FORWARD-LOOKING STATEMENTS This section and other parts of this Quarterly Report on Form 10-Q ("Form 10-Q") contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions including those factors discussed in the "Risk Factors" contained in our Annual Report on Form 10-K for the year ended December 31, 2025, which is incorporated herein by reference. The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q, as well as in conjunction with MD&A and the consolidated financial statements and notes thereto that are included in our Form 10-K. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law. 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 incorporated by reference into, and should not be considered part of, this Form 10-Q. OBJECTIVE OF OUR MANAGEMENT'S DISCUSSION AND ANALYSIS 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 June 30, 2026 and the material changes in our results of operations for the three and six months ended June 30, 2026 as compared to the same periods in 2025. We also discuss in the MD&A any trends that we believe may materially affect our future operations or financial condition. OVERVIEW For over 55 years, Citizens has been fulfilling the needs of our policyholders and their families by providing insurance products that offer both living and death benefits. We conduct insurance related operations through our insurance subsidiaries, which provide benefits to policyholders globally. We specialize in offering primarily individual whole life insurance, endowment products and final expense insurance in niche markets where we believe we can optimize our competitive position. 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 – International Insurance and Domestic Insurance; and (2) net investment income. In addition to reserving for and paying insurance benefits 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. 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 June 30, 2026 | 10-Q 38 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS 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"). EVENTS THAT IMPACTED OUR BUSINESS From time-to-time, certain events may affect our business in ways that cause current or future results to differ from past results. See (1) the factors described in Part 1. Item 1A. Risk Factors in our Annual Report on Form 10-K for the period ended December 31, 2025 ("2025 Form 10-K"); and (2) the events described in Part 1. Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Events that Impacted Our Business" in the 2025 Form 10-K. Venezuela Earthquakes May Impact Insurance Premiums and Claims Venezuela represents one of our most significant markets in the International Insurance segment. The earthquakes that occurred in Venezuela in June 2026 may adversely affect this segment by hindering policyholders' capacity to submit timely premium payments and driving higher-than-expected claims activity. Due to the magnitude and breadth of the disaster, the full count of impacted policyholders will likely emerge gradually, as missed payments and submitted claims are tracked and confirmed. As an immediate measure, a $0.5 million death claim liability has been recorded. While current data does not point to a material effect on our operations, we will maintain diligent oversight and update our projections as new information becomes available. FINANCIAL HIGHLIGHTS Summary Q2: Net loss before federal income tax in the three months ended June 30, 2026 of $0.5 million decreased from income before federal income tax of $6.9 million in the same prior year period. The primary factors that drove this change were: •$3.9 million decline in investment related gains and losses primarily related to the change in fair market value for certain of our limited partnership investments that we have not sold; •$1.7 million increase in insurance benefits paid or provided due to: ◦$6.5 million decrease in claims and surrenders benefits due to the expected contractual decreases of matured endowments; more than offset by; and ◦$7.7 million increase in future policy benefit reserves primarily due to the increased business in our Domestic Insurance segment and the large amount of reserves released in the prior year period as we paid out matured endowment and released the corresponding reserves. YTD: Net income before federal income tax in the six months ended June 30, 2026 decreased to $1.8 million from $5.1 million in the same year period. The factors that drove this decrease were: •$1.1 million increase in insurance benefits paid or provided due to: ◦$6.9 million decrease in claims and surrenders as described above; more than offset by ◦$6.7 million increase in future policy benefit reserves as described above; and •$1.3 million increase in general operating expenses to support our growth initiatives. Financial Condition at June 30, 2026 •Total assets of $1.8 billion •Total direct insurance in force of $5.5 billion •Total investments of $1.4 billion; fixed maturity securities comprised 89% of total investments •No debt •Book value per share of Class A common stock of $4.64 June 30, 2026 | 10-Q 39 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS •Adjusted book value per share of Class A common stock of $6.441 •Diluted earnings per share of Class A common stock for the six months ended of $0.04 The Factors that Drive our Operating Results We see the following as the primary factors that drive our operating results. •Sales of our products and the premiums we receive from these sales •Investments and the income that they generate •Claims and surrenders •Operating expenses •Actuarial assumptions 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 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 Insurance segment to continue due to the anticipated volumes of endowment maturities being replaced by higher volumes of whole life products. Customer retention, or