000002409012/312021Q3FALSEP3Y0M0D00000240902021-01-012021-09-30xbrli:shares0000024090us-gaap:CommonClassAMember2021-10-290000024090us-gaap:CommonClassBMember2021-10-29iso4217:USD00000240902021-09-3000000240902020-12-31iso4217:USDxbrli:shares0000024090us-gaap:CommonClassAMember2020-12-310000024090us-gaap:CommonClassAMember2021-09-300000024090us-gaap:CommonClassBMember2021-09-300000024090us-gaap:CommonClassBMember2020-12-3100000240902021-07-012021-09-3000000240902020-07-012020-09-3000000240902020-01-012020-09-300000024090us-gaap:CommonClassAMember2021-07-012021-09-300000024090us-gaap:CommonClassAMember2020-07-012020-09-300000024090us-gaap:CommonClassAMember2021-01-012021-09-300000024090us-gaap:CommonClassAMember2020-01-012020-09-300000024090us-gaap:CommonClassBMember2021-07-012021-09-300000024090us-gaap:CommonClassBMember2020-07-012020-09-300000024090us-gaap:CommonClassBMember2021-01-012021-09-300000024090us-gaap:CommonClassBMember2020-01-012020-09-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-12-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-12-310000024090us-gaap:RetainedEarningsMember2020-12-310000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000024090us-gaap:TreasuryStockMember2020-12-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-01-012021-03-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2021-01-012021-03-310000024090us-gaap:RetainedEarningsMember2021-01-012021-03-310000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000024090us-gaap:TreasuryStockMember2021-01-012021-03-3100000240902021-01-012021-03-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-03-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2021-03-310000024090us-gaap:RetainedEarningsMember2021-03-310000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000024090us-gaap:TreasuryStockMember2021-03-3100000240902021-03-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-04-012021-06-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2021-04-012021-06-300000024090us-gaap:RetainedEarningsMember2021-04-012021-06-300000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000024090us-gaap:TreasuryStockMember2021-04-012021-06-3000000240902021-04-012021-06-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-06-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2021-06-300000024090us-gaap:RetainedEarningsMember2021-06-300000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000024090us-gaap:TreasuryStockMember2021-06-3000000240902021-06-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-07-012021-09-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2021-07-012021-09-300000024090us-gaap:RetainedEarningsMember2021-07-012021-09-300000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000024090us-gaap:TreasuryStockMember2021-07-012021-09-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-09-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2021-09-300000024090us-gaap:RetainedEarningsMember2021-09-300000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300000024090us-gaap:TreasuryStockMember2021-09-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-12-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2019-12-310000024090us-gaap:RetainedEarningsMember2019-12-310000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000024090us-gaap:TreasuryStockMember2019-12-3100000240902019-12-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-01-012020-01-010000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-01-012020-01-010000024090us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-01-012020-01-010000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-01-010000024090us-gaap:TreasuryStockMember2020-01-012020-01-010000024090srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-01-012020-01-010000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-01-012020-03-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-01-012020-03-310000024090us-gaap:RetainedEarningsMember2020-01-012020-03-310000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310000024090us-gaap:TreasuryStockMember2020-01-012020-03-3100000240902020-01-012020-03-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-03-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-03-310000024090us-gaap:RetainedEarningsMember2020-03-310000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310000024090us-gaap:TreasuryStockMember2020-03-3100000240902020-03-310000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-04-012020-06-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-04-012020-06-300000024090us-gaap:RetainedEarningsMember2020-04-012020-06-300000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300000024090us-gaap:TreasuryStockMember2020-04-012020-06-3000000240902020-04-012020-06-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-06-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-06-300000024090us-gaap:RetainedEarningsMember2020-06-300000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300000024090us-gaap:TreasuryStockMember2020-06-3000000240902020-06-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-07-012020-09-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-07-012020-09-300000024090us-gaap:RetainedEarningsMember2020-07-012020-09-300000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000024090us-gaap:TreasuryStockMember2020-07-012020-09-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-09-300000024090us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-09-300000024090us-gaap:RetainedEarningsMember2020-09-300000024090us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300000024090us-gaap:TreasuryStockMember2020-09-3000000240902020-09-300000024090us-gaap:UnusualOrInfrequentItemDomain2021-04-012021-04-010000024090us-gaap:AccountingStandardsUpdate201613Member2020-01-01xbrli:pure0000024090cia:LifeInsuranceBusinessSegmentMember2021-07-012021-09-300000024090cia:HomeServiceInsuranceSegmentMember2021-07-012021-09-300000024090cia:OtherNonInsuranceEnterpriseSegmentMember2021-07-012021-09-300000024090cia:LifeInsuranceBusinessSegmentMember2021-01-012021-09-300000024090cia:HomeServiceInsuranceSegmentMember2021-01-012021-09-300000024090cia:OtherNonInsuranceEnterpriseSegmentMember2021-01-012021-09-300000024090cia:LifeInsuranceBusinessSegmentMember2020-07-012020-09-300000024090cia:HomeServiceInsuranceSegmentMember2020-07-012020-09-300000024090cia:OtherNonInsuranceEnterpriseSegmentMember2020-07-012020-09-300000024090cia:LifeInsuranceBusinessSegmentMember2020-01-012020-09-300000024090cia:HomeServiceInsuranceSegmentMember2020-01-012020-09-300000024090cia:OtherNonInsuranceEnterpriseSegmentMember2020-01-012020-09-300000024090us-gaap:RetainedEarningsMember2021-01-012021-09-300000024090us-gaap:RetainedEarningsMember2020-01-012020-09-3000000240902021-04-1500000240902021-04-152021-04-150000024090us-gaap:USTreasurySecuritiesMember2021-09-300000024090us-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-09-300000024090us-gaap:USStatesAndPoliticalSubdivisionsMember2021-09-300000024090cia:CorporateDebtSecuritiesFinancialSectorMember2021-09-300000024090cia:CorporateDebtSecurityConsumerSectorMember2021-09-300000024090cia:CorporateDebtSecurityEnergySectorMember2021-09-300000024090cia:CorporateDebtSecurityAllOtherSectorMember2021-09-300000024090us-gaap:ResidentialMortgageBackedSecuritiesMember2021-09-300000024090us-gaap:AssetBackedSecuritiesMember2021-09-300000024090us-gaap:ForeignGovernmentDebtSecuritiesMember2021-09-300000024090us-gaap:USTreasurySecuritiesMember2020-12-310000024090us-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310000024090us-gaap:USStatesAndPoliticalSubdivisionsMember2020-12-310000024090cia:CorporateDebtSecuritiesFinancialSectorMember2020-12-310000024090cia:CorporateDebtSecurityConsumerSectorMember2020-12-310000024090cia:CorporateDebtSecurityEnergySectorMember2020-12-310000024090cia:CorporateDebtSecurityAllOtherSectorMember2020-12-310000024090us-gaap:CommercialMortgageBackedSecuritiesMember2020-12-310000024090us-gaap:ResidentialMortgageBackedSecuritiesMember2020-12-310000024090us-gaap:AssetBackedSecuritiesMember2020-12-310000024090us-gaap:ForeignGovernmentDebtSecuritiesMember2020-12-310000024090us-gaap:EquityFundsMember2021-09-300000024090us-gaap:EquityFundsMember2020-12-310000024090us-gaap:FixedIncomeFundsMember2021-09-300000024090us-gaap:FixedIncomeFundsMember2020-12-310000024090us-gaap:CommonStockMember2021-09-300000024090us-gaap:CommonStockMember2020-12-310000024090us-gaap:NonredeemablePreferredStockMember2021-09-300000024090us-gaap:NonredeemablePreferredStockMember2020-12-310000024090cia:CIA_NonredeemablePreferredStockFundMemberMember2021-09-300000024090cia:CIA_NonredeemablePreferredStockFundMemberMember2020-12-310000024090us-gaap:EquitySecuritiesMember2021-07-012021-09-300000024090us-gaap:EquitySecuritiesMember2021-01-012021-09-300000024090us-gaap:EquitySecuritiesMember2020-07-012020-09-300000024090us-gaap:EquitySecuritiesMember2020-01-012020-09-300000024090us-gaap:DebtSecuritiesMember2020-07-012020-09-300000024090us-gaap:DebtSecuritiesMember2020-01-012020-09-300000024090us-gaap:DebtSecuritiesMember2021-01-012021-09-300000024090us-gaap:DebtSecuritiesMember2021-07-012021-09-300000024090us-gaap:DebtSecuritiesMember2021-09-300000024090us-gaap:DebtSecuritiesMember2020-12-310000024090us-gaap:LandBuildingsAndImprovementsMember2021-07-012021-09-300000024090us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel1Member2021-09-300000024090us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasuryAndGovernmentMember2021-09-300000024090us-gaap:USTreasuryAndGovernmentMember2021-09-300000024090us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel1Member2021-09-300000024090us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel3Member2021-09-300000024090us-gaap:USStatesAndPoliticalSubdivisionsMember2021-09-300000024090us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2021-09-300000024090us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2021-09-300000024090us-gaap:CorporateDebtSecuritiesMember2021-09-300000024090us-gaap:FairValueInputsLevel1Memberus-gaap:ResidentialMortgageBackedSecuritiesMember2021-09-300000024090us-gaap:ResidentialMortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:FairValueInputsLevel3Memberus-gaap:ResidentialMortgageBackedSecuritiesMember2021-09-300000024090us-gaap:ResidentialMortgageBackedSecuritiesMember2021-09-300000024090us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Member2021-09-300000024090us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Member2021-09-300000024090us-gaap:AssetBackedSecuritiesMember2021-09-300000024090us-gaap:FairValueInputsLevel1Memberus-gaap:ForeignGovernmentDebtSecuritiesMember2021-09-300000024090us-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:FairValueInputsLevel3Memberus-gaap:ForeignGovernmentDebtSecuritiesMember2021-09-300000024090us-gaap:ForeignGovernmentDebtSecuritiesMember2021-09-300000024090us-gaap:FairValueInputsLevel1Memberus-gaap:DebtSecuritiesMember2021-09-300000024090us-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMember2021-09-300000024090us-gaap:FairValueInputsLevel3Memberus-gaap:DebtSecuritiesMember2021-09-300000024090us-gaap:DebtSecuritiesMember2021-09-300000024090us-gaap:EquityFundsMemberus-gaap:FairValueInputsLevel1Member2021-09-300000024090us-gaap:EquityFundsMemberus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:FairValueInputsLevel3Memberus-gaap:EquityFundsMember2021-09-300000024090us-gaap:EquityFundsMember2021-09-300000024090us-gaap:FairValueInputsLevel1Memberus-gaap:FixedIncomeFundsMember2021-09-300000024090us-gaap:FixedIncomeFundsMemberus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:FairValueInputsLevel3Memberus-gaap:FixedIncomeFundsMember2021-09-300000024090us-gaap:FixedIncomeFundsMember2021-09-300000