CIA 10-K & 10-Q changes, risk factors and insider trading

As a smaller reporting company, we are not required to discloseprovide informationrisk required by this Item 1A.factors. However, we have elected to provide the following discussion of risks as we feelbelieve it is important to provide adequate information to our investors regardingdisclose the material risks of investing in our securities. 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. TheseYou should read these risk factors may also be important to understanding other statements in this Form 10-K. The following information should be read in conjunctiontogether 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.

International Regulatory Risks. A substantial majorityAs of our direct insurance premiums, approximately 67% at December 31, 2024, are from2025, policyholders in foreigninternational countries,markets primarily- thosemainly inwithin Latin America and the Pacific Rim.Rim - accounted for approximately 64% of our direct insurance premiums. As described in Part I. 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 aregenerally locatedreside in the foreign countries in which the policies are sold. Generally,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. Some of these countries also require that local regulatory authorities December 31, 2025 | 10-K 10 approve the terms and rates of any insurance productproducts sold to residents of that country. 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 on our behalfpolicies unless we become qualified to do business in that country or unless our policies receive prior approval from their insurance regulators. Others have a "consumption abroad" model where their residents may purchase unregistered products only if they are outside of their country when the purchase is made. We do not register to do business in these countries (i.e., we are non-admitted) nor do we seek to have our international products approved by any governmental authority.

We have sought to mitigate the risks described above by, among other things, not locating any of our offices or assets in these foreign countries or jurisdictions, and selling policies only through independent consultants rather than our own employees. We also try to mitigate risks by relying on laws that allow citizens of some countries to buy insurance abroad or by reverse solicitation. We rely on our independent consultants to comply with laws applicable to them in marketing and servicing our insurance products in their respective countries. There is no assurance that these precautionary measures, practices and policies will partially or entirely mitigate the risks associated with the potential application of foreign laws to our sales of insurance policies in our foreign markets. 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 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. Alternatively, the Company may determine that the risks associated with a particular market and its regulatory environment outweigh the benefits of conducting further business in that market and discontinue doing business there.

Any actions byIf a foreign government takes action to enforce these laws against usus, couldwe causemay disruptionface tointerruptions thein marketing andor sale ofselling our policies in that country or ourbe withdrawalforced fromto doing business inexit that country,market. whichThese consequences could havematerially a material adverse effect onharm our premium revenue, increase our costsexpenses, andadversely expenses and onaffect our results of operations and financial condition.condition, and cause significant damage to our brand.

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 affectlimit our revenues by limiting thepolicyholders' ability of our policyholders in such countries to payremit premiums in U.S. dollars or to receive U.S. dollar benefits.benefits, Difficultiesincreasing in transferring funds from or converting currencies to U.S. dollars in certain countries could cause an increase in feescosts and costsreducing associatedproduct with such payments or receipt of benefits and therefore make our products less attractive to such policyholders.attractiveness.

International Political Risks. Many of the countries in which we operateoperate, 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. The ability of people living in these countries to purchase and continue to make premium payments onto our insurance policiesus and our ability to sell our policies in those countries through our independent consultants or otherwise may be adversely affected by political instability. 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. 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. 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 andor receive premiums from policyholders in those countries.

We face significant competition for customers and distributors in our international markets. 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.

We experience considerable competition for salescustomers ofand our policies,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 similar U.S. dollar-denominated products;

•CompaniesForeign thatinsurers are foreign to a particular jurisdiction, but registerusing locally operatedregulated subsidiaries. These companies may offer both local jurisdiction-regulated products in local currency and regulated or offshore U.S. dollar-denominated policies. This arrangement creates a competitive advantage for these companies because they can December 31, 2025 | 10-K 11 cross-sell the U.S. dollar-denominated policies through established distributors who sell high-need local insurance policies, such as health insurance; and

•CompaniesLocal who are local to a particular jurisdiction and sell local currency policies.carriers. 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,agencies whothat recruit their own independent consultants,consultants for distribution of our international products. The fact that we are not a local or admitted company, regulations or licensing requirements imposed upon our Company or these consultants,company may impactreduce our ability to attract and retain effective sales representatives,producers, who may choose to distribute products of our competitors.