persistency, is another key factor influencing both revenue and profitability. Persistency refers to the extent to which policyholders keep their insurance policies in force over time rather than allowing them to lapse, surrender, or terminate. Persistency is a key measure because we spend a significant amount of money acquiring a policyholder upfront (e.g., commissions, underwriting, marketing) and expect to recover those costs over many years. A highly persistent block of business is one where policyholders continue paying premiums and maintaining coverage for many years. Unfavorable persistency is characterized by higher than expected policy lapses, surrenders, or terminations, which can negatively impact profitability by reducing the in-force block of business generating premiums, coupled with an increase in reserves resulting from less projected future premiums, as well as an acceleration in the recognition of deferred acquisition costs. We actively monitor persistency trends across our product lines and customer segments, and where unfavorable persistency is observed, we may take targeted retention actions; however, there can be no assurance that such efforts will fully offset the financial impact of higher than expected policy terminations. 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. 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 June 30, 2026 to $48.1 million and $92.0 million, respectively, from $46.4 million and $88.8 million in the three and six months ended June 30, 2025, respectively. This increase was driven by sales and renewal premiums in our Domestic Insurance segment. 1 Adjusted book value per of Class A common share is a non-GAAP measure that is calculated by dividing actual Class A common stockholders’ equity, excluding AOCI, by the number of Class A common shares outstanding at the end of the period. June 30, 2026 | 10-Q 40 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS First Year Premiums. Direct first year premiums increased 3% in the three and six months ended June 30, 2026 to $9.8 million and $18.7 million, respectively, from $9.4 million and $18.3 million in the three and six months ended June 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 June 30, 2026 increased primarily due to strong sales in prior 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 have lowered the number of policies remaining in force and paying renewal premiums. Investment Income. Our net investment income decreased slightly for the three and six months ended June 30, 2026 compared to the same prior year periods. Total investment income increased for the three and six months ended June 30, 2026 compared to the same prior year periods, as we have been investing in investment grade private placement fixed income securities, where we expect higher returns. However, this increase was offset by higher fund fees. June 30, 2026 | 10-Q 41 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS 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 graph below. Operating Expenses. Operating expenses are our second largest expense and thus also drive our operating results. Operating 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 $0.6 million and $1.3 million in the three and six months ended June 30, 2026, respectively, as compared to the prior year periods due to continued investment in supporting the growth of our business. 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. This is reflected in our Consolidated Statements of Operations and Comprehensive Income as increase (decrease) in future policy benefit reserves and policyholder liability remeasurement (gain) loss. 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 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS 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 $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. INSURANCE ISSUED AND INFORCE The amount of direct insurance, number of policies, and average face amounts for life policies issued during the periods indicated are shown below. Six Months Ended June 30, 2026 2025 Amount of Insurance Issued Number of Policies Issued Average Policy Face Amount Issued Amount of Insurance Issued Number of Policies Issued Average Policy Face Amount Issued International $ 199,814,892 1,793 $ 111,442 $ 229,176,095 1,970 $ 116,333 Domestic 319,795,393 37,692 8,484 288,086,170 30,277 9,515 Total $ 519,610,285 39,485 $ 517,262,265 32,247 In the first six months of 2026, we issued $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 six months ended June 30, 2026 as compared to the prior year period due to lower volume and product mix. During the first six 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. The amount of direct insurance inforce for the periods indicated is shown below. Overall insurance inforce has grown due to the issuance of new business, but growth has been and will be impacted by persistency rates, policy maturities and surrenders. June 30, 2026 | 10-Q 43 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS CONSOLIDATED RESULTS OF OPERATIONS REVENUES Our revenues are generated primarily by life insurance premiums and investment income from invested assets. Total revenues declined in the three months ended June 30, 2026 primarily due to the $3.9 million decline in investment related gains (losses) resulting from changes in market value of the underlying assets. The decline in other income also contributed to the decline in the three month-period, as well as the six months ended June 30, 2026. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Revenues: Premiums $ 43,703 43,388 83,641 83,185 Net investment income 17,031 17,169 34,335 34,546 Investment related gains (losses), net (1,494) 2,408 (510) (486) Other income 1,168 2,121 2,662 3,493 Total revenues $ 60,408 65,086 120,128 120,738 Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Direct premiums: First year $ 9,759 9,435 18,729 18,252 Renewal 38,346 36,966 73,308 70,499 Total direct premiums 48,105 46,401 92,037 88,751 Reinsurance (4,402) (3,013) (8,396) (5,566) Total premiums $ 43,703 43,388 83,641 83,185 Our first year direct premiums increased 3% in the three and six months ended June 30, 2026 compared to the same periods in 2025, due to sales and expanded distribution in our Domestic Insurance segment. Renewal premiums also increased from strong first year sales in prior 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 segment, which has lowered the number of policies paying renewal premiums in this segment. Reinsurance premiums ceded increased in the three and six months ended June 30, 2026 compared to the same periods 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. June 30, 2026 | 10-Q 44 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS Net Investment Income. A summary of our net investment income performance is as follows: Three Months Ended Six Months Ended June 30, June 30, (In thousands, except for %) 2026 2025 2026 2025 Gross investment income: Fixed maturity securities $ 16,054 15,538 32,412 30,966 Equity securities 12 72 23 147 Policy loans 1,226 1,297 2,493 2,666 Other long-term investments 762 1,041 1,583 2,205 Total investment income 18,054 17,948 36,511 35,984 Investment expenses (1,023) (779) (2,176) (1,438) Net investment income $ 17,031 17,169 34,335 34,546 Net investment income, annualized $ 68,670 69,093 Average invested assets, at amortized cost $ 1,555,692 1,534,610 Annualized yield on average invested assets 4.41 % 4.50 % 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 and our annualized yield are down for the three and six months ended June 30, 2026 as a result of higher investment expenses when compared to prior year periods. Investment Related Gains (Losses), Net. We recorded investment related losses of $1.5 million and $0.5 million during the three and six months ended June 30, 2026, respectively, compared to investment related gains of $2.4 million and losses of $0.5 million during the same prior year periods, respectively, primarily in our International Insurance segment. The gain or loss between periods is attributable to changes in the estimated fair market value of our limited partnership investments, which can vary considerably based on market conditions and underlying fund performance. Other Income. Other income is derived mainly 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. June 30, 2026 | 10-Q 45 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS BENEFITS AND EXPENSES Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders $ 33,751 40,220 73,404 80,318 Increase (decrease) in future policy benefit reserves 3,192 (4,554) (1,511) (8,200) Policyholder liability remeasurement (gain) loss 1,712 1,351 2,587 1,179 Policyholders' dividends 1,393 1,315 2,495 2,610 Total insurance benefits paid or provided 40,048 38,332 76,975 75,907 Commissions 11,352 11,409 22,176 22,684 Other general expenses 14,090 13,459 27,462 26,152 Capitalization of deferred policy acquisition costs (9,717) (9,720) (18,661) (18,569) Amortization of deferred policy acquisition costs 5,021 4,613 10,000 9,260 Amortization of cost of insurance acquired 143 79 331 177 Total benefits and expenses $ 60,937 58,172 118,283 115,611 Payments of claims and surrenders benefits, which constitute the vast majority of our expenses, declined in both the three- and six-month periods ended June 30, 2026. Claims and Surrenders. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Claims and surrenders: Death claim benefits $ 7,495 4,861 14,164 10,928 Surrender benefits 12,174 13,076 24,033 25,977 Endowment benefits 1,358 1,542 2,806 3,221 Matured endowment benefits 10,199 18,528 27,647 35,879 A&H and other policy benefits 2,525 2,213 4,754 4,313 Total claims and surrenders $ 33,751 40,220 73,404 80,318 Death claim benefits increased in the three and six months ended June 30, 2026 compared to the same periods in 2025 due to a higher volume of claims, especially in our expanding Domestic Insurance business. While we maintain diligent oversight of claims activities, we expect this 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 may be partially offset by our reinsurance coverage. June 30, 2026 | 10-Q 46 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS The vast majority of our surrender benefits payments are made on policies surrendered in our International Insurance segment. These policies are generally policies that have been in place for many years, built up cash values, and have little or no surrender charges remaining. Surrender benefits decreased 7% in the three and six months ended June 30, 2026 compared to the prior year periods and can vary from one period to another. We continue to focus efforts on retention initiatives. As we have previously disclosed, 2025 was the year in which the highest number of our endowment policies reached their contractual maturity dates and thus matured endowment benefits decreased in the three and six months ended June 30, 2026 compared to the prior year 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 June 30, 2026, the change in future policy benefit reserves increased compared to the prior year periods from the increase to inforce business and due 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 June 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 June 30, 2026 as compared to the same period in 2025, commissions decreased in the three and six months ended June 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 $0.6 million and $1.3 million in the three and six months ended June 30, 2026, respectively, as compared to the prior year periods due to continued investment in supporting the growth of our 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. 