Citizens, Inc. Reports 90.8% Increase in Net Income

AUSTIN, Texas, March 13 /PRNewswire-FirstCall/ -- Citizens, Inc. NYSE: CIA reported net income of $16.6 million or $0.35 per share of Class A common stock for the year ended December 31, 2007, an increase of 90.8% compared to net income of $8.7 million or $0.16 per share of Class A common stock in 2006. The increase was largely attributed to growth in premium and investment income and a decline in property claims being more in line with historical levels, as well as economies of scale achieved in the integration of the Security Plan acquisition. Revenue increased 10.0% from $158.1 million in 2006 to $173.8 million in 2007 primarily due to an increase in premium income as a result of persistency in the international business, as well as a significant increase in net investment income.

Premium income grew 9.7% to $140.9 million in 2007 compared to $128.5 million in 2006. The increase was attributable primarily to the new business written over the past several years in the Company's Life Insurance segment, which had $101.4 million of premium revenue during the year, a 12.1% increase from $90.5 million in 2006. The Company's Home Service Insurance segment generated $39.5 million in premium income in 2007 compared to $38.0 million in 2006.

Net investment income increased 14.0% in 2007 to $30.7 million compared to $27.0 million in 2006 due primarily to growth in the Company's asset base and to distributions received on the Company's mutual funds in late 2007. Claims and surrenders decreased 2.7% from $56.3 million for 2006 to $54.7 million for 2007, due primarily to property claims expense being more in line with historical experience after the Company experienced abnormally high claims in Louisiana in 2006 and 2005 as a result of Hurricanes Katrina and Rita. Underwriting, acquisition and insurance expense were unchanged in 2007 from 2006 at $27.6 million, largely because of integration of our Home Service Segment into Citizens back office operations.

For the three months ended December 31, 2007 the Company's net income was $5.9 million or $0.13 per share of Class A common stock, compared to $4.1 million or $0.08 per share of Class A common stock for the same period in 2006. Total revenues for the three months ended December 31, 2007 increased 12.0% to $50.0 million from $44.6 million for the same period in 2006. Life insurance premium production contributed to a 4.7% increase in premium income during the three months ended December 31, 2007 to $39.1 million from $37.4 million during the fourth quarter of 2006.

Assets increased to $787.9 million at December 31, 2007, compared to $711.2 million at December 31, 2006, due primarily to growth in life insurance as well as a registered direct public offering of Class A common stock which resulted $17.1 million in net proceeds. Stockholders' equity increased to $176.2 million at December 31, 2007, from $139.6 million at December 31, 2006, due to income earned in 2007, a decrease in unrealized gains as well as an increase due to the registered direct public offering.

The Sarbanes-Oxley Act of 2002 requires public companies to assess their internal controls over financial reporting. Management assessed the Company's internal control over financial reporting based on criteria that was established by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, management concluded that the Company maintained effective internal control over the financial reporting process as of December 31, 2007.

About Citizens, Inc.

Citizens, Inc., parent of Citizens, Inc. Financial Group, a financial services investment company listed on the New York Stock Exchange, trading symbol CIA. It plans to achieve $1 billion in assets, $250 million in revenues and $10 billion of life insurance in force by 2010, via the worldwide sale of U.S. dollar denominated whole life cash value insurance policies, coupled with the acquisition of other life insurance companies. Citizens' Class A common stock closed at $6.24 on March 12, 2008.

Additional information is available about the Company on its web site: http://www.citizensinc.com.

Information herein contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by words such as "may," "will," "expect," "anticipate" or "continue" or comparable words. In addition, all statements other than statements of historical facts that address activities that the Company expects or anticipates will or may occur in the future are forward-looking statements. Readers are encouraged to read the SEC reports of the Company, particularly its Form 10-K/A for the fiscal year ended December 31, 2006, its quarterly reports on Form 10-Q and its current reports on Form 8-K, for the meaningful cautionary language disclosing why actual results may vary materially from those anticipated by management. The Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in the Company's expectations. The Company also disclaims any duty to comment upon or correct information that may be contained in reports published by the investment community.

     For further information contact:
     Randall H. Riley
     Vice President, Investor Relations
     512-837-7100



                                CITIZENS, INC.
                COMPARATIVE CONSOLIDATED FINANCIAL HIGHLIGHTS
                   (In thousands, except per share amounts)

                             OPERATING STATEMENTS

                                                               (Unaudited)
                                         Years ended        Three-Months ended
                                         December 31,          December 31,
                                        2007       2006       2007      2006
    Revenues
      Premium income                $140,905    128,496     39,135    37,389
      Net investment income           30,743     26,975      9,258     6,941
      Realized gains (losses), net       (94)     1,286         (4)      113
      Decrease (increase) in fair
       value of warrants                 828       (244)     1,324      (318)
      Other income                     1,412      1,546        245       478
        Total revenues               173,794    158,059     49,958    44,603

    Benefits and Expenses
      Insurance benefits paid or
       provided:
        Claims and surrenders         54,728     56,261     13,861    14,947
        Increase in future policy
         benefit reserves             36,420     30,719     12,440     8,766
        Policyholders' dividends       6,401      5,384      2,067     1,562
        Total insurance benefits
         paid or provided             97,549     92,364     28,368    25,275

      Commissions                     35,641     35,691      9,349     9,871
      Other underwriting, acquisition
       and insurance expenses         27,583     27,607      6,631     6,628
      Capitalization of deferred
       policy acquisition costs      (26,210)   (26,986)    (6,728)   (7,860)
      Amortization of deferred
       policy acquisition costs       12,530     11,391      3,040     2,477
      Amortization of cost of
       customer relationships
       acquired and other intangibles  3,203      4,650        726     1,580

         Total benefits and expenses 150,296    144,717     41,386    37,971

    Income before Federal income tax  23,498     13,342      8,572     6,632

    Federal income tax expense         6,941      4,665      2,638     2,551

      Net income                     $16,557      8,677      5,934     4,081

      Net income applicable to
       common stock                  $14,555      6,654      5,449     3,580

    Basic earnings per share of
     Class A common stock              $0.35       0.16       0.13      0.08
    Diluted earnings per share of
     Class A common stock              $0.35       0.16       0.10      0.08


                                BALANCE SHEETS

                                   December 31,  December 31,
                                      2007          2006
    Total assets                    $787,909       711,184
    Total invested assets            585,296       515,055
    Stockholders' equity             176,157       139,611