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. Criminals may overpay premiums, surrender policies prematurely, or make fictitious claims to cycle the illicit December 31, 2024 | 10-K 13 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.

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. Accordingly, as required by applicable U.S. laws and best business practices, we have developed and implemented an anti-money laundering, anti-terrorist financing and sanctions program that includes policies, procedures, controls, independent testing, reporting and recordkeeping requirements for deterring, preventing and detecting potential money laundering, terrorist financing, fraud and other criminal activity and have an officer of the Company responsible for managing this program. Despite our efforts to prevent money laundering through our companies, there can be no assurance that these enhancedour controls willmay entirelynot fully mitigate money laundering risk associated with our insurance products, whether in these foreign countries or in the United States.States, which could expose us to regulatory scrutiny, penalties, litigation, operational burden, and reputational harm.

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 PRODUCTPRICING PRICING.ASSUMPTIONS. DIFFERENCES IN ACTUAL EXPERIENCE, IMPROPER EVALUATION OF UNDERWRITING RISK, MISMANAGEMENT OF CLAIMS, OR OTHER UNFORESEEN EVENTS WOULD CAUSE OUR ACTUAL RESULTS TO DIFFER FROM OUR ASSUMPTIONS, WHICH WOULD REDUCE OUR MARGINS, INCREASE OUR RESERVES AND REMEASUREMENT LOSS, NEGATIVELY AFFECTING OUR PROFITABILITY AND FINANCIAL CONDITION.

In order to price products accurately, the Company must develop and apply appropriate morbidity and mortality estimates, closely monitor and timely recognize changes in trends, and project both severity and frequency of losses with reasonable accuracy to cover these risks. Pricing adequacy is necessary to generate sufficient premiums to cover our cost of sales, costs of operations (including payment of policy benefits)benefits, costs of operations and to earn a profit. Pricing adequacy is subject to a number of risks and uncertainties, including, without limitation:

Additionally, the actuarial assumptions that underlie our reserves are based upon our best estimates of 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. DomesticAs we continue to experience growth in theCLOA, Lifeemerging Insurancedata segmenttrends haswill significantlyallow expandedus into refine our assumptions. To the lastextent 2that years.emerging Ourexperience currentdiffers profitabilityfrom ispreviously affectedset byassumptions, the level of reserves we haveadjustments to holdreserve forlevels thismay newbe 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.required. Actuarial assumptions are continually monitored and updated at least annually to reflect overall experience as well as emerging trends.

Historically, we have fully underwritten most of our products in order to properly evaluate risk. For many of our newer products, primarily in the U.S., we utilize a “simplified” underwriting process where applicants generally must answer some health-related questions, but do not have to take a life insurance medical exam or submit supporting documentation. 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. The underwriting decision is based on questions answered on the application and may be supplemented with additional medical claims history and lab data information that we get from third parties.

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 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. 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 surrenders of policies that no longer remain subject to surrender charges. These changes in surrender activity may result in remeasurement gains or losses which could increase volatility in our results of operations.

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'sCLOA's RBC remains above 350%. Any required capital contribution could negatively impact our capital resources and liquidity.

In our CICA DomesticCLOA 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. 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 DomesticCLOA to maintain the required level of capital and surplus. Additionally, rapid growth in first year sales of these products creates a significant increase in commission payments, which reduces our available cash, negatively affecting our liquidity. 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'sCLOA's commission payments exceed current resources or require additional capital contributions from Citizens. If we are unable to borrow money to contribute capital to CICA Domestic,CLOA, we could be exposed to cash flow strain.

