Citizens Profile
Citizens, Inc. operates as an insurance holding company that serves the life insurance needs of individuals in the United States and internationally.
The company, through its domestic insurance subsidiaries, is licensed to provide insurance benefits to residents in 32 U.S. states. The company, through its international subsidiaries, provide insurance benefits to residents in more than 70 different countries. The company pursues a strategy of offering traditional insurance products in niche markets.
Segments
The company operates through two business segments, Life Insurance and Home Service Insurance.
Life Insurance segment - Internationally, the company primarily sells U.S. dollar-denominated ordinary whole life insurance and endowment policies to non-U.S. residents, located principally in Latin America and the Pacific Rim. Domestically, the company sells whole life insurance, credit life, credit disability and critical illness products.
Home Service Insurance segment – The company sells final expense life insurance and property insurance policies to middle- and lower-income households, as well as whole life products with higher allowable face values, in Louisiana, Mississippi and Arkansas.
Principal Brands
Life Insurance
Internationally, the company conducts its Life Insurance segment business through CICA Life Ltd., a Bermuda company (CICA International) and, beginning January 1, 2023, through CICA Life, A.I., a Puerto Rico company (CICA PR). Domestically, the company conducts business primarily through CICA Life Insurance Company of America (CICA).
Home Service Insurance
The company conducts its Home Service Insurance segment through Security Plan Life Insurance Company (SPLIC), Security Plan Fire Insurance Company (SPFIC) and Magnolia Guaranty Life Insurance Company (Magnolia).
As an insurance provider, the company collects premiums on an ongoing basis from its 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 premiums earned for insurance coverage provided to its policyholders; and net investment income.
Strategy
The company focuses on its customer needs by offering new products tailored to its specific markets and enhancing existing products. The company focuses on implementing sales promotions and campaigns in order to align its sales consultant compensation opportunities with its premium revenue goals, and its growth and retention initiatives. The company is implementing process improvements and new technologies in order to get products to its customers faster and improve services for both its policyholders and its agents, as well as helping its employees work more effectively and efficiently.
Life Insurance segment
Until December 31, 2022, the company’s Life Insurance segment primarily operated through CICA Life Ltd. (CICA International), a Bermuda company. Upon surveying the market demands and needs of its policyholders, in 2022, the company formed a new subsidiary in Puerto Rico, CICA Life, A.I. (CICA PR). CICA PR received a license in September 2022 to issue business as a Puerto Rico international insurer for the company’s international portion of its Life Insurance segment. Beginning January 1, 2023, all new international policies are issued by CICA PR. Because CICA PR provides the company’s non-U.S. policyholders the ability to purchase policies in a U.S. territory and in a jurisdiction where the primary language spoken is Spanish, which is the primary language of the majority of its international policyholders.
International Life Insurance
Sales
The company focuses its international sales to residents in Latin America and the Pacific Rim. As of December 31, 2022, the company had insurance policies in force in more than 70 foreign countries and receive the majority of its premiums from Colombia, Venezuela, Taiwan, Ecuador and Argentina. International direct premiums comprised approximately 96% of total direct premiums in the Life Insurance segment and 69% of its total consolidated direct premiums in 2022.
The company sells its products internationally through independent marketing agencies and consultants who specialize in life insurance products. The company enters into contracts with the independent marketing agencies pursuant to which they recruit, train and supervise their managers and associates in the sales and service of its products. These agencies receive commissions for products they sell, as well as commission overrides on the business that their agents produce and, in return for the override, they guarantee any debt their agents owe to it. Their agents also contract directly with the company as independent consultants and receive commission compensation directly from it. The company’s agreements typically provide that the agencies and their agents are independent consultants responsible for their own operational expenses and is the representative of the prospective insured. The company’s contracts require the independent marketing agencies and consultants to understand and comply with all laws applicable to sales of its products in their country.
Products
CICA PR and prior to January 1, 2023, CICA International, issues primarily ordinary whole life insurance and endowment products in U.S. dollar-denominated amounts to non-U.S. residents. The whole life insurance products are designed to provide a fixed amount of insurance coverage over the life of the insured and can include rider benefits to provide additional coverage and annuity benefits to enhance accumulations. The company’s endowment contracts are principally accumulation contracts that incorporate an element of life insurance protection.