024090us-gaap:CommonStockMemberus-gaap:FairValueInputsLevel1Member2021-09-300000024090us-gaap:CommonStockMemberus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:CommonStockMemberus-gaap:FairValueInputsLevel3Member2021-09-300000024090us-gaap:CommonStockMember2021-09-300000024090us-gaap:FairValueInputsLevel1Memberus-gaap:NonredeemablePreferredStockMember2021-09-300000024090us-gaap:FairValueInputsLevel2Memberus-gaap:NonredeemablePreferredStockMember2021-09-300000024090us-gaap:FairValueInputsLevel3Memberus-gaap:NonredeemablePreferredStockMember2021-09-300000024090us-gaap:NonredeemablePreferredStockMember2021-09-300000024090us-gaap:FairValueInputsLevel1Membercia:CIA_NonredeemablePreferredStockFundMemberDomain2021-09-300000024090cia:CIA_NonredeemablePreferredStockFundMemberDomainus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:FairValueInputsLevel3Membercia:CIA_NonredeemablePreferredStockFundMemberDomain2021-09-300000024090cia:CIA_NonredeemablePreferredStockFundMemberDomain2021-09-300000024090us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel1Member2021-09-300000024090us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel3Member2021-09-300000024090us-gaap:EquitySecuritiesMember2021-09-300000024090us-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueInputsLevel1Member2021-09-300000024090us-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:FairValueInputsLevel3Memberus-gaap:OtherLongTermInvestmentsMember2021-09-300000024090us-gaap:OtherLongTermInvestmentsMember2021-09-300000024090us-gaap:FairValueInputsLevel1Member2021-09-300000024090us-gaap:FairValueInputsLevel2Member2021-09-300000024090us-gaap:FairValueInputsLevel3Member2021-09-300000024090us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel1Member2020-12-310000024090us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasuryAndGovernmentMember2020-12-310000024090us-gaap:USTreasuryAndGovernmentMember2020-12-310000024090us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel1Member2020-12-310000024090us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueInputsLevel3Member2020-12-310000024090us-gaap:USStatesAndPoliticalSubdivisionsMember2020-12-310000024090us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-12-310000024090us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-12-310000024090us-gaap:CorporateDebtSecuritiesMember2020-12-310000024090us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-12-310000024090us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:CommercialMortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-12-310000024090us-gaap:CommercialMortgageBackedSecuritiesMember2020-12-310000024090us-gaap:FairValueInputsLevel1Memberus-gaap:ResidentialMortgageBackedSecuritiesMember2020-12-310000024090us-gaap:ResidentialMortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:FairValueInputsLevel3Memberus-gaap:ResidentialMortgageBackedSecuritiesMember2020-12-310000024090us-gaap:ResidentialMortgageBackedSecuritiesMember2020-12-310000024090us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-12-310000024090us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:AssetBackedSecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-12-310000024090us-gaap:AssetBackedSecuritiesMember2020-12-310000024090us-gaap:FairValueInputsLevel1Memberus-gaap:ForeignGovernmentDebtSecuritiesMember2020-12-310000024090us-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:FairValueInputsLevel3Memberus-gaap:ForeignGovernmentDebtSecuritiesMember2020-12-310000024090us-gaap:ForeignGovernmentDebtSecuritiesMember2020-12-310000024090us-gaap:FairValueInputsLevel1Memberus-gaap:DebtSecuritiesMember2020-12-310000024090us-gaap:FairValueInputsLevel2Memberus-gaap:DebtSecuritiesMember2020-12-310000024090us-gaap:FairValueInputsLevel3Memberus-gaap:DebtSecuritiesMember2020-12-310000024090us-gaap:DebtSecuritiesMember2020-12-310000024090us-gaap:EquityFundsMemberus-gaap:FairValueInputsLevel1Member2020-12-310000024090us-gaap:EquityFundsMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:FairValueInputsLevel3Memberus-gaap:EquityFundsMember2020-12-310000024090us-gaap:EquityFundsMember2020-12-310000024090us-gaap:FairValueInputsLevel1Memberus-gaap:FixedIncomeFundsMember2020-12-310000024090us-gaap:FixedIncomeFundsMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:FairValueInputsLevel3Memberus-gaap:FixedIncomeFundsMember2020-12-310000024090us-gaap:FixedIncomeFundsMember2020-12-310000024090us-gaap:CommonStockMemberus-gaap:FairValueInputsLevel1Member2020-12-310000024090us-gaap:CommonStockMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:CommonStockMemberus-gaap:FairValueInputsLevel3Member2020-12-310000024090us-gaap:CommonStockMember2020-12-310000024090us-gaap:FairValueInputsLevel1Memberus-gaap:NonredeemablePreferredStockMember2020-12-310000024090us-gaap:FairValueInputsLevel2Memberus-gaap:NonredeemablePreferredStockMember2020-12-310000024090us-gaap:FairValueInputsLevel3Memberus-gaap:NonredeemablePreferredStockMember2020-12-310000024090us-gaap:NonredeemablePreferredStockMember2020-12-310000024090us-gaap:FairValueInputsLevel1Membercia:CIA_NonredeemablePreferredStockFundMemberDomain2020-12-310000024090cia:CIA_NonredeemablePreferredStockFundMemberDomainus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:FairValueInputsLevel3Membercia:CIA_NonredeemablePreferredStockFundMemberDomain2020-12-310000024090cia:CIA_NonredeemablePreferredStockFundMemberDomain2020-12-310000024090us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel1Member2020-12-310000024090us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel3Member2020-12-310000024090us-gaap:EquitySecuritiesMember2020-12-310000024090us-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueInputsLevel1Member2020-12-310000024090us-gaap:OtherLongTermInvestmentsMemberus-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:FairValueInputsLevel3Memberus-gaap:OtherLongTermInvestmentsMember2020-12-310000024090us-gaap:OtherLongTermInvestmentsMember2020-12-310000024090us-gaap:FairValueInputsLevel1Member2020-12-310000024090us-gaap:FairValueInputsLevel2Member2020-12-310000024090us-gaap:FairValueInputsLevel3Member2020-12-310000024090us-gaap:PrivateEquityFundsMember2021-07-012021-09-300000024090us-gaap:PrivateEquityFundsMember2021-01-012021-09-300000024090us-gaap:PrivateEquityFundsMember2020-01-012020-09-300000024090us-gaap:PrivateEquityFundsMember2020-07-012020-09-300000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMembercia:PrivateEquityFundsMiddleMarketMember2021-09-300000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMembercia:PrivateEquityFundsMiddleMarketMemberus-gaap:UnfundedLoanCommitmentMember2021-09-300000024090cia:PrivateEquityFundsMiddleMarketMember2021-01-012021-09-300000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMembercia:PrivateEquityFundsMiddleMarketMember2020-12-310000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMembercia:PrivateEquityFundsMiddleMarketMemberus-gaap:UnfundedLoanCommitmentMember2020-12-310000024090cia:PrivateEquityFundsMiddleMarketMember2020-01-012020-12-310000024090cia:PrivateEquityFundsTermLiquidityFacilityMemberus-gaap:FairValueMeasuredAtNetAssetValuePerShareMember2021-09-300000024090cia:PrivateEquityFundsTermLiquidityFacilityMemberus-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:UnfundedLoanCommitmentMember2021-09-300000024090cia:PrivateEquityFundsTermLiquidityFacilityMember2021-01-012021-09-300000024090cia:PrivateEquityFundsTermLiquidityFacilityMemberus-gaap:FairValueMeasuredAtNetAssetValuePerShareMember2020-12-310000024090cia:PrivateEquityFundsTermLiquidityFacilityMemberus-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:UnfundedLoanCommitmentMember2020-12-310000024090cia:PrivateEquityFundsTermLiquidityFacilityMember2020-01-012020-12-310000024090cia:PrivateEquityFundsLateStageGrowthMemberus-gaap:FairValueMeasuredAtNetAssetValuePerShareMember2021-09-300000024090cia:PrivateEquityFundsLateStageGrowthMemberus-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:UnfundedLoanCommitmentMember2021-09-300000024090cia:PrivateEquityFundsLateStageGrowthMember2021-01-012021-09-300000024090cia:PrivateEquityFundsLateStageGrowthMemberus-gaap:FairValueMeasuredAtNetAssetValuePerShareMember2020-12-310000024090cia:PrivateEquityFundsLateStageGrowthMemberus-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:UnfundedLoanCommitmentMember2020-12-310000024090cia:PrivateEquityFundsLateStageGrowthMember2020-01-012020-12-310000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMembercia:PrivateEquityFundsInfrastructureMember2021-09-300000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:UnfundedLoanCommitmentMembercia:PrivateEquityFundsInfrastructureMember2021-09-300000024090cia:PrivateEquityFundsInfrastructureMember2021-01-012021-09-300000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMembercia:PrivateEquityFundsInfrastructureMember2020-12-310000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:UnfundedLoanCommitmentMembercia:PrivateEquityFundsInfrastructureMember2020-12-310000024090cia:PrivateEquityFundsInfrastructureMember2020-01-012020-12-310000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:PrivateEquityFundsMember2021-09-300000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:UnfundedLoanCommitmentMemberus-gaap:PrivateEquityFundsMember2021-09-300000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:PrivateEquityFundsMember2020-12-310000024090us-gaap:FairValueMeasuredAtNetAssetValuePerShareMemberus-gaap:UnfundedLoanCommitmentMemberus-gaap:PrivateEquityFundsMember2020-12-310000024090us-gaap:PrivateEquityFundsMember2021-09-300000024090us-gaap:PrivateEquityFundsMember2020-12-310000024090us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-09-300000024090us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-09-300000024090us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310000024090us-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310000024090us-gaap:CarryingReportedAmountFairValueDisclosureMembersrt:OtherPropertyMember2021-09-300000024090us-gaap:EstimateOfFairValueFairValueDisclosureMembersrt:OtherPropertyMember2021-09-300000024090us-gaap:CarryingReportedAmountFairValueDisclosureMembersrt:OtherPropertyMember2020-12-310000024090us-gaap:EstimateOfFairValueFairValueDisclosureMembersrt:OtherPropertyMember2020-12-310000024090us-gaap:CarryingReportedAmountFairValueDisclosureMembersrt:SingleFamilyMember2021-09-300000024090us-gaap:EstimateOfFairValueFairValueDisclosureMembersrt:SingleFamilyMember2021-09-300000024090us-gaap:CarryingReportedAmountFairValueDisclosureMembersrt:SingleFamilyMember2020-12-310000024090us-gaap:EstimateOfFairValueFairValueDisclosureMembersrt:SingleFamilyMember2020-12-3100000240902020-01-012020-12-310000024090srt:OtherPropertyMember2021-01-012021-09-300000024090srt:OtherPropertyMember2021-09-300000024090srt:SingleFamilyMember2021-01-012021-09-300000024090srt:SingleFamilyMember2020-01-012020-12-310000024090srt:SingleFamilyMember2021-09-300000024090us-gaap:CarryingReportedAmountFairValueDisclosureMembersrt:ChiefExecutiveOfficerMember2020-12-3100000240902018-07-012018-07-010000024090us-gaap:UnfundedLoanCommitmentMember2021-09-3000000240902021-05-052021-05-050000024090us-gaap:RevolvingCreditFacilityMember2021-05-050000024090us-gaap:BaseRateMember2021-05-050000024090us-gaap:FederalFundsEffectiveSwapRateMember2021-01-012021-09-300000024090us-gaap:LondonInterbankOfferedRateLiborSwapRateMember2021-01-012021-09-300000024090us-gaap:RevolvingCreditFacilityMember2021-09-300000024090us-gaap:LondonInterbankOfferedRateLIBORMember2021-05-050000024090us-gaap:LondonInterbankOfferedRateLIBORMember2021-01-012021-09-300000024090us-gaap:RevolvingCreditFacilityMember2021-07-012021-09-3000000240902021-04-122021-04-12
                                                