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. We reported federal income tax benefit in the three months ended June 30, 2026 as compared to a federal income tax expense in the same prior year period, reflecting lower taxable income. See Part I, Item 1, Note 11. Income Taxes in the notes to our consolidated financial statements herein. June 30, 2026 | 10-Q 47 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS SEGMENT OPERATIONS We operate in two business segments: International Insurance and Domestic Insurance. 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 other non-insurance operations include non-insurance activities and corporate-support functions, which are presented in the table presented below to reconcile segment information with the consolidated financial statements of the Company. The following table sets forth income (loss) before federal income tax by segment during the periods indicated. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Income (loss) before federal income tax: Segments: International Insurance $ 1,124 7,127 4,729 6,932 Domestic Insurance 1,614 2,628 2,865 3,186 Total segments 2,738 9,755 7,594 10,118 Other non-insurance operations (3,267) (2,841) (5,749) (4,991) Total income (loss) before federal income tax $ (529) 6,914 1,845 5,127 June 30, 2026 | 10-Q 48 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS INTERNATIONAL INSURANCE Detailed results of operations in the International Insurance segment for the periods indicated are as follows: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Revenues: Premiums $ 28,369 28,878 53,567 54,486 Net investment income 11,725 12,076 23,729 24,207 Investment related gains (losses), net (1,559) 2,834 (225) 68 Other income 1,161 2,113 2,648 3,478 Total revenues 39,696 45,901 79,719 82,239 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 25,907 34,399 58,018 67,433 Increase (decrease) in future policy benefit reserves 189 (6,965) (7,075) (13,821) Policyholder liability remeasurement (gain) loss 1,966 1,106 3,091 1,199 Policyholders' dividends 1,341 1,229 2,377 2,414 Total insurance benefits paid or provided 29,403 29,769 56,411 57,225 Commissions 4,892 5,185 9,381 10,288 Other general expenses 5,193 5,318 10,795 10,613 Capitalization of deferred policy acquisition costs (4,464) (4,960) (8,697) (9,747) Amortization of deferred policy acquisition costs 3,548 3,462 7,100 6,928 Total benefits and expenses 38,572 38,774 74,990 75,307 Income before federal income tax $ 1,124 7,127 4,729 6,932 In the three months ended June 30, 2026, premiums were $28.4 million, while our total insurance benefits paid or provided were $29.4 million. This reflects a $0.5 million decrease in premiums compared to the prior-year period with only a $0.4 million decrease in total insurance benefits paid or provided. The lower premiums are mainly due to the impact from the level of surrenders and matured endowments in prior years, which has lowered the number of policies remaining in force and paying renewal premiums in this segment. In the six months ended June 30, 2026, premiums received were $53.6 million, while our total insurance benefits paid or provided were $56.4 million. This reflects a $0.9 million decrease in premiums compared to the prior-year period with only a $0.8 million decrease in total insurance benefits paid or provided for the reasons described above. June 30, 2026 | 10-Q 49 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS Premium breakout is detailed below. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Direct premiums: First year $ 3,541 3,814 6,831 7,206 Renewal 25,344 25,492 47,636 48,179 Total direct premiums 28,885 29,306 54,467 55,385 Reinsurance (516) (428) (900) (899) Total premiums $ 28,369 28,878 53,567 54,486 Our International Insurance segment derives its premiums from policyholders residing in over 80 different countries across the globe. The following table sets forth our premiums by location for the three and six months ended June 30, 2026 and 2025. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Premiums: Colombia $ 6,752 6,461 13,577 13,015 Taiwan 3,047 3,167 6,453 7,053 Venezuela 3,159 3,322 6,337 6,672 Ecuador 3,268 3,366 6,264 6,566 Argentina 3,214 2,923 5,816 5,019 Other 9,291 9,121 18,569 19,032 Reinsurance and change in premium accruals (362) 518 (3,449) (2,871) Total premiums $ 28,369 28,878 53,567 54,486 Sales in Taiwan have been declining recently due to leadership succession related difficulties within our primary distribution agency in Taiwan and regulatory challenges. We are facing some headwinds in Venezuela that may affect premium revenues. Most notably, the Venezuela earthquakes of June 2026 may impair policyholders' ability to make timely premium payments. The strength of the U.S. dollar, combined with policyholders' difficulties in obtaining dollars, may further constrain their ability to remit premiums. The recent political instability may cause further decline in this business. We continue to closely monitor emerging trends in our Venezuela business. June 30, 2026 | 10-Q 50 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS Benefits and Expenses. Claims and surrender benefits breakout is detailed below. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Claims and surrenders: Death claim benefits $ 1,605 470 2,564 936 Surrender benefits 10,746 12,038 21,145 23,888 Endowment benefits 1,357 1,541 2,803 3,219 Matured endowment benefits 9,935 18,305 27,174 35,499 A&H and other policy benefits 2,264 2,045 4,332 3,891 Total claims and surrenders $ 25,907 34,399 58,018 67,433 As discussed, the majority of our claims and surrender benefits in this segment are related to payment of matured endowment and surrender benefits. Matured endowment benefits peaked in 2025 and has decreased in the three and six months ended June 30, 2026 compared to the prior year periods, as contractually expected. Surrender benefits are also a large component of this expense; often as surrender charges expire on endowments after certain periods, policyholders surrender their policies to access the cash value. Accordingly, as our block of maturing endowments decreases, surrenders will generally decrease as well. Increase (Decrease) in Future Policy Benefit Reserves. In the three and six months ended June 30, 2026, the change in future policy benefit reserves was higher compared to the prior year periods, reflecting reserve growth on our inforce block of business. In contrast, the prior year periods were impacted by a greater level of reserves released in connection with surrender benefits and higher matured endowment benefit payments. Commissions. Commissions decreased due to strong sales of our single premium product offered to policyholders with maturing endowments, which has a lower commission rate than other products. June 30, 2026 | 10-Q 51 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS DOMESTIC INSURANCE Detailed results of operations for the Domestic Insurance segment for the periods indicated are as follows: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Revenues: Premiums $ 15,334 14,510 30,074 28,699 Net investment income 5,102 4,919 10,215 9,978 Investment related gains (losses), net 67 (427) (278) (556) Other income 7 8 14 15 Total revenues 20,510 19,010 40,025 38,136 Benefits and expenses: Insurance benefits paid or provided: Claims and surrenders 7,844 5,821 15,386 12,885 Increase (decrease) in future policy benefit reserves 3,003 2,411 5,564 5,621 Policyholder liability remeasurement (gain) loss (254) 245 (504) (20) Policyholders' dividends 52 86 118 196 Total insurance benefits paid or provided 10,645 8,563 20,564 18,682 Commissions 6,460 6,224 12,795 12,396 Other general expenses 5,428 5,125 10,534 10,185 Capitalization of deferred policy acquisition costs (5,253) (4,760) (9,964) (8,822) Amortization of deferred policy acquisition costs 1,473 1,151 2,900 2,332 Amortization of cost of insurance acquired 143 79 331 177 Total benefits and expenses 18,896 16,382 37,160 34,950 Income before federal income tax $ 1,614 2,628 2,865 3,186 In the three months ended June 30, 2026, premiums in our Domestic Insurance segment were $15.3 million, while total insurance benefits paid or provided were $10.6 million. This reflects an increase in premiums of $0.8 million from the prior year period, while total insurance benefits paid or provided increased by $2.1 million. Premiums increased due to sustained first year sales and increase in renewal year premiums due to strong prior year sales, while the total benefits and expenses paid increased due to higher claims and surrenders paid. We expect death benefit payments to increase in the Domestic Insurance segment as our business has significantly grown in this segment over the last several years. In the six months ended June 30, 2026, premiums in our Domestic Insurance segment were $30.1 million, while total insurance benefits paid or provided were $20.6 million. This reflects an increase in premiums of $1.4 million from the prior year period, while total insurance benefits paid or provided increased by $1.9 million for the reasons described above. June 30, 2026 | 10-Q 52 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS Premium breakout is detailed below. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Direct premiums: First year $ 6,218 5,621 11,898 11,046 Renewal 13,002 11,474 25,672 22,320 Total direct premiums 19,220 17,095 37,570 33,366 Reinsurance (3,886) (2,585) (7,496) (4,667) Total premiums $ 15,334 14,510 30,074 28,699 Benefits and Expenses. Claims and surrender benefits breakout is detailed below. Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Claims and surrenders: Death claim benefits $ 5,890 4,391 11,600 9,992 Surrender benefits 1,428 1,038 2,888 2,089 Endowment benefits 1 1 3 2 Matured endowment benefits 264 223 473 380 A&H and other policy benefits 261 168 422 422 Total claims and surrenders $ 7,844 5,821 15,386 12,885 In our Domestic Insurance segment, the majority of claims and surrender benefits are death claim benefits. Death claim benefits increased in the three and six months ended June 30, 2026 compared to the same prior year periods due primarily to a higher volume of reported claims. The Company carefully tracks mortality experience as an important measure of performance, which can fluctuate from quarter-to-quarter based on reported claims. While we monitor claims activities, we expect a rise in claims corresponding with business expansion. A portion of these death claims should be offset by our reinsurance coverage. OTHER NON-INSURANCE OPERATIONS Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2026 2025 2026 2025 Loss before federal income tax $ (3,267) (2,841) (5,749) (4,991) This operating unit represents the administrative support functions for the insurance operations. Its revenues are primarily intercompany and have been eliminated in consolidation under U.S. GAAP, which typically results in a loss. Revenue in this operating unit consists primarily of net investment income and investment related gains or losses, while expenses consist of other general expenses related to corporate functions. For the three and six months ended June 30, 2026, the elevated loss before federal income tax compared to the same periods in 2025 is mainly due to higher general expenses to support our growth initiatives. June 30, 2026 | 10-Q 53 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS 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. Our cash and invested assets at June 30, 2026 were $1.4 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. The following table shows the carrying value of our investments by investment category and the percentage of each to total cash, cash equivalents and invested assets. Carrying