce the liquidity risk should CICA Domestic's required commission payments exceed current resources. See Part IV. Item 15. Note 8.
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 IV. Item 15. Note 8. Commitments and Contingencies , as well as Part I. Item 3.
Business , we describe the actions and initiatives that we are taking to increase sales and improve retention, sales performance in each period and as compared to prior periods, and how we view trends with respect to sales and retention.
Throughout the MD&A, we describe: the actions and initiatives we are taking to increase sales and improve retention, sales performance in each period and as compared to prior year periods, and how we view trends with respect to sales and retention. One sales factor that is key to our profitability is product mix.
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. The administration of our investment portfolio is handled by our management and a third-party investment manager, pursuant to Board-approved investment guidelines.
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.
Reinsurance ceded premiums increased in the twelve months ended December 31, 2024 compared to the same periods in 2023 due to the RGA Agreement entered in the second quarter of 2024, which relates to our CICA Domestic business. December 31, 2024 | 10-K 34 Table of Contents CITIZENS, INC. Net Investment Income.
Reinsurance ceded premiums increased in 2025 compared to 2024 due to the RGA Agreement we entered into the second quarter of 2024, which relates to our CLOA final expense business. December 31, 2025 | 10-K 31 Table of Contents CITIZENS, INC. Net Investment Income.
Our fixed maturity investment portfolio, primarily invested in callable securities, has faced challenges due to the sustained low interest rate environment over the past decade. Many securities were called between 2019 and 2021, necessitating reinvestment in lower interest rate fixed maturity assets, which has begun and will continue to impact net investment income and yields.
Our net 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.
Surrender benefits, which have been higher than usual the last several years, slightly decreased during 2024.
Surrender benefits, which have been high the last several years, slightly decreased during 2025.
BENEFITS AND EXPENSES Years ended December 31, (In thousands) 2024 2023 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders $ 146,082 135,993 Increase (decrease) in future policy benefit reserves (4,286) (5,624) Policyholder liability remeasurement (gain) loss 4,756 4,460 Policyholders' dividends 5,355 5,542 Total insurance benefits paid or provided 151,907 140,371 Commissions 49,118 39,241 Other general expenses 52,266 47,131 Capitalization of deferred policy acquisition costs (41,302) (28,301) Amortization of deferred policy acquisition costs 17,435 15,460 Amortization of cost of insurance acquired 597 604 Total benefits and expenses $ 230,021 214,506 Payments of claims and surrenders benefits and other general expenses constitute the majority of our expenses.
BENEFITS AND EXPENSES Years ended December 31, (In thousands) 2025 2024 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders $ 165,025 146,082 Increase (decrease) in future policy benefit reserves (14,857) (4,286) Policyholder liability remeasurement (gain) loss 2,573 4,756 Policyholders' dividends 5,550 5,355 Total insurance benefits paid or provided 158,291 151,907 Commissions 47,265 49,118 Other general expenses 53,041 52,266 Capitalization of deferred policy acquisition costs (39,801) (41,302) Amortization of deferred policy acquisition costs 18,899 17,435 Amortization of cost of insurance acquired 451 597 Total benefits and expenses $ 238,146 230,021 Payments of claims and surrenders benefits constitute the vast majority of our expenses.
We also believe the impact of inflation on the cost of living has affected new sales since the customer demographic is primarily lower-income individuals. The amount of direct insurance inforce for the years indicated is shown below. Overall insurance inforce growth has been and will be impacted by persistency rates, policy maturities and surrenders.
We believe growth in this segment is being impacted by inflation on the cost of living, which has affected new sales since the customer demographic is primarily lower-income individuals. The amount of direct insurance inforce for the years indicated is shown below.
Payment of policyholder benefits for claims and surrenders is our largest expense and thus also key to our profitability. The three largest components of this expense are reflected in the graph below.
December 31, 2025 | 10-K 28 Table of Contents CITIZENS, INC. Claims and Surrenders. Payment of policyholder benefits for claims and surrenders is our largest expense and thus key to our profitability. The three largest components of this expense are reflected in the graphs below.
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. As discussed above, our domestic growth in the Life Insurance segment has been significantly expanded.
Legal Proceedings - Trade Secret Lawsuit for additional details. 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.
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.
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.
At December 31, 2024, 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. December 31, 2024 | 10-K 50 Table of Contents CITIZENS, INC.
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 December 31, 2025, 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.
December 31, 2024 | 10-K 28 Table of Contents CITIZENS, INC. Investment Related Losses due to BlackRock write-down As we have previously discussed, investment related gains and losses derive principally from our investments in equity securities and include unrealized gains and losses from market price changes in these equities during the period.
Investment Related Losses due to BlackRock write-down Investment related gains and losses derive principally from our investments in equity securities and include unrealized gains and losses from market price changes in these equities during the period.
We anticipated the $11.7 million increase in 2024 based upon the contractual maturity dates and expect continued increases in matured endowment benefits over the next few years as more of these contracts expire. Increase (Decrease) in Future Policy Benefit Reserves.