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
COMMISSION FILE NUMBER:  000-16509

CIA-20210930_G1.JPG
CITIZENS, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0755371
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

11815 Alterra Pkwy, Floor 15, Austin, TX 78758
(Current Address)

Registrant's telephone number, including area code: (512) 837-7100
Securities registered pursuant to Section 12(b) of the Act
Class A Common Stock CIA  NYSE
(Title of each class) (Trading symbol(s)) (Name of each exchange on which registered)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer Accelerated filer Emerging growth company
Non-accelerated filer Smaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No
As of October 29, 2021, the Registrant had 49,789,339 shares of Class A common stock outstanding and 0 shares of Class B common stock outstanding.


                                                



























THIS PAGE INTENTIONALLY LEFT BLANK


                                                
CIA-20210930_G2.JPG

TABLE OF CONTENTS
Page Number
Part I. FINANCIAL INFORMATION
  Item 1.  
   
2
4
5
   
7
   
9
  Item 2.
30
  Item 3.
52
  Item 4.
52
Part II. OTHER INFORMATION  
  Item 1.
54
Item 1A.
55
  Item 2.
55
  Item 3.
55
  Item 4.
55
  Item 5.
55
  Item 6.
56


September 30, 2021 | 10-Q 1


Table of Contents                                            
PART I.  FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS
CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
(In thousands) September 30, 2021 December 31, 2020
Assets (Unaudited)
Investments:    
Fixed maturity securities available-for-sale, at fair value (amortized cost: $1,324,307 and $1,321,487 in 2021 and 2020, respectively)
$ 1,456,694  1,489,383 
Equity securities, at fair value 22,335  22,102 
Policy loans 80,102  83,318 
Real estate held-for-sale   2,571 
Other long-term investments (portion measured at fair value $32,651 and $11,923 in 2021 and 2020, respectively; less allowance for losses of $11 in 2021 and 2020)
34,013  27,294 
Total investments 1,593,144  1,624,668 
Cash and cash equivalents 30,087  34,131 
Accrued investment income 15,625  16,137 
Receivable for securities 10,000  — 
Reinsurance recoverable 13,724  5,753 
Deferred policy acquisition costs 115,093  104,913 
Cost of insurance acquired 10,865  11,541 
Goodwill and other intangible assets 13,567  13,570 
Property and equipment, net 14,524  16,312 
Due premiums 9,369  11,309 
Other assets (less allowance for losses of $223 and $297 in 2021 and 2020, respectively)
5,500  5,086 
Total assets $ 1,831,498  1,843,420 

See accompanying Notes to Consolidated Financial Statements.