Value June 30, 2026 December 31, 2025 (In thousands, except for %) Amount % Amount % Cash, cash equivalents and invested assets: Fixed maturity securities: U.S. Treasury and U.S. Government-sponsored enterprises $ 6,886 0.5 % $ 7,008 0.5 % Corporate 877,445 60.5 866,870 59.2 States and political subdivisions (1) 258,385 17.8 268,792 18.3 Mortgage-backed (2) 107,189 7.4 111,982 7.6 Asset-backed 32,155 2.2 33,209 2.3 Total fixed maturity securities 1,282,060 88.4 1,287,861 87.9 Cash and cash equivalents 16,960 1.2 22,976 1.6 Other investments: Policy loans 66,146 4.6 67,455 4.6 Equity securities 1,233 0.1 1,356 0.1 Other long-term investments 83,260 5.7 85,439 5.8 Total cash, cash equivalents and invested assets $ 1,449,659 100.0 % $ 1,465,087 100.0 % (1) Includes $97.6 million and $106.9 million of securities guaranteed by third parties at June 30, 2026 and December 31, 2025, respectively. (2) Includes $90.4 million and $101.1 million of U.S. Government-sponsored enterprises at June 30, 2026 and December 31, 2025, respectively. The carrying value of the Company’s fixed maturity securities investment portfolio at June 30, 2026 was $1.28 billion compared to $1.29 billion at December 31, 2025. 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 June 30, 2026 did not materially change from December 31, 2025 – the weighted average was “A” at both dates. Cash and cash equivalents decreased as of June 30, 2026 from December 31, 2025 and fluctuate from period to period primarily due to the timing of operating and investing activities. As of June 30, 2026, other long-term investments decreased by $2.2 million compared to December 31, 2025, primarily due to the impact of changes in the fair market value of our limited partnership holdings partially offset by additional funding of our commitments of other investments. Obligations of States and Political Subdivisions 20% of the Company’s fixed maturity securities investment portfolio at June 30, 2026 consists of municipal bonds, which are securities that are obligations of states and political subdivisions. A portion of these municipal bonds June 30, 2026 | 10-Q 54 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS includes third-party guarantees, which enhance a bond's credit rating. A presentation of our municipal bonds by credit rating and third-party guarantee is below. General Obligation Special Revenue Other Total % Based on Amortized Cost (In thousands, except for %) Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost State and political subdivision fixed maturity securities including third-party guarantees: AAA $ 12,001 11,826 12,621 12,941 3,326 3,235 27,948 28,002 9.8 % AA 36,775 37,065 112,086 128,256 4,879 5,106 153,740 170,427 59.8 A 2,733 3,021 62,328 71,217 2,130 2,117 67,191 76,355 26.8 BBB 91 93 6,993 7,692 — — 7,084 7,785 2.7 BB and other 2,422 2,534 — — — — 2,422 2,534 0.9 Total $ 54,022 54,539 194,028 220,106 10,335 10,458 258,385 285,103 100.0 % State and political subdivision fixed maturity securities excluding third-party guarantees: AA $ 30,638 30,615 38,410 44,201 1,022 1,067 70,070 75,883 26.6 A 10,276 10,573 75,274 84,205 2,948 3,093 88,498 97,871 34.3 BBB 2,393 2,569 20,447 21,976 46 55 22,886 24,600 8.6 BB and other 10,715 10,782 59,897 69,724 6,319 6,243 76,931 86,749 30.5 Total $ 54,022 54,539 194,028 220,106 10,335 10,458 258,385 285,103 100.0 % The table below shows the categories in which we held investments in special revenue municipal bonds that were greater than 10% of the fair value of our total municipal bond portfolio at June 30, 2026. (In thousands, except for %) Fair Value Amortized Cost % of Total Fair Value Utilities $ 41,721 45,620 16.1 % Education 38,720 44,843 15.0 Transportation 32,549 39,517 12.6 The Company's municipal bond portfolio consists of bonds from states and political subdivisions in many states; however, as of June 30, 2026, municipal bonds from issuers in Texas and California comprised 22% and 18%, respectively, of the portfolio. There were no other states or individual issuer holdings equal to or greater than 10% of the total municipal bond portfolio as of June 30, 2026. June 30, 2026 | 10-Q 55 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in Texas at June 30, 2026. General Obligation Special Revenue Other Total (In thousands) Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Texas state and political subdivision fixed maturity securities including third-party guarantees: AAA $ 11,499 11,325 2,461 2,496 — — 13,960 13,821 AA 13,043 13,031 17,137 19,699 46 55 30,226 32,785 A — — 10,858 14,730 — — 10,858 14,730 BBB — — 2,948 2,920 — — 2,948 2,920 Total $ 24,542 24,356 33,404 39,845 46 55 57,992 64,256 Texas state and political subdivision fixed maturity securities excluding third-party guarantees: AA $ 20,224 20,041 5,006 5,549 — — 25,230 25,590 A 3,092 3,090 12,966 14,889 — — 16,058 17,979 BBB — — 6,183 6,282 46 55 6,229 6,337 BB and other 1,226 1,225 9,249 13,125 — — 10,475 14,350 Total $ 24,542 24,356 33,404 39,845 46 55 57,992 64,256 The table below represents the Company's detailed exposure to municipal fixed maturity securities by credit rating in California at June 30, 2026. General Obligation Special Revenue Other Total (In thousands) Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost California state and political subdivision fixed maturity securities including third-party guarantees: AA $ 2,123 2,122 32,543 38,798 4,523 4,744 39,189 45,664 A 1,323 1,650 5,929 6,807 — — 7,252 8,457 Total $ 3,446 3,772 38,472 45,605 4,523 4,744 46,441 54,121 California state and political subdivision fixed maturity securities excluding third-party guarantees: AA $ 452 446 5,111 6,767 712 760 6,275 7,973 A 2,994 3,326 18,757 21,800 1,819 1,976 23,570 27,102 BB and other — — 14,604 17,038 1,992 2,008 16,596 19,046 Total $ 3,446 3,772 38,472 45,605 4,523 4,744 46,441 54,121 IMPAIRMENT