If our internal sources of liquidity prove to be insufficient to cover our holding company operations, we may have to sell investments earlier than we want to sell them or in less than favorable market conditions, or we may have to seek external sources of capital. In May 2024, we renewed our Credit Facility with Regions Bank for an additional three years. See Part IV. Item 15. Note 8. Commitments and Contingencies in the notes to our consolidated financial statements, herein, for a description of the Credit Facility. To date, we have not utilized the Credit Facility, but if internal sources of capital are not sufficient to meet our operating needs, we may need to utilize the Credit Facility or increase the borrowing availability under the Credit Facility. Borrowing money, increasing our borrowing availability under the Credit Facility or obtaining financing for even a small amount of capital could be challenging or expensive in unfavorable market conditions and during periods of economic uncertainty. The availability of financing December 31, 2024 | 10-K 18 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 perception of our financial prospects. We may also need to raise capital through issuing our stock. Raising capital in unfavorable market conditions could increase our interest expense or negatively impact our shareholders through dilution of their common stock ownership of the Company.

A.M. Best reviews CICA DomesticCLOA 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. Best with respect to the financial strength rating of CICA DomesticCLOA could negatively affect us by limiting or restricting the ability of CICA DomesticCLOA to attract independent insurance agencies to distribute our products or reduce the attractiveness of our products to consumers.

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.

•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 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 impactimpacts the fair market value of our equity type securities, leading to investment-related losses that negatively affect our GAAP operating revenue and profitability.

THE COMPANY RELIES ON OUR INFORMATION TECHNOLOGY SYSTEMS, AND THE DATA MAINTAINED WITHIN THOSE SYSTEMS, TO MANAGE MANY ASPECTS OF OUR BUSINESS. 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 policyholder administration system allows us to administer almost all of our business, including issuing policies, crediting premiums to such policies,premiums, and payment of commissions to our agents. 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. If we do not maintain adequate systems, we could experience adverse consequences, including inability to accept new applications or issue new products, inadequate information on which to base pricing, underwriting and reserve decisions, regulatory problems, failure to meet prompt payment obligations, increases in administrative expenses and loss of customers. Our 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. Our system utilizes proprietary code requiring highly skilled personnel. DueShortages toof specialized talent and reliance on legacy systems may slow modernization or increase operational risk. Competition for qualified personnel and vendor dependencies may delay upgrades, elevate costs, or increase the unique naturerisk of our proprietary operating environment, we could have difficulty finding personnel with the skills required to provide ongoing system maintenancefailures and developmentcontrol as we seek to keep pace with changes in our products and business models, information processing technology, evolving industry and regulatory standards and policyholder needs.deficiencies.

We are continuously evaluatingenhancing our system and enhancing systemsprocesses and creatingwe are licensing new systems and processes as our business depends on our ability to maintain and improve our technology. Due to the complexity and interconnectedness of our systems and processes, these changes, as well as changes designed to update and enhance our protective measures to address new threats, increase the risk of a system or process failure or the creation of a gap in our security measures. Any such failure or gap could adversely affect our business operations and results of operations.

WeAs an insurer, we collect, maintain and use information, including proprietary and personally identifiable information ("PII"), of our applicants, policyholders, independent agents and others. As part of our normal business operations, we engage third-party providers, such as companies who print and mail our policies and premium notices, data programmers, marketing companies, and agents, who may also collect, store, access, process, and transmit this PII. Various federal and state laws, as well as laws of the countries in which our policyholders reside, address the use and disclosure of PII.

We devote significant resources and employ security measures to help protect our information technology systems and confidential information, including PII, and we have programs in place to detect, contain, and respond to cyber security incidents. We also have a stringent process to analyze the systems of our third-party vendors and partners who may collect and/or have access to our PII. However, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we and our third-party providers may be unable to anticipate these techniques or implement adequate preventative measures. In addition, hardware, software, or applications we develop or procure from third parties or through open source solutions may contain defects in design or manufacture or other problems that could unexpectedly compromise our information security. Unauthorized parties, whether within or outside our company,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.