September 30, 2021 | 10-Q 2


Table of Contents                                            

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets, Continued
(In thousands, except share amounts) September 30, 2021 December 31, 2020
Liabilities and Stockholders' Equity (Unaudited)
Liabilities:    
Policy liabilities:    
Future policy benefit reserves:    
Life insurance $ 1,266,745  1,246,423 
Annuities 83,223  78,304 
Accident and health 779  761 
Dividend accumulations 36,588  33,336 
Premiums paid in advance 42,132  40,605 
Policy claims payable 23,478  13,206 
Other policyholders' funds 28,064  22,447 
Total policy liabilities 1,481,009  1,435,082 
Commissions payable 2,197  2,572 
Current federal income tax payable 45,771  43,916 
Deferred federal income tax payable 9,162  9,564 
Payable for securities in process of settlement 560  5,265 
Other liabilities 27,768  46,076 
Total liabilities 1,566,467  1,542,475 
Commitments and contingencies (Note 7)
Stockholders' Equity:    
Common stock:
Class A, no par value, 100,000,000 shares authorized, 52,765,837 and 52,654,016 shares issued and outstanding in 2021 and 2020, respectively, including shares in treasury of 3,135,738 in 2021 and 2020
263,160  262,869 
Class B, no par value, 2,000,000 shares authorized, 1,001,714 shares issued and outstanding in 2021 and 2020, including shares in treasury of 1,001,714 in 2021
3,184  3,184 
Accumulated deficit (83,702) (82,352)
Accumulated other comprehensive income:    
Net unrealized gains (losses) on fixed maturity securities, net of tax 102,490  128,255 
Treasury stock, at cost (20,101) (11,011)
Total stockholders' equity 265,031  300,945 
Total liabilities and stockholders' equity $ 1,831,498  1,843,420 

See accompanying Notes to Consolidated Financial Statements.


September 30, 2021 | 10-Q 3


Table of Contents                                            

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except per share amounts)
2021 2020 2021 2020
Revenues:  
Premiums:    
Life insurance $ 43,239  42,732  122,319  122,863 
Accident and health insurance 311  236  945  745 
Property insurance (223) 1,140  1,921  3,313 
Net investment income 15,454  14,997  46,018  45,081 
Realized investment gains (losses), net 2,126  527  7,277  669 
Other income 677  193  2,145  1,217 
Total revenues 61,584  59,825  180,625  173,888 
Benefits and Expenses:    
Insurance benefits paid or provided:    
Claims and surrenders 31,816  32,958  91,701  87,161 
Increase in future policy benefit reserves 10,888  4,158  22,407  21,866 
Policyholders' dividends 1,650  1,450  4,431  4,011 
Total insurance benefits paid or provided 44,354  38,566  118,539  113,038 
Commissions 9,115  7,712  26,073  22,279 
Other general expenses 10,542  19,391  33,427  42,003 
Capitalization of deferred policy acquisition costs (6,026) (4,892) (16,798) (13,632)
Amortization of deferred policy acquisition costs 6,043  6,760  18,300  18,940 
Amortization of cost of insurance acquired 283  459  959  1,228 
Total benefits and expenses 64,311  67,996  180,500  183,856 
Income (loss) before federal income tax (2,727) (8,171) 125  (9,968)
Federal income tax expense (benefit) 72  (256) 1,475  2,558 
Net income (loss) (2,799) (7,915) (1,350) (12,526)
Per Share Amounts:    
Basic and diluted earnings (losses) per share of Class A common stock (0.06) (0.16) (0.03) (0.25)
Basic and diluted earnings (losses) per share of Class B common stock   (0.07) (0.01) (0.12)
Other Comprehensive Income (Loss):    
Unrealized gains (losses) on fixed maturity securities:    
Unrealized holding gains (losses) arising during period (1,564) 15,128  (25,706) 52,707 
Reclassification adjustment for losses (gains) included in net income (loss) (102) (91) 46 
Unrealized gains (losses) on fixed maturity securities, net (1,666) 15,130  (25,797) 52,753 
Income tax expense (benefit) on unrealized gains (losses) on fixed maturity securities (271) 1,020  (32) 4,067 
Other comprehensive income (loss) (1,395) 14,110  (25,765) 48,686 
Total comprehensive income (loss) $ (4,194) 6,195  (27,115) 36,160 
See accompanying Notes to Consolidated Financial Statements.

September 30, 2021 | 10-Q 4


Table of Contents                                            

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(Unaudited)
  Common Stock Accumulated
deficit
Accumulated other
comprehensive
 income (loss)
Treasury
stock
Total
Stock-holders'
equity
(In thousands) Class A Class B
Balance at December 31, 2020 $ 262,869  3,184  (82,352) 128,255  (11,011) 300,945 
Comprehensive income (loss):
Net income (loss)     (3,573)     (3,573)
Unrealized investment gains (losses), net       (56,518)   (56,518)
Total comprehensive income (loss)     (3,573) (56,518)   (60,091)
Stock-based compensation (14)         (14)
Balance at March 31, 2021 262,855  3,184  (85,925) 71,737  (11,011) 240,840 
Comprehensive income (loss):            
Net income (loss)     5,022      5,022 
Unrealized investment gains (losses), net       32,148    32,148 
Total comprehensive income (loss)     5,022  32,148    37,170 
Acquisition of treasury stock         (9,090) (9,090)
Stock-based compensation 205          205 
Balance at June 30, 2021 263,060  3,184  (80,903) 103,885  (20,101) 269,125 
Comprehensive income (loss):            
Net income (loss)     (2,799)     (2,799)
Unrealized investment gains (losses), net       (1,395)   (1,395)
Total comprehensive income (loss)     (2,799) (1,395)   (4,194)
Stock-based compensation 100          100 
Balance at September 30, 2021 $ 263,160  3,184  (83,702) 102,490  (20,101) 265,031 

See accompanying Notes to Consolidated Financial Statements.

September 30, 2021 | 10-Q 5


Table of Contents                                            

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Stockholders' Equity, Continued
(Unaudited)
  Common Stock Accumulated
deficit
Accumulated other
comprehensive
income (loss)
Treasury
stock
Total
Stock-holders'
equity
(In thousands) Class A Class B
Balance at December 31, 2019 $ 261,515  3,184  (70,969) 77,117  (11,011) 259,836 
Accounting standards adopted January 1, 2020 —  —  (395) —  —  (395)
Comprehensive income (loss):
Net income (loss) —  —  (3,584) —  —  (3,584)
Unrealized investment gains (losses), net —  —  —  (40,070) —  (40,070)
Total comprehensive income (loss) —  —  (3,584) (40,070) —  (43,654)
Stock-based compensation (53) —  —  —  —  (53)
Balance at March 31, 2020 261,462  3,184  (74,948) 37,047  (11,011) 215,734 
Comprehensive income (loss):            
Net income (loss) —  —  (1,027) —  —  (1,027)
Unrealized investment gains (losses), net —  —  —  74,647  —  74,647 
Total comprehensive income (loss) —  —  (1,027) 74,647  —  73,620 
Stock-based compensation 439  —  —  —  —  439 
Balance at June 30, 2020 261,901  3,184  (75,975) 111,694  (11,011) 289,793 
Comprehensive income (loss):            
Net income (loss) —  —  (7,915) —  —  (7,915)
Unrealized investment gains (losses), net —  —  —  14,110  —  14,110 
Total comprehensive income (loss) —  —  (7,915) 14,110  —  6,195 
Stock-based compensation 766  —  —  —  —  766 
Balance at September 30, 2020 $ 262,667  3,184  (83,890) 125,804  (11,011) 296,754 

See accompanying Notes to Consolidated Financial Statements.


September 30, 2021 | 10-Q 6


Table of Contents                                            

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)

Nine Months Ended September 30,
(In thousands)
2021 2020
Cash flows from operating activities:  
Net income (loss) $ (1,350) (12,526)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Realized investment (gains) losses on sale of investments and other assets (7,277) (669)
Net deferred policy acquisition costs 1,502  5,308 
Amortization of cost of insurance acquired 959  1,228 
Depreciation 954  771 
Amortization of premiums and discounts on investments 4,065  6,616 
Stock-based compensation 406  2,020 
Deferred federal income tax expense (benefit) (370) (386)
Change in:    
Accrued investment income 512  1,133 
Reinsurance recoverable (7,971) (8,274)
Due premiums 1,940  1,434 
Future policy benefit reserves 22,292  21,654 
Other policyholders' liabilities 20,668  15,364 
Federal income tax payable 1,855  3,165 
Commissions payable and other liabilities (14,342) 145 
Other, net (73) (2,967)
Net cash provided by (used in) operating activities 23,770  34,016 
Cash flows from investing activities:    
Purchases of fixed maturity securities, available-for-sale (62,809) (187,267)
Sales of fixed maturity securities, available-for-sale 8,238  17,524 
Maturities and calls of fixed maturity securities, available-for-sale 40,395  154,873 
Purchases of equity securities   (4,473)
Principal payments on mortgage loans 7 
Funding of mortgage loans (1,000) — 
(Increase) decrease in policy loans, net 3,216  (1,957)
Sales of other long-term investments and real estate 20,893  — 
Purchases of other long-term investments (27,514) (19,115)
Sales of property and equipment 14  — 
Purchases of property and equipment (847) (124)
Maturities of short-term investments   1,300 
Net cash provided by (used in) investing activities (19,407) (39,230)
See accompanying Notes to Consolidated Financial Statements.