CONSIDERATIONS RELATED TO INVESTMENTS IN FIXED MATURITY SECURITIES We analyze our available-for-sale ("AFS") fixed maturity securities that are experiencing unrealized losses to ascertain if there is an expectation of credit related impairments. We did not record any credit valuation allowances on fixed maturity securities in either of the three and six months ended June 30, 2026 or 2025. Gross unrealized losses on AFS fixed maturity securities amounted to $162.6 million as of June 30, 2026 and $154.3 million as of December 31, 2025. This increase in gross unrealized losses during 2026 was a result of the increase in average market interest rates in 2026 as compared to 2025. June 30, 2026 | 10-Q 56 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS Information on both unrealized and realized gains and losses by category is set forth in Part I, Item 1, Note 3. Investments of the notes to our consolidated financial statements herein. LIQUIDITY AND CAPITAL RESOURCES Below are our primary capital resources (based on carrying value of each) as of the periods indicated. (In thousands) June 30, 2026 December 31, 2025 Fixed maturity securities $ 1,282,060 1,287,861 Cash and cash equivalents 16,960 22,976 Liquidity refers to a company's ability to generate sufficient cash flows to meet the needs of its operations. 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 manage our insurance operations in order to ensure that we have stable and reliable sources of cash flows to meet our obligations. In the six months ended June 30, 2026, our operations provided $1.7 million of net cash. We anticipate meeting our short-term and long-term cash needs with cash generated by our insurance operations and from our invested assets. 89% of our investments consist of marketable fixed maturity securities classified as available-for-sale that could be readily converted to cash for liquidity needs. Additionally, we may raise capital by selling shares in our SIP (as defined below) and we may also access our Credit Facility if needed (also described below). Citizens had no debt as of June 30, 2026. We have traditionally also had significant cash flows from both scheduled and unscheduled investment security maturities, redemptions, and prepayments. These cash flows, for the most part, are reinvested in new investments. The investing activities fluctuate from period to period due to timing of securities activities such as calls, maturities and reinvestment of those funds. We purchased $53.4 million of fixed maturity securities and we also used $1.5 million to purchase other long-term investments in the first six months of 2026. PARENT COMPANY LIQUIDITY AND CAPITAL RESOURCES Citizens is a holding company and has minimal operations of its own. Our assets consist of the capital stock of our subsidiaries, cash and investments. 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. The ability to make payments to the holding company is limited by applicable laws of the U.S. states of domicile and by the Puerto Rico Office of Commissioner of Insurance, which all subject insurance operations to significant regulatory restrictions. These laws and regulations require, among other things, that our insurance subsidiaries maintain minimum solvency or premium to surplus ratio requirements, which limit the amount of dividends that can be paid to the holding company. The regulations also require approval of our service agreements with the applicable regulatory authority in order to prevent insurance subsidiaries from moving large amounts of cash to the less regulated holding company. In addition to the above-mentioned sources of cash, we offer a Stock Investment Plan ("SIP"), which allows investors, policyholders, independent contractors and agents, employees and directors to directly purchase our stock. At our option, purchases of stock under the SIP can be made from newly issued or treasury stock, rather than in the open market, in which case, we can raise capital by selling our shares. We renewed our Credit Facility with Regions Bank on May 3, 2024 for an additional three years. See Part I, Item 1, Note 8. Commitments and Contingencies in the notes to our consolidated financial statements herein for a June 30, 2026 | 10-Q 57 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS description of the Credit Facility. The Credit Facility provides additional liquidity to the Company for short-term or longer-term needs. We have not borrowed any money under the Credit Facility. INSURANCE COMPANY SUBSIDIARY LIQUIDITY AND CAPITAL RESOURCES The liquidity requirements of our insurance operations are primarily met by premium revenues, investment income and proceeds from investment maturities, calls or sales. Primary cash needs are for payments of policyholder benefits, investment purchases, and operating expenses. We manage our insurance operations in order to ensure that we have stable and reliable sources of cash flow to meet our obligations. 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 increases in first year direct premiums (i.e., new sales) in our Domestic Insurance segment in the last couple years. When selling new policies, we incur upfront policy acquisition costs, such as agent commission payments. While historically, cash flows from our operations have been sufficient to meet our cash needs, we entered into a coinsurance reinsurance agreement with RGA to help with some of the costs, and the insurance subsidiaries also have the AFS fixed maturity investment portfolio available to create additional cash flows if required. 