Citizens Swings to a Loss as Endowment Maturities Recede
Direct insurance premiums reached $48.1 million in the second quarter, the fifteenth straight year-over-year gain in first-year premium.
Citizens, Inc. (CIA), a diversified financial services company specializing in life, living benefits, and final expense insurance, reported a net loss of $0.4 million, or $0.01 a share, for the second quarter ended June 30, 2026, reversing $6.5 million of net income, or $0.13 a share, a year earlier.
The Austin-based insurer said the swing reflected investment-market fluctuations and a $7.7 million increase in future policy benefit reserves, which more than offset a $6.5 million drop in claims and surrenders as matured endowments fell. Those maturities had reached their highest level in 2025; the company expects reduced levels of maturities for the remainder of 2026 and over the next few years as fewer contracts expire.
Adjusted net income, which excludes investment-related gains and losses, was $0.8 million, or $0.01 a share, versus $4.2 million, or $0.08 a share, a year earlier.
Total revenues were $60.4 million, down from $65.1 million in the year-ago quarter. The $3.9 million decline was primarily due to investment-related gains (losses) on limited partnership assets that were not sold. Adjusted total revenues were $61.9 million, versus $62.7 million, on decreased other income. Other income is related to the issuance of supplemental contracts, and that income is expected to decline as matured endowment benefits also decline, as contractually expected.
Direct insurance premiums were $48.1 million, up from $46.4 million a year earlier, marking the fifteenth consecutive quarter of year-over-year growth in direct first-year premiums. Newer product offerings and expanded distribution in Domestic Insurance, as well as direct renewal premiums from a larger number of policies paying renewals, contributed to the increase. Premium growth was constrained by unfavorable persistency in Domestic Insurance, while high surrenders and matured endowments in International Insurance over recent years have reduced policies remaining in force.
The global network of producing agents was up 6% since June 30, 2025. Total direct insurance in force was $5.54 billion at June 30, 2026.
International Insurance direct insurance premiums were $28.9 million, down from $29.3 million a year earlier. Segment pre-tax income fell to $1.1 million from $7.1 million as claims and surrenders dropped to $25.9 million from $34.4 million.
Domestic Insurance direct insurance premiums were $19.2 million, up from $17.1 million a year earlier. Segment pre-tax income was $1.6 million, versus $2.6 million a year earlier. Claims and surrenders in the segment were $7.8 million, versus $5.8 million.
Total benefits and expenses were $60.9 million, up from $58.2 million a year earlier. The reserve increase was primarily due to increased business in Domestic Insurance and the comparatively large amount of reserves released in the prior-year period when the company paid out matured endowments.
Net investment income was $17.0 million, down from $17.2 million a year earlier on higher limited partnership investment expenses. Total investment income was $18.1 million, versus $17.9 million, due to investment-grade private placement credit investments, which are expected to generate higher returns. The average annualized yield on the investment portfolio was 4.41%, versus 4.50% a year earlier. The carrying value of the total investment portfolio was $1.4 billion at June 30, 2026, relatively the same as a year earlier.
Book value per Class A share was $4.64 on June 30, 2026, versus $4.56 a year earlier, the fourteenth consecutive quarter of year-over-year growth. Adjusted book value excluding accumulated other comprehensive income was $6.44, versus $6.22.
Cash and cash equivalents were $17.0 million, with no debt, at June 30, 2026. The company reported $1.7 million of net cash provided by operating activities in the quarter and expects positive net cash from operations for the remainder of 2026 as matured endowment benefit payments continue to decline. Total assets were $1.8 billion.