Citizens, Inc.

What they do

Citizens operates two segments: International Insurance, which sells U.S. dollar-denominated life, endowment and other financial products to non-U.S. residents mainly in Latin America and the Pacific Rim through CICA Life, A.I., a Puerto Rican insurer; and Domestic Insurance, which sells life and other financial products in the U.S. through CICA Life Insurance Company of America (CLOA), Security Plan Life Insurance Company (SPLIC) in Louisiana, Mississippi and Arkansas, and Magnolia Guaranty Life Insurance Company. Revenues come principally from life insurance premiums and net investment income, with premiums invested in available-for-sale fixed maturities (corporate bonds, municipal bonds and government obligation bonds) to fund future benefits. The company reports approximately $1.8 billion of assets and over $5.4 billion of direct insurance in force at December 31, 2025.

Revenue drivers

• International Insurance (CICA International) — U.S. dollar-denominated life, endowment and other financial products sold to non-U.S. residents in over 80 countries, principally Latin America and the Pacific Rim; Venezuela is described as one of the most significant markets in this segment. The segment has seen high surrenders and matured endowments in recent years, reducing the number of in-force policies paying renewal premiums.
• Domestic Insurance - final expense whole life (CLOA) — The majority of first year premiums in the Domestic Insurance segment come from final expense whole life products sold through CLOA, and the company has grown this business by developing new products and expanding distribution channels, producing significant increases in first year premiums in the last two years.
• Domestic Insurance - SPLIC — Security Plan Life Insurance Company issues final expense whole life policies throughout Louisiana, Mississippi and Arkansas intended to cover funeral and burial costs.
• Net investment income — One of two principal revenue sources; most invested assets are held in available-for-sale fixed maturity securities, primarily corporate, municipal and government obligation bonds, and spread-based product profitability depends on earning higher returns on invested assets than the interest credited to policyholders.

Recent performance

Second quarter 2026 total revenues were $60.4 million, down from $65.1 million a year earlier, primarily because investment related gains (losses) fell $3.9 million from market value changes in limited partnership assets that were not sold; adjusted total revenues, excluding investment related gains and losses, were $61.9 million versus $62.7 million. The company reported a net loss of $0.4 million for Q2 2026 compared with $6.5 million of net income in Q2 2025, and adjusted net income of $0.8 million versus $4.2 million. Total benefits and expenses rose to $60.9 million from $58.2 million as a $6.5 million decline in claims and surrenders from lower matured endowments was more than offset by an increase in future policy benefit reserves. Direct insurance premiums were $48.1 million in Q2 2026, up from $46.4 million in Q2 2025, and direct first year premiums grew year-over-year for a fifteenth consecutive quarter. Book value per Class A share was $4.64 at June 30, 2026, up from $4.56 a year earlier, and adjusted book value per Class A share, which excludes AOCI, was $6.44 versus $6.22.

Strategy

Management describes a strategy of offering insurance products in niche markets where it believes it can achieve competitive advantages, and of pursuing profitable growth through new product development, expanded distribution and a larger producing-agent network, which was up 6% since June 30, 2025. Domestically, the company is growing CLOA by developing new products and expanding distribution channels, which has driven significant increases in first year premiums over the last two years even as it incurs upfront acquisition costs such as agent commissions. The company entered into the RGA Agreement to help with some of the costs of new domestic sales, and management says targeted investments in its strategic roadmap are designed to drive growth in premiums and adjusted book value per share. The company's stated financial priorities center on premium growth, adjusted book value per share and long-term value for customers and shareholders.

Risks

• Venezuela earthquake exposure — Venezuela is one of the company's most significant International Insurance markets, and the June 2026 earthquakes may hinder policyholders' ability to pay premiums on time and drive higher-than-expected claims, with the full count of affected policyholders likely to emerge gradually.
• Matured endowments and surrenders shrinking the in-force block — A high level of surrenders and matured endowments in International Insurance over the last few years has reduced the number of policies remaining in force and paying renewal premiums, and other income tied to supplemental contracts is expected to decline as matured endowment benefits decline.
• Domestic persistency and rising reserves — Premium growth in Q2 2026 was constrained by unfavorable persistency in the Domestic Insurance segment, and total benefits and expenses rose as an increase in future policy benefit reserves more than offset lower claims and surrenders.
• Interest rates, inflation and reinsurance market tightening — The company cites unrealized losses in fixed-income portfolios from the rate rising cycle, inflation reducing customer discretionary income and potentially raising lapse rates, and tighter reinsurance markets that could increase its cost of reinsurance or limit availability.

Outlook

Management said it expects reduced levels of matured endowments during the remainder of 2026 and over the next few years as fewer of these contracts expire, after maturities peaked in 2025. The company also said it expects other income to decline as matured endowment benefits decline, as contractually expected. It pointed to an expanding sales force and newer product offerings as drivers of continued direct first year premium growth.