September 30, 2021 | 10-Q 7


CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(Unaudited)
Nine Months Ended September 30,
(In thousands)
2021 2020
Cash flows from financing activities:    
Annuity deposits $ 6,901  5,542 
Annuity withdrawals (5,855) (3,403)
Acquisition of treasury stock (9,090) — 
Other (363) (869)
Net cash provided by (used in) financing activities (8,407) 1,270 
Net increase (decrease) in cash and cash equivalents (4,044) (3,944)
Cash and cash equivalents at beginning of year 34,131  46,205 
Cash and cash equivalents at end of period $ 30,087  42,261 


SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:

During the nine months ended September 30, 2021 and 2020, various fixed maturity issuers exchanged securities with book values of $10.9 million and $5.3 million, respectively, for securities of equal value.

The Company had $9.4 million net unsettled security trades at September 30, 2021 and $6.0 million at September 30, 2020.

The Company recognized right-of-use assets of $12.0 million in exchange for new operating lease liabilities during the nine months ended September 30, 2020. None were recognized during the nine months ended September 30, 2021.


See accompanying Notes to Consolidated Financial Statements.


September 30, 2021 | 10-Q 8



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(1) FINANCIAL STATEMENTS

BASIS OF PRESENTATION AND CONSOLIDATION

The consolidated financial statements include the accounts and operations of Citizens, Inc. ("Citizens" or the "Company"), a Colorado corporation, and its wholly-owned subsidiaries, CICA Life Insurance Company of America ("CICA"), CICA Life Ltd. ("CICA Ltd."), Citizens National Life Insurance Company ("CNLIC"), Security Plan Life Insurance Company ("SPLIC"), Security Plan Fire Insurance Company ("SPFIC"), Magnolia Guaranty Life Insurance Company ("MGLIC") and Computing Technology, Inc. ("CTI"). All significant inter-company accounts and transactions have been eliminated. Citizens and its wholly-owned subsidiaries are collectively referred to as the "Company", "we", "us" or "our".

The consolidated balance sheets as of September 30, 2021, the consolidated statements of operations and comprehensive income (loss) and stockholders' equity for the three and nine months ended September 30, 2021 and September 30, 2020 and the consolidated statements of cash flows for the nine months ended September 30, 2021 and September 30, 2020 have been prepared by the Company without audit and are not subject to audit. In the opinion of management, all normal and recurring adjustments to present fairly the financial position, results of operations, and changes in cash flows at September 30, 2021 and for comparative periods have been made. The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission ("SEC").  Accordingly, the consolidated financial statements do not include all the information and footnotes required for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 ("Form 10-K").  Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

Our Life Insurance segment operates through CICA Ltd., CICA and CNLIC. Our international life insurance business, which operates through CICA Ltd., issues U.S. dollar-denominated endowment contracts internationally, which are principally accumulation contracts that incorporate an element of life insurance protection and ordinary whole life insurance in U.S. dollar-denominated amounts sold to non-U.S. residents.  These contracts are designed to provide a fixed amount of insurance coverage over the life of the insured and may utilize rider benefits to provide additional increasing or decreasing coverage and annuity benefits to enhance accumulations. Our domestic life insurance business, which operates through CICA and CNLIC, primarily focused on living needs and provided benefits toward accumulating financial benefits for the policyowners throughout the Midwest and southern U.S. until they ceased most domestic sales beginning January 1, 2017. We have recently developed a whole life insurance product and have begun selling this product in Florida in 2021.

Our Home Service Insurance segment operates through our subsidiaries SPLIC, MGLIC and SPFIC, and focuses on the life insurance needs of the middle- and lower-income markets, primarily in Louisiana, Mississippi and Arkansas.  Our products in this segment consist primarily of small face amount ordinary whole life, industrial life and pre-need policies, which are designed to fund final expenses for the insured, primarily consisting of funeral and burial costs as well as property insurance policies, which are named peril property policies covering dwelling and contents.

CTI provides data processing systems and services to the Company.

We converted the small block of ordinary whole life policies of CNLIC from a legacy platform to our new actuarial valuation software solution which provides enhanced modeling capabilities as of April 1, 2021. The impact of this system conversion reflected in the accompanying consolidated financial statements as of and for the nine months ended September 30, 2021 was an increase to pretax income of $0.7 million consisting of a reduced increase in future policy benefit reserves of $0.8 million and increased amortization of deferred policy acquisition costs of $0.1 million.

September 30, 2021 | 10-Q 9



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Significant estimates include those used in the evaluation of credit allowances on fixed maturity securities, actuarially determined assets and liabilities and assumptions, tests of goodwill impairment and valuation allowance on deferred tax assets.  Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the consolidated financial statements.

SIGNIFICANT ACCOUNTING POLICIES

For a description of our significant accounting policies, see Part IV, Item 15, Note 1. Summary of Significant Accounting Policies in the notes to our consolidated financial statements included in our Form 10-K, which should be read in conjunction with these accompanying consolidated financial statements.

(2) ACCOUNTING PRONOUNCEMENTS

ACCOUNTING STANDARDS RECENTLY ADOPTED

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments-Credit Losses (Topic 326), with the main objective to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The ASU requires a financial asset (or a group of financial assets) measured at amortized cost to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the increases or decreases of expected credit losses that have taken place during the period. Credit losses on available-for-sale ("AFS") fixed maturity securities should be measured in a manner similar to current U.S. GAAP; however, the credit losses are recorded through an allowance for credit losses rather than as a write-down. This approach is an improvement to prior U.S. GAAP because an entity will be able to record reversals of credit losses (in situations in which the estimate of credit losses declines) in current period net income, which in turn should align the income statement recognition of credit losses with the reporting period in which changes occur. Prior U.S. GAAP prohibited reflecting those improvements in current-period earnings. The Company adopted this standard effective January 1, 2020 using the modified retrospective approach. The adoption resulted in an increase in accumulated deficit of $0.4 million related to agents' debit balance collectability.


September 30, 2021 | 10-Q 10



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
ACCOUNTING STANDARDS NOT YET ADOPTED

In August 2018, the FASB issued ASU No. 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. This ASU amends four key areas of the accounting and impacts disclosures for long-duration insurance and investment contracts:

Requires updated assumptions for liability measurement. Assumptions used to measure the liability for traditional insurance contracts, which are typically determined at contract inception, will now be reviewed at least annually, and, if there is a change, updated, with the effect recorded in net income;
Standardizes the liability discount rate. The liability discount rate will be a market-observable discount rate (upper-medium grade fixed-income instrument yield), with the effect of rate changes recorded in other comprehensive income;
Provides greater consistency in measurement of market risk benefits. The two previous measurement models have been reduced to one measurement model (fair value), resulting in greater uniformity across similar market-based benefits and better alignment with the fair value measurement of derivatives used to hedge capital market risk;
Simplifies amortization of deferred acquisition costs ("DAC"). Previous earnings-based amortization methods have been replaced with a more level amortization basis; and
Requires enhanced disclosures. The new disclosures include rollforwards and information about significant assumptions and the effects of changes in those assumptions.

For calendar-year public companies, the changes will be effective on January 1, 2023, however, early adoption is permitted. While it is not possible to estimate the expected impact of adoption at this time, the Company believes there is a reasonable possibility that implementation of ASU No. 2018-12 may result in a material impact on our consolidated statements of stockholders' equity and future earnings patterns.

No other new accounting pronouncement issued or effective during the year had, or is expected to have, a material impact on our consolidated financial statements.

(3) SEGMENT INFORMATION

The Company has two reportable segments:  Life Insurance and Home Service Insurance.  

Our Life Insurance segment primarily issues endowment contracts, which are principally accumulation contracts that incorporate an element of life insurance protection and ordinary whole life insurance, to non-U.S. residents through CICA Ltd.  These contracts are designed to provide a fixed amount of insurance coverage over the life of the insured and may utilize rider benefits to provide additional coverage and annuity benefits to enhance accumulations. CICA and CNLIC issued ordinary whole life, credit life and disability and accident and health related policies, throughout the Midwest and southern U.S. until they ceased most domestic sales beginning January 1, 2017. We restarted marketing domestically in Florida in 2021.