Because we allow our policyholders to use their policy dividends to purchase our Class A common stock through our SIP,Citizens, Inc. Stock Investment Plan (the "SIP"), we have almost 83,00081,000 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. 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.get approved.

As mentioned above, a significant portion of our Class A common stock has been purchased under the SIP by foreign holders of life insurance policies. TheOur 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 19331933, but is not registered under the laws of any foreign jurisdiction. If a foreign securities regulatory authority were to determine the offer and sale of our Class A common stock under the SIP was not allowed under applicable laws and regulations of its jurisdiction, such authority may issue or assert a fine, penalty or cease and desist order against our offer and sale of Class A common stock in that foreign jurisdiction. There is a risk our Class A common stock price could be negatively impacted by a decrease in participation in the SIP.

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 best interests. To the extent the interests of our policyholders and stockholders conflict, the insurance regulators consider the best interests of policyholders over the best interests of our shareholders. As a result, our shareholders December 31, 2025 | 10-K 20 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.

As an insurance provider, we collect premiums on an ongoing basis from our policyholders and invest the majority of the premiums to pay future benefits, including claims, surrenders and policyholder dividends. Accordingly, the Company derives its revenues principally from: (1) life insurance premiums earned for insurance coverages provided to insureds in our two operating segments – LifeInternational Insurance and Home ServiceDomestic Insurance; and (2) net investment income. In addition to paying and reserving for insurance benefits that we pay to our policyholders, our expenses consist primarily of the costs of selling our insurance products (e.g., commissions, underwriting, marketing expenses), operating expenses and income taxes.

•Increase in Interest Rates;Rate Environment, Market Volatility in Equity and Credit Markets; Inflation. The material uptick in interest rates over the past few years has generally benefited the life insuranceinsurers sectorby withimproving respect to increasedreinvestment yields and higher net investment income. However, thisthese benefitbenefits washave been partially offset by unrealized losses in fixed-income portfolios as market values declined during the rate‑rising cycle, a movetrend observable across the industry. Life insurers remain sensitive to materialinterest‑rate unrealizedmovements lossgiven positionsthe onasset‑intensive fixed-incomenature portfolios.of the business and long‑duration liabilities.

•AvailabilityReinsurance ofMarket Reinsurance.Dynamics. Reinsurance marketmarkets dynamicshave includingtightened due to factors such as increased cybersecurity concerns,risks, significant weather-related losses, pandemic losses, and similarvolatility toin theasset lifevaluations. insuranceThese industry, economic-related market losses,pressures have led to a decline in the availability of reinsurance, tighter terms (such as, for example, pandemic exclusions) and/or increased reinsurance prices. WhileContinued wemarket currentlytightening cedecould aincrease limitedour amountcost of ourreinsurance primaryor insurancelimit businessavailability, to reinsurers, wewhich may encounter difficulty in obtaining reinsurance in the future, forcing us to resort to a more expensive reinsurance market. If we are unable to obtain affordable reinsurance coverage, this may impactaffect our netrisk exposurestransfer strategies and thecapital number of underwriting commitments.management.

As we have previously discussed, investmentInvestment 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. As evidenced, investmentInvestment 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.

InAs discussed in our 2024 Form 10-K, in December 2024, BlackRock, Inc. ("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. We had invested in this fund as part of our environmental, social and governance ("ESG") initiatives and although we did not sell this investment, due to the write-down, we reported an investment related loss on this investment of $3.3 million.million in the fourth quarter of 2024 and an additional $5.2 million in 2025. This sector has experienced market headwinds primarily driven by rising interest rates, supply chain disruption and less certain policy environment. In 2025, the write-down of our BlackRock investment was offset by positive fair value changes in some of our other limited partnership type investments.

See Part IV. Item 15. Note 8. Commitments and Contingencies, as well as Part I. Item 3. Legal Proceedings - Trade Secret Lawsuit for a discussion of the trade secret lawsuit, which has impacted our results of operations in 2024 and could negatively impact our cash if we do not succeed in our appeal.