We anticipated this $23.3 million increase in 2025 based upon the contractual maturity dates. We expect matured endowment benefits to remain at elevated, but slightly lower levels over the next few years, as more of these contracts expire. Increase (Decrease) in Future Policy Benefit Reserves.
Government-sponsored enterprises $ 9,213 0.6 % $ 9,715 0.7 % Corporate 794,989 56.0 787,607 55.1 Municipal bonds (1) 268,302 18.9 287,231 20.1 Mortgage-backed (2) 93,953 6.6 97,294 6.8 Asset-backed 54,504 3.9 57,134 4.0 Total fixed maturity securities 1,220,961 86.0 1,238,981 86.7 Cash and cash equivalents 29,271 2.0 26,997 1.8 Other investments: Policy loans 71,216 5.0 75,359 5.3 Equity securities 5,447 0.4 5,282 0.4 Other long-term investments 93,604 6.6 82,725 5.8 Total cash, cash equivalents and invested assets $ 1,420,499 100.0 % $ 1,429,344 100.0 % (1) Includes $113.4 million and $124.2 million of securities guaranteed by third parties at December 31, 2024 and 2023, respectively.
Government-sponsored enterprises $ 7,008 0.5 % $ 9,213 0.6 % Corporate 866,870 59.2 794,989 56.0 Municipal bonds (1) 268,792 18.3 268,302 18.9 Mortgage-backed (2) 111,982 7.6 93,953 6.6 Asset-backed 33,209 2.3 54,504 3.9 Total fixed maturity securities 1,287,861 87.9 1,220,961 86.0 Cash and cash equivalents 22,976 1.6 29,271 2.0 Other investments: Policy loans 67,455 4.6 71,216 5.0 Equity securities 1,356 0.1 5,447 0.4 Other long-term investments 85,439 5.8 93,604 6.6 Total cash, cash equivalents and invested assets $ 1,465,087 100.0 % $ 1,420,499 100.0 % (1) Includes $106.9 million and $113.4 million of securities guaranteed by third parties at December 31, 2025 and 2024, respectively.
T he investment related gains and losses in 2024 increased due to the BlackRock write-down. These gains and losses are generally a result of the change in estimated fair market value for our limited partnerships, as previously discussed. December 31, 2024 | 10-K 39 Table of Contents CITIZENS, INC. Claims and Surrenders.
Investment related gains and losses improved in 2025 compared to 2024 largely due to the BlackRock write-down in 2024. These gains and losses are generally a result of the change in estimated fair market value for our limited partnerships, as previously discussed. Other Income.
December 31, (In thousands, except for %) 2024 % 2023 % AAA $ 36,458 3.0 % $ 36,233 2.9 % AA 332,010 27.2 337,841 27.3 A 393,598 32.2 394,158 31.8 BBB 449,117 36.8 463,581 37.4 BB and other 9,778 0.8 7,168 0.6 Totals $ 1,220,961 100.0 % $ 1,238,981 100.0 % Our investment policy requires investment primarily in fixed maturity securities that are investment grade.
December 31, (In thousands, except for %) 2025 % 2024 % AAA $ 46,889 3.6 % $ 36,458 3.0 % AA 323,248 25.1 332,010 27.2 A 457,705 35.6 393,598 32.2 BBB 443,486 34.4 449,117 36.8 BB and other 16,533 1.3 9,778 0.8 Totals $ 1,287,861 100.0 % $ 1,220,961 100.0 % Our investment policy requires us to invest primarily in fixed maturity securities that are investment grade.
A credit rating assigned by a NRSRO is a quality-based rating, with AAA representing the highest quality and D the lowest, with BBB and above being considered investment grade. If there is no NRSRO rating, the Company may use credit ratings of the NAIC Securities Valuation Office ("SVO") as assigned.
A credit rating assigned by a NRSRO is a quality-based rating, with AAA representing the highest quality (i.e., strong finances and lowest default risk) and D the lowest, with BBB and above being considered high-quality investment grade. If an issuer does not have a NRSRO rating, we may look at credit ratings assigned by the NAIC Securities Valuation Office ("SVO").
In addition, we do not hedge our investment positions. We have no known material cash requirements other than those described above. CRITICAL ACCOUNTING POLICIES The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures.
CRITICAL ACCOUNTING POLICIES The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures.
In the year December 31, 2024 | 10-K 36 Table of Contents CITIZENS, INC. ended December 31, 2024, the change in future policy benefit reserves increased due to the amount of reserves on new insurance issued and the in force book of business somewhat offset by released reserves in connection with higher matured endowments. Policyholder Liability Remeasurement (Gain) Loss.
In the year ended December 31, 2025, December 31, 2025 | 10-K 33 Table of Contents CITIZENS, INC. the change in future policy benefit reserves decreased significantly as compared to 2024 despite the increase in our inforce business, due to the amount of reserves released in connection with matured endowments. Policyholder Liability Remeasurement (Gain) Loss.
