Citizens, Inc. operates as an insurance holding company that serves the life insurance needs of individuals in the United States and internationally.
Through its international subsidiaries, the company provides insurance benefits to residents in almost 80 different countries.
Segments
The company operates through two business segments, Life Insurance and Home Service Insurance.
Life Insurance - Internationally, the company sell U.S. dollar-denominated whole life insurance, endowment and crit...
Citizens, Inc. operates as an insurance holding company that serves the life insurance needs of individuals in the United States and internationally.
Through its international subsidiaries, the company provides insurance benefits to residents in almost 80 different countries.
Segments
The company operates through two business segments, Life Insurance and Home Service Insurance.
Life Insurance - Internationally, the company sell U.S. dollar-denominated whole life insurance, endowment and critical illness policies to non-U.S. residents, located principally in Latin America and the Pacific Rim. In the U.S. the company primarily sell whole life final expense insurance and insurance with living benefits.
Home Service Insurance – the company sell affordable life insurance policies to lower-income households in Louisiana, Mississippi and Arkansas.
Principal Brands
Life Insurance
Internationally, the company conducts its Life Insurance segment business through CICA Life, A.I., a Puerto Rico company (CICA International). Domestically, the company conducts its Life Insurance segment business through CICA Life Insurance Company of America (CICA Domestic).
Home Service Insurance
The company conducts its Home Service Insurance segment through Security Plan Life Insurance Company (SPLIC) and Magnolia Guaranty Life Insurance Company (Magnolia).
As an insurance provider, the company collect premiums on an ongoing basis from its policyholders and invest the majority of the premiums to pay future benefits, including claims, maturities, surrenders and policyholder dividends. Accordingly, it derives its revenues principally from: (1) life insurance premiums, and (2) net investment income. In addition to paying and reserving for insurance benefits that the company pay to its policyholders and their beneficiaries.
Strategy
The company’s strategy is to grow first year sales to reverse the decline in its total revenue. It does this through the introduction of new products and by expanding its distribution.
Products. The company’s product development process focuses on its customer needs by developing new products tailored to its specific markets, working with partners to develop products tailored to their markets, and enhancing existing products. Its management team meets regularly to ensure it is bringing the right products to market at the right time.
Distribution. New products help its 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. It also focused on implementing sales promotions, and campaigns in order to align its sales consultant compensation opportunities with its premium revenue goals and its growth and retention initiatives.
Slow the decline of premiums through retention efforts. The company pay certain costs (e.g., commissions, underwriting, marketing expenses) to obtain new policyholders. First year commissions paid to its agents are significantly higher than renewal commissions. Accordingly, it is important to preserve policyholder relationships once it has issued a new policy. It is focused on improving the customer experience and policyholder retention.
Focus on execution.
Processes. The company is implementing process improvements and new technologies not only to speed up product delivery but also to improve the experience for both its policyholders and agents. It also implemented new processes and technologies to help its employees work more effectively and efficiently.
Status of New and Enhanced Products; Trends in Market Demand
Offering new and enhanced products and expanding its distribution are key to achieving its strategic goals. In 2024, the company issued the highest amount of insurance ever in a year by Citizens - $1.1 billion and achieved its highest ever total direct insurance in force - $5.2 billion.
Following the filing of 3 new products in its domestic markets in 2023, the company continued growing its domestic business in 2024:
It became licensed in 8 additional states. CICA Domestic is licensed in 43 states, up from 35 states at 2023 year-end and up from 32 states at 2022 year-end; and
It expanded its domestic distribution network, growing from over 2,000 agents on December 31, 2023, to over 5,000 agents on December 31, 2024.
This led to direct first year premium revenue growth of 106% in its Life Insurance segment.
It maintained its A.M. Best rating.
CICA Domestic is rated as a B++ with a ‘Very Strong’ balance sheet. The company believe this will help it expand its distribution networks and the appeal of its products to consumers.
The company introduced a new product in its international markets designed to allow policyholders with maturing endowments to use some or all of the funds to purchase a new life insurance policy. This led to increased first year premiums in the international business.
Life Insurance Segment
International Life Insurance
Products
CICA International issues primarily individual whole life insurance and endowment products in U.S. dollar-denominated amounts to non-U.S. residents. The products accumulate guaranteed cash values beginning in the first policy year and provide lifetime income guarantees for an insured or for surviving beneficiaries.