Net income before federal income tax decreasedincreased to $17.5 million in 2025 from $15.0 million in 2024 fromdue $26.2to a $10.6 million increase in 2023.total Therevenues factorsoffset thatby impacteda this$8.1 changemillion were:increase in total benefits and expenses.

•$3.4 million decreaseImprovement in investment related gains and losses primarily related to the BlackRock write-down;

•$0.8 million increase in other general expenses due to strategic growth initiatives and increased participation in our equity compensation program in addition to being negatively impacted in 2024 by the accrual of $3.5 million in legal fees awarded to the certain defendants in the trade secret lawsuit; andlawsuit.

First Year Premiums. Total directDirect first year premiums increased 71%,16%, to $38.3 million in 2025, compared to $33.0 million in 2024, compared to $19.3 million in 2023, including 106%23% growth in our LifeDomestic Insurance segment driven by new products and an increased number of producing agents. In addition to increased firstFirst year premiums duealso to our domestic growth discussed above, first year premiumsincreased in our internationalInternational businessInsurance increasedsegment in 20242025 from 20232024 as we continue to work with our distribution partners to expand products and sales.

Renewal Premiums. OurIn 2025, our direct renewal premium revenues increased as a result of robust sales in 2024 decreasedin primarilyour dueDomestic toInsurance segment, which resulted in a greater volume of policies making renewal premium payments in 2025. Premium growth was constrained by the impact of a higherhigh level of surrenders and matured endowments in our internationalInternational businessInsurance segment during the last few years, which has ledlowered to a lowerthe number of policies remaining in force and paying renewal premiums.premiums in this segment.

Investment Income. Our net investment income increased from 20232024 to 20242025. dueIn primarily2025, towe investmentreceived incomea special dividend of $1.7 million from one of our limited partnership investments,investments adue growingto diversifiedthe investedsale assetof baseone andof reinvestingits maturedassets. orAdditionally, calledwe began investing in investment grade private placement fixed income maturity securities intoand astructured notes, which led to slightly higher interestnet rateinvestment environment.income in 2025.

Claims and Surrenders. 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 graphgraphs below. In 2024,2025, compared to 2023,2024,

Part I, Item 1A. Risk Factors of our 2025 Form 10-K includes a discussion of our risk factors. There have been no material changes in the three months ended MarchJune 31,30, 2026 from the risk factors included in our 2025 Form 10-K.

The U.S. Securities and Exchange Commission ("SEC") maintains a website at www.sec.gov that contains reports, proxy statements, and other information regarding issuers, including the Company, that file electronically with the SEC. Our own website, www.citizensinc.com, provides free access to the Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Section 16 filings made by our executive officers and directors, and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. These materials are made available on our website as soon as reasonably practicable after we file them with, or furnish them to, the SEC. Information contained on, or accessible through, our website is not incorporatingincorporated by reference into, and should not be considered part of, this Form 10-Q.

We refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations as our “MD&A”. The objective of our MD&A is to provide investors with information in order to assess the material changes in our financial condition from December 31, 2025 to MarchJune 31,30, 2026 and the material changes in our results of operations for the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025. We also discuss in the MD&A any trends that we believe may materially affect our future operations or financial condition.

We operate in two segments - International Insurance and Domestic Insurance. Our International Insurance segment operates through CICA Life, A.I., a Puerto Rican insurer, referred to as "CICA International". Our Domestic MarchJune 31,30, 2026 | 10-Q 3438 Insurance segment operates through our subsidiaries CICA Life Insurance Company of America ("CLOA"), Security Plan Life Insurance Company ("SPLIC") and Magnolia Guaranty Life Insurance Company ("MGLIC").