Our Home Service Insurance segment operates through our subsidiaries SPLIC, MGLIC and SPFIC, and focuses on the life insurance needs of the middle- and lower-income markets in Louisiana, Mississippi and Arkansas.  Our policies are sold and serviced through funeral homes and independent agents who sell policies, collect premiums and service policyholders.  To a lesser extent, our Home Service Insurance segment also sells property insurance policies in Louisiana.

The Company also operates other non-insurance portions of the Company ("Other Non-Insurance Enterprises"), which primarily include the Company’s IT and Corporate-support functions that are included in the tables presented. The Company's Other Non-Insurance Enterprises are the only reportable difference between segments and consolidated operations.


September 30, 2021 | 10-Q 11



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accounting policies of the reportable segments and Other Non-Insurance Enterprises are presented in accordance with U.S. GAAP and are the same as those used in the preparation of the consolidated financial statements.  The Company evaluates profit and loss performance based on U.S. GAAP income before federal income taxes for its two reportable segments.

Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Three Months Ended September 30, 2021
(In thousands)
Revenues:        
Premiums $ 32,198  11,129    43,327 
Net investment income 11,991  3,238  225  15,454 
Realized investment gains (losses), net 1,205  (36) 957  2,126 
Other income 676  1    677 
Total revenues 46,070  14,332  1,182  61,584 
Benefits and expenses:      
Insurance benefits paid or provided:        
Claims and surrenders 22,565  9,251    31,816 
Increase in future policy benefit reserves 9,369  1,519    10,888 
Policyholders' dividends 1,638  12    1,650 
Total insurance benefits paid or provided 33,572  10,782    44,354 
Commissions 4,854  4,261    9,115 
Other general expenses 4,900  4,146  1,496  10,542 
Capitalization of deferred policy acquisition costs (4,201) (1,825)   (6,026)
Amortization of deferred policy acquisition costs 5,191  852    6,043 
Amortization of cost of insurance acquired 68  215    283 
Total benefits and expenses 44,384  18,431  1,496  64,311 
Income (loss) before federal income tax expense $ 1,686  (4,099) (314) (2,727)


September 30, 2021 | 10-Q 12



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Nine Months Ended September 30, 2021
(In thousands)
Revenues:        
Premiums $ 89,399  35,786    125,185 
Net investment income 35,468  9,826  724  46,018 
Realized investment gains (losses), net 5,741  393  1,143  7,277 
Other income 2,142  3    2,145 
Total revenues 132,750  46,008  1,867  180,625 
Benefits and expenses:      
Insurance benefits paid or provided:        
Claims and surrenders 69,366  22,335    91,701 
Increase in future policy benefit reserves 17,081  5,326    22,407 
Policyholders' dividends 4,400  31    4,431 
Total insurance benefits paid or provided 90,847  27,692    118,539 
Commissions 13,483  12,590    26,073 
Other general expenses 15,273  12,024  6,130  33,427 
Capitalization of deferred policy acquisition costs (11,578) (5,220)   (16,798)
Amortization of deferred policy acquisition costs 15,739  2,561    18,300 
Amortization of cost of insurance acquired 279  680    959 
Total benefits and expenses 124,043  50,327  6,130  180,500 
Income (loss) before federal income tax expense $ 8,707  (4,319) (4,263) 125 

September 30, 2021 | 10-Q 13



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Three Months Ended September 30, 2020
(In thousands)
Revenues:        
Premiums $ 32,265  11,843  —  44,108 
Net investment income 11,507  3,200  290  14,997 
Realized investment gains (losses), net 133  388  527 
Other income 189  193 
Total revenues 44,094  15,432  299  59,825 
Benefits and expenses:        
Insurance benefits paid or provided:        
Claims and surrenders 25,023  7,935  —  32,958 
Increase in future policy benefit reserves 3,274  884  —  4,158 
Policyholders' dividends 1,443  —  1,450 
Total insurance benefits paid or provided 29,740  8,826  —  38,566 
Commissions 4,140  3,572  —  7,712 
Other general expenses 1,915  4,524  12,952  19,391 
Capitalization of deferred policy acquisition costs (3,512) (1,380) —  (4,892)
Amortization of deferred policy acquisition costs 6,190  570  —  6,760 
Amortization of cost of insurance acquired 113  346  —  459 
Total benefits and expenses 38,586  16,458  12,952  67,996 
Income (loss) before federal income tax expense $ 5,508  (1,026) (12,653) (8,171)

September 30, 2021 | 10-Q 14



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Life Insurance Home Service Insurance Other Non-Insurance Enterprises Consolidated
Nine Months Ended September 30, 2020
(In thousands)
Revenues:        
Premiums $ 92,146  34,775  —  126,921 
Net investment income 34,332  9,788  961  45,081 
Realized investment gains (losses), net 1,259  (405) (185) 669 
Other income 1,195  19  1,217 
Total revenues 128,932  44,177  779  173,888 
Benefits and expenses:        
Insurance benefits paid or provided:        
Claims and surrenders 66,071  21,090  —  87,161 
Increase in future policy benefit reserves 18,804  3,062  —  21,866 
Policyholders' dividends 3,987  24  —  4,011 
Total insurance benefits paid or provided 88,862  24,176  —  113,038 
Commissions 11,912  10,367  —  22,279 
Other general expenses 11,309  13,431  17,263  42,003 
Capitalization of deferred policy acquisition costs (10,149) (3,483) —  (13,632)
Amortization of deferred policy acquisition costs 16,927  2,013  —  18,940 
Amortization of cost of insurance acquired 358  870  —  1,228 
Total benefits and expenses 119,219  47,374  17,263  183,856 
Income (loss) before federal income tax expense $ 9,713  (3,197) (16,484) (9,968)


September 30, 2021 | 10-Q 15



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(4) STOCKHOLDERS' EQUITY AND RESTRICTIONS

EARNINGS PER SHARE

The following tables set forth the computation of basic and diluted earnings (loss) per share.

Three Months Ended September 30, 2021 2020
(In thousands, except per share amounts)
Basic and diluted earnings (loss) per share:    
Numerator:    
Net income (loss) $ (2,799) (7,915)
Net income (loss) allocated to Class A common stock $ (2,799) (7,836)
Net income (loss) allocated to Class B common stock   (79)
Net income (loss) $ (2,799) (7,915)
Denominator:    
Weighted average shares of Class A outstanding - basic 49,630  49,437 
Weighted average shares of Class A outstanding - diluted 50,263  49,832 
Weighted average shares of Class B outstanding - basic and diluted   1,002 
Basic and diluted earnings (loss) per share of Class A common stock $ (0.06) (0.16)
Basic and diluted earnings (loss) per share of Class B common stock   (0.07)

Nine Months Ended September 30, 2021 2020
(In thousands, except per share amounts)
Basic and diluted earnings (loss) per share:
Numerator:
Net income (loss) $ (1,350) (12,526)
Net income (loss) allocated to Class A common stock $ (1,345) (12,401)
Net income (loss) allocated to Class B common stock (5) (125)
Net income (loss) $ (1,350) (12,526)
Denominator:
Weighted average shares of Class A outstanding - basic 49,594  49,365 
Weighted average shares of Class A outstanding - diluted 50,226  49,760 
Weighted average shares of Class B outstanding - basic and diluted 401  1,002 
Basic and diluted earnings (loss) per share of Class A common stock $ (0.03) (0.25)
Basic and diluted earnings (loss) per share of Class B common stock (0.01) (0.12)

CAPITAL AND SURPLUS

Each of our regulated insurance subsidiaries is required to meet stipulated regulatory capital requirements. These include capital requirements imposed by the U.S. National Association of Insurance Commissioners ("NAIC") and the Bermuda Monetary Authority ("BMA"). All insurance subsidiaries exceeded the minimum capital requirements at September 30, 2021.


September 30, 2021 | 10-Q 16



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In order to minimize the risk of a shortfall in capital arising from an unexpected adverse deviation or excess risk, the BMA has established a threshold capital level (termed the Target Capital Level ("TCL")), which is set at 120% of a company’s enhanced capital requirement. The TCL serves as an early warning tool for the BMA. As of September 30, 2021, CICA Ltd. was above the TCL threshold. At the request of the BMA, on April 15, 2021, Citizens and CICA Ltd. entered into a Keep Well Agreement. The Keep Well Agreement requires Citizens to contribute up to $10 million in capital to CICA Ltd. as necessary to ensure that CICA Ltd. has a minimum capital level of 120% (equal to the TCL). Since CICA Ltd.’s capital level currently exceeds 120%, Citizens is not currently required to make a capital contribution.