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. We believe that we have adequate capital resources and ability to obtain additional capital if needed to support the short-term and longer-term liquidity requirements of our insurance operations. See Contractual Obligations and Off-balance Sheet Arrangements in our 2025 Form 10-K and below for a discussion of known and estimated cash needs. Cash flow projections and cash flow tests under various market interest rate scenarios are performed annually to assist in evaluating liquidity needs and adequacy. Trends, Demands and Restrictions on our Uses of Cash Payments of benefits for claims and surrenders and commissions are our largest use of cash. There are three primary components of payments of benefits: matured endowments, surrenders and death claims. 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. Approximately 18% of the endowments in force will mature in the next five years, totaling approximately 5% of our in force business as of June 30, 2026. 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. Meeting these distributions could require the Company to sell its investments at inopportune times to pay policyholder withdrawals. Alternatively, if the policyholders were to leave the money on deposit with the Company at interest, our profitability could be impacted if the product guaranteed rate is higher than the market rate we are earning on our investments. 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. Surrender benefits, which have been high the last several years, slightly decreased during 2025 and continued to decrease the first six months of 2026. 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. We believe that surrenders have been high due to other reasons, including the loss of one of our biggest distributors in Venezuela in 2018, increasing interest rates, which may encourage policyholders to seek higher rates of return in different investment products, post-pandemic beliefs that life insurance may not be as important as it was during the pandemic, and inflationary pressures, which may cause policyholders to want the cash values of their policies due to decreased purchasing power elsewhere. To the June 30, 2026 | 10-Q 58 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS extent that early surrenders are higher than expected, our use of cash could be higher than expected. We continue to monitor surrenders and early withdrawals and focus on our retention initiatives and efforts to retain cash when policyholders surrender their policies. Our liquidity is also negatively impacted with high matured endowments and surrenders, as they lead to lower renewal premiums. Death Claims. Our product pricing assumes a certain mortality rate and thus a primary liquidity concern is the risk of higher than expected mortality experience. Commissions. Another significant use of cash is payment of commissions. 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. Because of this, another liquidity concern is that rapid growth in first year sales of these products creates a significant increase in commission payments. 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 coinsurance agreement with RGA in the second quarter of 2024 and elected to cede 50% of our final expense business to RGA. 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 I, Item 1, Note 8. Commitments and Contingencies, as well as Legal Proceedings - Trade Secret Lawsuit in our 2025 Form 10-K for a discussion of the trade secret lawsuit, which could negatively impact our cash if we do not succeed in our appeal. Regulatory Restrictions on our Use of Cash As discussed above, we are subject to regulatory capital requirements that could affect the Company’s ability to access capital from our insurance operations or cause the Company to have to put additional cash in our insurance subsidiaries. Our domestic companies are subject to minimum capital requirements set by the NAIC in the form of risk-based capital ("RBC"). RBC considers the type of business written by an insurance company, the quality of its assets, and various other aspects of an insurance company's business to develop a minimum level of capital called "Authorized Control Level Risk-Based Capital". This level of capital is then compared to an adjusted statutory capital that includes capital and surplus as reported under statutory accounting principles, plus certain investment reserves. Should the ratio of adjusted statutory capital to control level RBC fall below 200% for our domestic companies, a series of remedial actions by the affected company would be required. 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 an RBC level above 350%. At June 30, 2026, our domestic insurance subsidiaries were above the required minimum RBC levels and CLOA was above 350%. 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. 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 June 30, 2026, 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. June 30, 2026 | 10-Q 59 Table of Contents CITIZENS, INC. MANAGEMENT'S DISCUSSION & ANALYSIS CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS As of June 30, 2026, we have no additional contractual obligations or off-balance sheet arrangements other than those described in Part I, Item 1, Note 8. Commitments and Contingencies in the notes to our consolidated financial statements herein and in Part II, Item 7, Contractual Obligations and Off-Balance Sheet Arrangements in our 2025 Form 10-K. We do not utilize special purpose entities as investment vehicles, nor are there any such entities in which we have an investment that engage in speculative activities of any nature, and we do not use such investments to hedge our investment positions. CRITICAL ACCOUNTING POLICIES We believe that the accounting policies set forth in Part I, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - "Critical Accounting Policies" and Part IV, Item 15, Note 1. Summary of Significant Accounting Policies of our consolidated financial statements in our 2025 Form 10-K continue to describe the significant judgments and estimates used in the preparation of our consolidated financial statements.