Financial Condition at MarchJune 31,30, 2026

•Diluted earnings per share of Class A common stock for the threesix months ended of $0.04

Sales of our Products. We believe sales statistics are meaningful to gain an understanding of, among other things, the attractiveness of our products, how expansion of our distribution channels affects our revenue, customer retention and the performance of our business from period-to-period. Throughout the MD&A, we describe the actions and initiatives we are taking to increase sales and improve retention, sales performance in each period and as compared to prior year period,periods, and how we view trends with respect to sales and retention.

One sales factor that is key to our profitability is product mix. We offer a competitive product mix designed to meet the needs of our specific customer demographics and actively manage new product margins and in-force profitability. Product mix can have an impact on profitability; when we sell a higher volume of lower-margin products, we may receive more premiums but may not be as profitable as in periods when we sell a greater percentage of higher-margin products. Our product mix has been trending towards sales of our newer whole life products, which have a smaller margin than sales of our international endowment products. We expect this trend in our International 1Insurance Adjustedsegment bookto valuecontinue perdue to the anticipated volumes of Classendowment Amaturities commonbeing share is a non-GAAP measure that is calculatedreplaced by dividinghigher actual Class A common stockholders’ equity, excluding AOCI, by the numbervolumes of Classwhole Alife common shares outstanding at the end of the period.products.

Throughout the MD&A, we refer to "direct" premiums as all premiums received and "net" or "total" premiums as all premiums received less premiums ceded to our reinsurers. Direct premium revenue increased 4% in the three and six months ended MarchJune 31,30, 2026 to $43.9$48.1 million and $92.0 million, respectively, from $42.4$46.4 million and $88.8 million in the three and six months ended MarchJune 31,30, 2025.2025, respectively. This increase was driven by sales and renewal premiums in our Domestic Insurance segment.

First Year Premiums. Direct first year premiums increased 2%3% in the three and six months ended MarchJune 31,30, 2026 to $9.0$9.8 million and $18.7 million, respectively, from $8.8$9.4 million and $18.3 million in the three and six months ended MarchJune 31,30, 2025, respectively, driven by sales in our Domestic Insurance segment and from an increased number of producing agents. First year premium growth primarily resulted from our CLOA final expense business.

Renewal Premiums. Our direct renewal premiums in the three and six months ended MarchJune 31,30, 2026 increased primarily due to strong sales in 2025prior periods in our Domestic Insurance segment, leading to higher number of policies paying renewal premiums in the current period. Premium growth was constrained by unfavorable persistency in our Domestic Insurance segment, as well as the high level of surrenders and matured endowments in our International Insurance segment during the last few years, both of which hashave lowered the number of policies remaining in force and paying renewal premiums in this segment.premiums.

Investment Income. Our net investment income decreased slightly for the three and six months ended MarchJune 31,30, 2026 compared to the same prior year period.periods. Total investment income increased for the three and six months ended MarchJune 31,30, 2026 compared to the same prior year periodperiods, as we beganhave been investing in investment grade private placement credit,fixed income securities, where we expect higher returns. ThisHowever, this increase was outweighedoffset by non-recurringhigher fund fees due to the underperformance of the BlackRock middle market limited partnership. Excluding one time and unanticipated events, we expect our March 31, 2026 | 10-Q 36 net investment income to increase, as we have begun investing in investment grade private placement credit, where we expect higher returns.fees.

Operating Expenses. Operating expenses are our second largest expense and thus also drive our operating results. These operatingOperating expenses are meaningful to gain an understanding of how we manage our business, including among other things, salaries, benefits, and spending on growth initiatives. Our operating expenses increased by $0.7$0.6 million and $1.3 million in the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the prior year periodperiods due to continued investment in supporting the growth of our business.