The company’s international products have both living and death benefit features. Most policies contain guaranteed cash values and are participating (i.e., provide for cash dividends as apportioned by CICA PR's and CICA International's board of directors). The policyowner has several options with regards to the policy dividends and annual premium benefits, which include, among other things, electing to receive cash, crediting such amounts towards the payment of premiums on the policy, leaving such amounts on deposit with the company to accumulate at a defined interest rate or assigning them to a third-party. Under the assigned to a third-party provision, the company has historically allowed policyowners, after receiving a copy of the Citizens, Inc.
Domestic Life Insurance
The company operates its domestic life insurance business through CICA Life Insurance Company of America (CICA) and Citizens National Life Insurance Company (CNLIC). In 2022, domestic direct life insurance premiums comprised approximately 4% of total direct premiums in the Life Insurance segment and 3% of the company’s consolidated total direct premiums. The majority of the company’s domestic in force business results from renewal premiums from blocks of business of insurance companies it has acquired over the years. In 2022, the company began its white label program, expanding CICA's state licenses and filing new white label products in multiple states.
Home Service Insurance segment
The company operates its domestic Home Service Insurance segment through SPLIC, Magnolia and SPFIC. SPLIC and Magnolia primarily issue final expense life insurance products to middle- and lower-income individuals, primarily in Louisiana, Mississippi and Arkansas.
Products
The company’s Home Service Insurance products consist primarily of small face amount ordinary whole life and pre-need policies, which are designed to fund final expenses for the insured. To a much lesser extent, the company’s Home Service Insurance segment sells property insurance policies covering dwellings and content.
Other Non-Insurance Enterprises
Other Non-Insurance Enterprises includes the results of the company’s parent company, Citizens, Inc. and its non-insurance subsidiary, Computing Technology, Inc., which primarily provide the company's corporate-support and information technology functions to the insurance operations.
Operations and Technology
Most of the company’s operations are based at its corporate headquarters in Austin, Texas. The company also conducts operations for its Home Service Insurance segment from its district offices in Louisiana, Arkansas and Mississippi, as well as its service center in Donaldsonville, Louisiana. For the international portion of its Life Insurance segment, operations including underwriting, policy issuance, claims processing, accounting and reporting related to certain international policies are conducted in Bermuda.
The company has a proprietary single, centrally-controlled, mainframe-based policy administrative system (PAS) that it uses for all of its insurance companies. The company’s PAS performs various functions to effectively handle its insurance operations. These functions include policy set-up, administration, billing and collections, commission calculation, valuation, automated data edits, storage backup, image management and other related functions. This investment is foundational to the company's growth strategy as it pursues new product innovation and provides:
its customers and agents with portals to be able to access account information 24/7;
its policyholder service and claims representatives with a customer account-centric view of its policyholders and beneficiaries, reducing customer inquiry response time and claims processing time; and
business-to-business solutions.
Regulation
While primarily regulated at the state level, the company’s domestic business is subject to federal laws and regulations, such as the USA Patriot Act of 2001, the Foreign Corrupt Practices Act, the Gramm-Leach-Bliley Act of 1999, the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Tax Cuts and Jobs Act, are examples of the U.S. laws that affect its business. The company is subject to comprehensive regulations under the USA Patriot Act and the U.S. Bank Secrecy Act with respect to money laundering, as well as federal regulations regarding privacy and confidentiality. The company’s U.S.-based insurance products and thus its businesses also are affected by the U.S. federal, state and local tax laws.
The company’s domestic insurance subsidiaries are primarily regulated by the insurance departments of the state in which they are domiciled (Colorado, Louisiana, Texas and Mississippi). They are also regulated in each of the 32 states and the District of Columbia in which it conducts insurance business. Additionally, as Citizens is a Colorado-based company, the Colorado Division of Insurance has supervisory authority over the holding company and all of its subsidiaries.
CICA International, the company’s Bermuda domiciled subsidiary, is subject to regulation and supervision by the Bermuda Monetary Authority (the BMA) and compliance with all applicable Bermuda laws and insurance statutes and regulations, including but not limited to Bermuda’s Insurance Act of 1978 (the Insurance Act). The Insurance Act regulates the insurance business of CICA International and provides that no person may conduct any insurance business in or within Bermuda unless registered as an insurer under the Insurance Act by the BMA.
History
Citizens, Inc. was founded in 1969.