(5) INVESTMENTS

The Company invests primarily in fixed maturity securities, which totaled 89.7% of total cash and invested assets at September 30, 2021, as shown below.

Carrying Value
(In thousands, except for %)
September 30, 2021 December 31, 2020
Amount % Amount %
Cash and invested assets:
Fixed maturity securities $ 1,456,694  89.7  % 1,489,383  89.8  %
Equity securities 22,335  1.4  % 22,102  1.3  %
Policy loans 80,102  4.9  % 83,318  5.0  %
Real estate and other long-term investments 34,013  2.1  % 29,865  1.8  %
Cash and cash equivalents 30,087  1.9  % 34,131  2.1  %
Total cash and invested assets $ 1,623,231  100.0  % 1,658,799  100.0  %

The following tables represent the amortized cost, gross unrealized gains and losses and fair value of fixed maturity securities as of the dates indicated.
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
September 30, 2021
(In thousands)
Fixed maturity securities:        
Available-for-sale:        
U.S. Treasury securities $ 7,257  1,078    8,335 
U.S. Government-sponsored enterprises 3,470  1,045    4,515 
States and political subdivisions 353,653  29,186  517  382,322 
Corporate:
Financial 203,997  22,774  120  226,651 
Consumer 212,805  23,842  787  235,860 
Energy 79,442  8,147  89  87,500 
All other 300,594  31,884  1,147  331,331 
Residential mortgage-backed 117,845  16,681  4  134,522 
Asset-backed 45,143  413  10  45,546 
Foreign governments 101  11    112 
Total fixed maturity securities $ 1,324,307  135,061  2,674  1,456,694 


September 30, 2021 | 10-Q 17



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
December 31, 2020
(In thousands)
Fixed maturity securities:        
Available-for-sale:        
U.S. Treasury securities $ 9,529  1,797  —  11,326 
U.S. Government-sponsored enterprises 3,490  1,301  —  4,791 
States and political subdivisions 377,462  32,751  548  409,665 
Corporate:
Financial 204,160  31,000  13  235,147 
Consumer 196,648  30,116  245  226,519 
Energy 81,223  8,174  536  88,861 
All other 284,209  42,554  82  326,681 
Commercial mortgage-backed 225  —  221 
Residential mortgage-backed 118,144  21,819  —  139,963 
Asset-backed 46,295  278  482  46,091 
Foreign governments 102  16  —  118 
Total fixed maturity securities $ 1,321,487  169,806  1,910  1,489,383 
 
Most of the Company's equity securities are diversified stock and bond mutual funds.
 
Fair Value
(In thousands)
September 30, 2021 December 31, 2020
Equity securities:  
Stock mutual funds $ 3,407  3,174 
Bond mutual funds 12,512  12,354 
Common stock 1,072  1,143 
Non-redeemable preferred stock 272  281 
Non-redeemable preferred stock fund 5,072  5,150 
Total equity securities $ 22,335  22,102 

VALUATION OF INVESTMENTS

Available-for-sale securities are reported in the consolidated financial statements at fair value. Equity securities are measured at fair value with the change in fair value recorded through net income. The Company recognized net realized losses of $0.4 million and net realized gains of $0.2 million on equity securities held for the three and nine months ended September 30, 2021 and gains of $0.4 million and $0.6 million for the same periods ended September 30, 2020.

The Company considers several factors in its review and evaluation of individual investments, using the process described in Part IV, Item 15, Note 2. Investments in the notes to the consolidated financial statements of our Form 10-K to determine whether a credit loss impairment exists. For the three and nine months ended September 30, 2021 and 2020, the Company recorded no credit valuation losses on fixed maturity securities.


September 30, 2021 | 10-Q 18



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables present the fair values and gross unrealized losses of fixed maturity securities that are not deemed to have credit losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position at September 30, 2021 and December 31, 2020.

September 30, 2021 Less than 12 months Greater than 12 months Total
(In thousands, except for # of securities) Fair
Value
Unrealized
Losses
# of
Securities
Fair
Value
Unrealized
Losses
# of
Securities
Fair
Value
Unrealized
Losses
# of
Securities
Fixed maturity securities:                
Available-for-sale securities:                  
U.S. Treasury securities $ 72    2  $       $ 72    2 
States and political subdivisions 22,636  517  17        22,636  517  17 
Corporate:
Financial 3,264  24  7  1,219  96  1  4,483  120  8 
Consumer 26,204  651  28  2,410  136  1  28,614  787  29 
Energy 6,778  89  8        6,778  89  8 
All Other 32,946  1,147  29        32,946  1,147  29 
Residential mortgage-backed 1,009  4  5        1,009  4  5 
Asset-backed 9,215  9  14  664  1  1  9,879  10  15 
Total fixed maturity securities $ 102,124  2,441  110  $ 4,293  233  3  $ 106,417  2,674  113 

December 31, 2020 Less than 12 months Greater than 12 months Total
(In thousands, except for # of securities) Fair
Value
Unrealized
Losses
# of
Securities
Fair
Value
Unrealized
Losses
# of
Securities
Fair
Value
Unrealized
Losses
# of
Securities
Fixed maturity securities:                
Available-for-sale securities:                  
States and political subdivisions $ 32,487  548  27  $ —  —  —  $ 32,487  548  27 
Corporate:
Financial 1,308  13  —  —  —  1,308  13 
Consumer 10,740  230  1,667  15  12,407  245 
Energy 6,350  536  —  —  —  6,350  536 
All Other 9,418  82  11  —  —  —  9,418  82  11 
Commercial mortgage-backed 221  —  —  —  221 
Residential mortgage-backed 83  —  —  —  —  83  — 
Asset-backed 26,353  481  26  994  27,347  482  27 
Total fixed maturity securities $ 86,960  1,894  80  $ 2,661  16  $ 89,621  1,910  82 

In each category of our fixed maturity securities described above, we do not intend to sell our investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

We did not recognize credit losses on securities with unrealized losses that were due to interest rate sensitivity and changes in credit spreads. We believe that fluctuations caused by movements in interest rates and credit spreads

September 30, 2021 | 10-Q 19



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
have little bearing on the recoverability of our investments. The fair value is expected to recover as the securities approach maturity.

The amortized cost and fair value of fixed maturity securities at September 30, 2021 by contractual maturity are shown in the table below.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date have been reflected based upon final stated maturity.

September 30, 2021 Amortized
Cost
Fair
Value
(In thousands)
Fixed maturity securities:    
Due in one year or less $ 31,502  32,097 
Due after one year through five years 120,606  130,861 
Due after five years through ten years 199,687  218,519 
Due after ten years 972,512  1,075,217 
Total fixed maturity securities $ 1,324,307  1,456,694 

The Company uses the specific identification method of the individual security to determine the cost basis used in the calculation of realized gains and losses related to security sales.  

Three Months Ended Nine Months Ended
Fixed Maturity Securities, Available-for-Sale September 30, September 30,
(In thousands) 2021 2020 2021 2020
Proceeds $ 984  11,221  8,238  17,524 
Gross realized gains $ 89  25  189  148 
Gross realized losses $   77  1  134 

The Company sold 10 and 28 AFS fixed maturity securities during the three and nine months ended September 30, 2021 and 18 and 24 during the three and nine months ended September 30, 2020, respectively.

The Company sold its former training facility near Austin, Texas during the third quarter 2021 for a gross sale price of $3.8 million, resulting in a gain on the sale of $1.0 million. The facility was owned by Citizens and was held in Other Non-Insurance Enterprises.

(6) FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  We hold AFS fixed maturity securities, which are carried at fair value. We also report our equity securities at fair value with changes in fair value reported through the consolidated statements of operations and comprehensive income (loss).

Fair value measurements are generally based upon observable and unobservable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information.  We utilize valuation techniques that maximize the use of

September 30, 2021 | 10-Q 20



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
observable inputs and minimize the use of unobservable inputs.  All assets and liabilities carried at fair value are required to be classified and disclosed in one of the following three categories:

Level 1 - Quoted prices for identical instruments in active markets.
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs or whose significant value drivers are observable.
Level 3 - Instruments whose significant value drivers are unobservable.

Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as U.S. Treasury securities and actively traded mutual fund and stock investments.