Recently, we have experienced a rebalancing in our business mix due to the volume of maturities in our international endowment business and continued growth in the Domestic Insurance segment. Our current June 30, 2026 | 10-Q 42 profitability is affected by how closely actual experience matches our actuarial assumptions for these shifts, and by the amount of reserves we must hold. Updated assumptions to policyholder liability remeasurement (gain) loss negatively affected our operating results by $1.0$0.4 million compared to the same prior year quarter due to unfavorable experience in our International Insurance segment. Actuarial assumptions are continually monitored and updated at least annually to reflect overall experience as well as emerging trends.

In the first threesix months of 2026, we issued $235.7$519.6 million in new direct insurance.

The number of insurance policies issued, average policy face amount and total insurance issued in our International Insurance segment decreased in the threesix months ended MarchJune 31,30, 2026 as compared to the prior year period due to lower volume and product mix. During the first threesix months of 2026, a larger proportion of our sales was comprised of our single premium product aimed at replacing maturing endowments, which has a $100,000 maximum face value, as well as other endowment products. Our endowment products generally have lower policy face amounts than our whole life product.

In our Domestic Insurance segment, we continue to experience strong sales and increased number of policies issued of our final expense products. The use of information to enhance underwriting decisions with additional medical and lab data from third parties is resulting in issuance of policies with lower face amounts, as expected. We also believe 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.

MarchJune 31,30, 2026 | 10-Q 3843

Our first year direct premiums increased 2%3% in the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in 2025, due to sales and expanded distribution in our Domestic Insurance segment. Renewal premiums also increased from strong first year sales in 2025prior periods in our Domestic Insurance segment, leading to higher number of policies paying renewal premiums in the current period, which more than offset the impact from the high level of surrenders during the last few years and increasing matured endowment benefits paid in our International Insurance segmentsegment, which has lowered the number of policies paying renewal premiums in this segment.

Reinsurance premiums ceded increased in the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in 2025. We have a coinsurance agreement with RGA Reinsurance Company ("RGA") in order to provide more capacity for growth in our Domestic Insurance segment. Since we cede 50% of the direct premiums we receive for our CLOA final expense products to RGA, as sales of these products increase, reinsurance ceded to RGA also increases.

MarchJune 31,30, 2026 | 10-Q 3944

Fixed maturity securities constitute the vast majority, or 89%, of our investment portfolio based on fair value and thus provide the majority of our net investment income. Our fixed maturity investment portfolio, primarily invested in callable securities, has faced challenges due to the sustained low interest rate environment for the 10 years prior to 2021. Many securities were called between 2019 and 2021, which required us to reinvest in lower interest rate fixed maturity assets, which impacts net investment income and yields. In order to enhance yields, we are investing in new opportunities, including investment grade private placement fixed income securities and other asset classes, while maintaining a prudent risk profile. As discussed above, net investment income isand our annualized yield are down slightly for the three and six months ended MarchJune 31,30, 2026 as a result of higher investment expenses when compared to prior year quarter.periods.

Other Income. Other income consistsis primarilyderived ofmainly from supplemental contracts issued to policyholders in our International Insurance segment upon the surrender or maturity of their original policies. Supplemental contracts offer our policyholders the opportunity to leave their cash with us and be paid interest at a guaranteed rate or receive an annuity, at their option. We expect other income to decline as our matured endowments decline, as this income is primarily related to supplemental contracts issued to policyholders when their endowments mature. The net impact from these supplemental contracts on the consolidated financial statements is minimal as the reserve liability setup for these policies offsets any recognized income.

MarchJune 31,30, 2026 | 10-Q 4045

Payments of claims and surrenders benefitsbenefits, which constitute the vast majority of our expenses.expenses, declined in both the three- and six-month periods ended June 30, 2026.

Death claim benefits increased in the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in 2025 due to a higher volume of claims.claims, especially in our expanding Domestic Insurance business. While we maintain diligent oversight of claims activities, we expect athis rise in line with the expansion of our business. Additionally, as discussed above, the Venezuela earthquakes in June 2026 have had a direct impact on our International Insurance segment's claims experience. Although the impact is immaterial at this time, we have established a $0.5 million death claim liability given the number of people still missing as we expect the total impact to be determined over time as claims are reported and verified. We will continue to monitor developments related to this event and update our estimates as additional information becomes available. Many of these death claims are expected tomay be partially offset by our reinsurance coverage.