December 31, 2024 | 10-K 35 Table of Contents CITIZENS, INC.
December 31, 2025 | 10-K 35 Table of Contents CITIZENS, INC. Premium breakout is detailed below.
(In thousands, except for %) 2024 2023 Fixed maturity securities $ 1,220,961 1,238,981 Cash and cash equivalents 29,271 26,997 Liquidity refers to a company's ability to generate sufficient cash flows to meet the needs of its operations. In the year ended December 31, 2024, our operations provided $31.9 million of net cash.
(In thousands) 2025 2024 Fixed maturity securities $ 1,287,861 1,220,961 Cash and cash equivalents 22,976 29,271 Liquidity refers to a company's ability to generate sufficient cash flows to meet the needs of its operations.
Cash and cash equivalents increased as of December 31, 2024 compared to December 31, 2023 and fluctuate from period to period primarily due to the timing of operating and investing activities. Other long-term investments increased to $93.6 million as of December 31, 2024, as compared to $82.7 million as of December 31, 2023 due to additional funding.
Cash and cash equivalents decreased as of December 31, 2025 compared to December 31, 2024 and fluctuate from period to period primarily due to the timing of operating and investing activities.
There were no other states or individual issuer holdings that represented or exceeded 10% of the total municipal fixed maturity security portfolio as of December 31, 2024. December 31, 2024 | 10-K 45 Table of Contents CITIZENS, INC. The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in Texas at December 31, 2024.
There were no other states or individual issuer holdings equal to or greater than 10% of the total municipal bond portfolio as of December 31, 2025. December 31, 2025 | 10-K 42 Table of Contents CITIZENS, INC. The table below reflects our Texas municipal bonds by credit rating at December 31, 2025.
For the Life Insurance segment, the constant level basis used is policy count in force. For the Home Service Insurance segment, the constant level basis used is face amount in force.
For CICA International and CLOA, the constant level basis used is policy count in force. For SPLIC, the constant level basis used is face amount in force.
This increase in gross unrealized losses during 2024 was a result of the increase in average market interest rates at the end of 2024 as compared to 2023. Information on both unrealized and realized gains and losses by category is set forth in Part IV. Item 15. Note 2. Investments of the notes to our consolidated financial statements.
The enhancement in gross unrealized losses seen in 2025 stemmed from the rise in average market interest rates at the close of 2025, relative to those at the end of 2024. Information on both unrealized and realized gains and losses by category is set forth in Part IV. Item 15. Note 2.
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 December 31, 2024 | 10-K 48 Table of Contents CITIZENS, INC. low-cost collateralized borrowings and funding agreements.
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.
Our fixed maturity investment portfolio, primarily invested in callable securities, has faced challenges due to the sustained low interest rate environment over the past decade. Many securities were called between 2019 and 2021, necessitating reinvestment in lower interest rate fixed maturity assets, which has begun and will continue to impact net investment income and yields.
Our fixed maturity investment portfolio, primarily invested in callable securities, has faced challenges due to the sustained low interest rate environment over the past decade.
As a life insurance company, the vast majority of our known cash requirements are for payments related to future policy benefits and policy claims payable, which we estimated in the table above. These amounts have been projected utilizing assumptions based upon our historical experience and anticipated future experience.
CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS As a life insurance company, the vast majority of our known contractual and other obligations relate to our future policy benefits payable. These amounts have been projected utilizing assumptions based upon our historical expe rience and anticipated future experience.
In 2024, compared to 2023, • death claim benefits increased due to the significant growth in our domestic life in force business as well as a higher average claim amount in our Home Services Insurance segment, • surrenders decreased as we continue to focus on retention efforts, and • matured endowments increased as expected due to many of our endowment policies reaching their contractual maturity dates.
In 2025, compared to 2024, • death claim benefits decreased due to a combination of lower volume of claims and the RGA Agreement alleviating some of our liability to pay these claims in 2025 as compared to 2024, • surrenders decreased as we continue to focus on retention efforts, and • matured endowments increased as expected due to many of our endowment policies reaching their contractual maturity dates.
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.
Our cash and invested assets at December 31, 2025 were $1.5 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.
As we continue our expansion into this market, we expect results will become proportionally less volatile. Actuarial assumptions are continually monitored and updated at least annually to reflect overall experience as well as emerging trends. CONSOLIDATED RESULTS OF OPERATIONS Our Operating Segments We manage our business in two operating segments: Life Insurance and Home Service Insurance. See Part I.
Actuarial assumptions are continually monitored and updated at least annually to reflect overall experience as well as emerging trends. December 31, 2025 | 10-K 29 Table of Contents CITIZENS, INC. CONSOLIDATED RESULTS OF OPERATIONS Our Operating Segments We manage our business in two operating segments: International Insurance and Domestic Insurance. See Part I. Item 1.

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