In addition to death benefits, the company’s 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). Its policyowners have several options with regards to the policy dividends and annual premium benefits, which include, among other things, electing to receive cash, crediting such amounts towards the payment of premiums on the policy, leaving such amounts on deposit with the company to accumulate at a specified interest rate or assigning them to a third party, Computershare Trust Company, N.A. (an affiliate of Computershare, Inc., its transfer agent), who facilitates its purchase of Class A common stock, through the Citizens, Inc. Stock Investment Plan (the ‘SIP’). The SIP is a direct stock purchase plan available to policyowners, shareholders, its employees and directors, independent consultants, and other potential investors through Computershare Trust Company, as administrator of the SIP. The company has registered the shares of Class A common stock issuable to participants under the SIP on a Form S-3 registration statement under the Securities Act of 1933, as amended, (the ‘Securities Act’) that is on file with the SEC. Computershare administers the SIP in accordance with the terms and conditions of the SIP, which is available on the Computershare website and as part of the company’s registration statement on file with the SEC.
Sales and Distribution
The company sell its international products through independent marketing agencies and consultants located primarily in Latin America and the Pacific Rim. As of December 31, 2024, it had insurance policies in force in almost 80 foreign countries and receive the majority of its 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 its total consolidated direct premiums in 2024.
Domestic Life Insurance
Over the last couple of years, the company began its ‘white label’ program to expand its distribution by expanding CICA Domestic's state licenses, developing new final expense and living benefit products, and filing these new products in multiple states. On December 31, 2024, the company had over 5,000 agents appointed to sell these products. As a result, in the past year, it has significantly expanded its domestic distribution in the Life Insurance segment and first year premiums have more than doubled in this segment compared to 2023. In 2024, domestic direct life insurance premiums comprised approximately 11% of total direct premiums in the Life Insurance segment and 9% of its consolidated total direct premiums. The average life insurance policy face amount issued in 2024 was approximately $10,800 per policy. Due to the lower risk associated with small face amount polices, the underwriting performed on these applications is limited.
Home Service Insurance Segment
The company operate its domestic Home Service Insurance segment through SPLIC and Magnolia. 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. Additionally, prior to June 30, 2023, it operated through Security Plan Fire Insurance Company (‘SPFIC’), a limited liability casualty company that issued small face value property insurance policies covering dwelling and contents, primarily in Louisiana. In 2024, Its Home Service Insurance segment comprised 24% of its total consolidated direct premiums.
The company’s Home Service Insurance products consist primarily of small face amount whole life, pre-need policies, which are designed to fund final expenses for the insured (e.g., funeral and burial costs) and critical illness products. The average life insurance policy face amount issued in 2024 was approximately $12,800 per policy. Due to the lower risk associated with small face amount polices, the underwriting performed on these applications is limited.
Reinsurance
The company follow the industry practice of reinsuring a portion of its insurance risks with unaffiliated reinsurers. 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. It participates in reinsurance activities in order to minimize exposure to significant risks, limit losses, and provide additional capacity for future growth. It enters 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 the company’s international life insurance business, it generally retains the first $100,000 of risk on any one life and reinsure the remainder of the risk. Therefore, under the terms of the reinsurance agreements, the reinsurers
Other Non-Insurance Enterprises
Other Non-Insurance Enterprises includes the results of its 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 its non-insurance subsidiary, Computing Technology, Inc., which primarily provides the company's corporate-support and information technology functions to the insurance operations.
Regulation
The insurance industry is heavily regulated, and both Citizens and its 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.
CICA International, its Puerto Rico domiciled subsidiary, is regulated by the Puerto Rico Office of the Insurance Commissioner (‘OIC’) and is licensed pursuant to the Puerto Rico Insurance Code (the ‘Insurance Code’). Although Puerto Rico is a U.S. territory, it has its own tax code and own insurance code, including a provision under its Insurance Code that allows CICA International to be established as an ‘international insurer’ and thus export insurance to international markets.
The company's primary regulator in the U.S. is the Colorado Division of Insurance, as both Citizens and CICA Domestic are Colorado companies. It is 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 it conduct insurance business. 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. 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.
While primarily regulated at the state level, the company's domestic business is subject to various federal laws and regulations. Some of the primary federal laws include:
USA Patriot Act and the Bank Secrecy Act, which require it 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 it to explain its information-sharing practices to the 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 its Class A common stock, reporting and disclosure requirements, and public company audit and internal control requirements.
History
Citizens, Inc. was founded in 1969.
The Analyst Price Target shows the analysts’ low, high, and average target at a glance.