MarchJune 31,30, 2026 | 10-Q 4146

ManyAs we have previously disclosed, 2025 was the year in which the highest number of our endowment policies are reachingreached their contractual maturity dates and thus matured endowment benefits increased slightlydecreased in the three and six months ended MarchJune 31,30, 2026 compared to the prior year period.periods. Compared to peak endowment activity in 2025, we expect maturity benefits to continue to decrease throughout 2026.

Increase (Decrease) in Future Policy Benefit Reserves. Future policy benefit reserves reflect the liability established to provide for the future payment of policy benefits and thus they generally increase when we have a larger in force block of business due to higher sales and persistency (i.e., more policies on which we expect to pay future benefits) and decrease when we have lower sales and persistency. In the three and six months ended MarchJune 31,30, 2026, the change in future policy benefit reserves decreasedincreased compared to the prior year periodperiods despitefrom the increase in ourto inforce business,business drivenand bydue to the high level of reserves released in the prior year periods in connection with policyholder benefits payouts.

Policyholder Liability Remeasurement (Gain) Loss. Most of our products are long-duration contracts that provide a specified, fixed amount of insurance benefit in exchange for a fixed premium. When a policy is initially issued, we establish a "net premium ratio" ("NPR") using assumptions regarding expected premiums and policyholder benefit liabilities. On a quarterly basis, we review actual versus expected experience in such quarter, which is reported as a policyholder liability remeasurement gain (if better performance than assumptions) or loss (if lower performance than assumptions). Additionally, the best estimate assumptions are updated every year in our third quarter and are reflected on our income statement as a policyholder liability remeasurement gain or loss. In the three and six months ended MarchJune 31,30, 2026, the remeasurement (gain) loss was negatively affected by unfavorable experience in our International Insurance segment.

Commissions. Commission expenses are a cost of acquiring business, as commissions are the primary compensation paid to our independent agents for selling our products. First year commission rates are higher than renewal commission rates and thus commissions fluctuate directly in relation to first year sales. Although first year sales increased in the three and six months ended MarchJune 31,30, 2026 as compared to the same period in 2025, commissions decreased in the three and six months ended MarchJune 31,30, 2026 due to more sales of our single premium product offered to policyholders with maturing endowments in the International Insurance segment, which has a lower commission rate than other products.

Other General Expenses. Total general expenses increased $0.7$0.6 million and $1.3 million in the three and six months ended MarchJune 31,30, 20262026, respectively, as compared to the sameprior periodyear in 2025periods due to continued investment in supporting the growth of our business. We continue to work on managing controllable operating expenses while investing in growth initiatives.

Amortization of Deferred Policy Acquisition Costs. Our deferred policy acquisition costs (DAC) are amortized on a constant level basis over the expected term of the related contracts to approximate straight-line amortization. As described above, unfavorable persistency leads to accelerated amortization of deferred policy acquisition costs, which contributed to the increased costs in both the three- and six-month periods ended June 30, 2026.

Federal Income Tax. TaxWe expensereported increasedfederal income tax benefit in the currentthree periodmonths ended June 30, 2026 as compared to a federal income tax expense in the same prior year,year period, reflecting higherlower taxable income. See Part I, Item 1, Note 11. Income Taxes in the notes to our consolidated financial statements herein.

These segments are reported in accordance with U.S. GAAP. The Company evaluates profit and loss performance based on U.S. GAAP income (loss) before federal income tax for these segments. The Company's Otherother Non-Insurancenon-insurance Enterprisesoperations include non-insurance operations such as ITactivities and corporate-support functions, which are March 31, 2026 | 10-Q 42 includedpresented in the table presented below to properly reconcile the segment information with the consolidated financial statements of the Company.