Level 2 includes those financial instruments that are valued by independent pricing services or broker quotes.  These pricing models are primarily industry-standard models that consider various inputs, such as interest rates, credit spreads and foreign exchange rates for the underlying financial instruments.  All significant inputs are observable or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace.  Financial instruments in this category primarily include corporate securities, U.S. Government-sponsored enterprise securities, securities issued by states and political subdivisions and certain mortgage and asset-backed securities.

Level 3 is comprised of financial instruments whose fair value is estimated based on non-binding broker prices utilizing significant inputs not based on or corroborated by readily available market information.  Real estate held-for-sale is in this category.


September 30, 2021 | 10-Q 21



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables set forth our assets that are measured at fair value on a recurring basis as of the dates indicated.

September 30, 2021 Level 1 Level 2 Level 3 Total
Fair Value
(In thousands)
Financial Assets
Fixed maturity securities available-for-sale        
U.S. Treasury and U.S. Government-sponsored enterprises $ 8,335  4,515    12,850 
States and political subdivisions   382,322    382,322 
Corporate 51  881,291    881,342 
Residential mortgage-backed   134,522    134,522 
Asset-backed   45,546    45,546 
Foreign governments   112    112 
Total fixed maturity securities available-for-sale 8,386  1,448,308    1,456,694 
Equity securities        
Stock mutual funds 3,407      3,407 
Bond mutual funds 12,512      12,512 
Common stock 1,072      1,072 
Non-redeemable preferred stock 272      272 
Non-redeemable preferred stock fund 5,072      5,072 
Total equity securities 22,335      22,335 
Other long-term investments (1)
      32,651 
Total financial assets $ 30,721  1,448,308    1,511,680 
(1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.

September 30, 2021 | 10-Q 22



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 31, 2020 Level 1 Level 2 Level 3 Total
Fair Value
(In thousands)
Financial Assets
Fixed maturity securities available-for-sale        
U.S. Treasury and U.S. Government-sponsored enterprises $ 11,326  4,791  —  16,117 
States and political subdivisions —  409,665  —  409,665 
Corporate 52  877,156  —  877,208 
Commercial mortgage-backed —  221  —  221 
Residential mortgage-backed —  139,963  —  139,963 
Asset-backed —  46,091  —  46,091 
Foreign governments —  118  —  118 
Total fixed maturity securities available-for-sale 11,378  1,478,005  —  1,489,383 
Equity securities        
Stock mutual funds 3,174  —  —  3,174 
Bond mutual funds 12,354  —  —  12,354 
Common stock 1,143  —  —  1,143 
Non-redeemable preferred stock 281  —  —  281 
Non-redeemable preferred stock fund 5,150  —  —  5,150 
Total equity securities 22,102  —  —  22,102 
Other long-term investments (1)
—  —  —  11,923 
Total financial assets $ 33,480  1,478,005  —  1,523,408 
(1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheet.
 
FINANCIAL INSTRUMENTS VALUATION

FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE

Fixed maturity securities, available-for-sale.  At September 30, 2021, our fixed maturity securities, valued using a third-party pricing source, totaled $1.4 billion for Level 2 assets and comprised 95.8% of total reported fair value of our financial assets.  The Level 1 and Level 2 valuations are reviewed and updated quarterly through testing by comparisons to separate pricing models, other third-party pricing services, and back tested to recent trades.  In addition, we obtain information annually relative to the third-party pricing models and review model parameters for reasonableness.  There were no Level 3 assets at September 30, 2021. For the nine months ended September 30, 2021, there were no material changes to the valuation methods or assumptions used to determine fair values, and no broker or third-party prices were changed from the values received.

Equity securities.  Our equity securities are classified as Level 1 assets as their fair values are based upon quoted market prices.

Limited partnerships. The Company considers the net asset value ("NAV") to represent the value of the investment fund and is measured by the total value of assets minus the total value of liabilities. The following tables include information related to our investments in limited partnerships that calculate NAV per share. For these investments, which are measured at fair value on a recurring basis, we use the NAV per share to measure fair value. Changes in the NAV of our limited partnerships are recorded through net income. The Company recognized net realized gains

September 30, 2021 | 10-Q 23



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
of $1.3 million and $5.8 million on limited partnerships held for the three and nine months ended September 30, 2021 and gains of $0.2 million for both the three and nine months ended September 30, 2020. These investments are included in other long-term investments on the consolidated balance sheets.

September 30, 2021 December 31, 2020
Fair Value
 Using NAV Per Share
Unfunded Commit-
ments
Life
in years
Fair Value
 Using NAV Per Share
Unfunded Commit-
ments
Life
in years
(In thousands, except years)
Limited partnerships
Middle
market
Investments in privately-originated, performing senior secured debt primarily in North America-based companies $ 13,847  26,645  10 $ 10,542  29,783  10
Term
liquidity
facility
Investments in a facility established by the U.S. Federal Reserve that provides financing to U.S. company market participants for levered asset purchases with a focus on asset-backed, commercial mortgage and collateralized loan obligation markets     0 1,381  —  3
Late-stage growth Investments in private late-stage, established companies seeking capital to accelerate growth prior to an IPO or sale 16,864  8,525  7 —  16,291  7
Infrastructure Investments in climate infrastructure assets, focusing on renewable power generation in wind and solar energy 1,940  17,784  12 —  17,497  12
Total limited partnerships $ 32,651  52,954  $ 11,923  63,571 

Our limited partnership investments are not redeemable because distributions will be received when the underlying investments of the partnerships are liquidated. The life spans indicated above may be shortened or extended at the fund manager's discretion, typically in one or two-year increments.

We initially estimate the fair value of investments in limited partnerships by reference to the transaction price. Subsequently, we obtain the fair value of these investments from net asset value information provided by the general partner or manager of the investments, the financial statements of which are audited annually. We carried no limited partnership investments at cost at September 30, 2021 and $6.2 million of limited partnership investments at cost at December 31, 2020.

We review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets.  Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. There were no transfers in or out of Level 3 during the nine months ended September 30, 2021 or 2020.

FINANCIAL INSTRUMENTS NOT CARRIED AT FAIR VALUE

Estimates of fair values are made at a specific point in time, based on relevant market prices and information about the financial instruments.  The fair values of financial instruments presented below are not necessarily indicative of the amounts the Company might realize in actual market transactions.


September 30, 2021 | 10-Q 24



CITIZENS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The carrying amount and fair value for the financial assets and liabilities on the consolidated balance sheets not otherwise disclosed for the periods indicated are as follows:

  September 30, 2021 December 31, 2020
(In thousands) Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Financial Assets:        
Policy loans $ 80,102  80,102  83,318  83,318 
Commercial mortgage loan 1,000  1,000  —  — 
Residential mortgage loans 150  169  157  195 
Cash and cash equivalents 30,087  30,087  34,131  34,131 
Financial Liabilities:        
Annuity - investment contracts 63,690  69,603  60,861  71,547 

Policy loans. Policy loans had a weighted average annual interest rate of 7.7% at September 30, 2021 and December 31, 2020, and no specified maturity dates.  The aggregate fair value of policy loans approximates the carrying value reflected on the consolidated balance sheets.  Policy loans are an integral part of the life insurance policies we have in force, cannot be valued separately and are not marketable.  Therefore, the fair value of policy loans approximates the carrying value and policy loans are considered Level 3 assets in the fair value hierarchy.

Commercial mortgage loan. We financed $1.0 million of the sale of our training facility at a 6.0% interest rate. The loan is due in less than 1 year. Due to the short-term nature of the loan, the carrying value approximates fair value.

Residential mortgage loans. Mortgage loans are secured principally by residential properties.  Weighted average interest rates for these loans were approximately 6.4% at September 30, 2021 and December 31, 2020. At September 30, 2021, maturities ranged from 5 to 18 years.  Management estimated the fair value using an annual interest rate of 6.25% at September 30, 2021.  Our mortgage loans are considered Level 3 assets in the fair value hierarchy and are included in other long-term investments on the consolidated balance sheets.

Cash and cash equivalents. The fair value of cash and cash equivalents approximate carrying value and are characterized as Level 1 assets in the fair value hierarchy.

Annuity liabilities. The fair value of the Company's liabilities under annuity contract policies, which are considered Level 3 liabilities, was estimated at September 30, 2021 and December 31, 2020 using discounted cash flows based upon spot rates adjusted for various risk adjustments ranging from 0.19% to 2.59% and 0.22% to 2.34%, respectively. The fair value of liabilities under all insurance contracts are taken into consideration in the overall management of interest rate risk, which seeks to minimize exposure to changing interest rates through the matching of investment maturities with amounts due under insurance contracts.


September 30, 2021 | 10-Q 25