Citizens Inc. Profits Up Sharply in 2nd Quarter.

Business Editors

AUSTIN, Texas--(BUSINESS WIRE)--Aug. 14, 2000

Citizens Inc. (AMEX:CIA), announced net income for the quarter ended June 30 of $949,114, or $0.04 per share, an increase from a loss of $(111,120) or $(0.01) per share for the same period in 1999.

Net income for the six-month period ended June 30, 1999 was $648,442, or $0.03 per share up from the $166,631 or $0.01 earned the previous year. Reduced accident and health claims and administrative expenses coupled with higher investment income fueled the improved profitability.

For the second quarter ended June 30, 2000, revenues declined to $16.5 million, compared to $18.2 million for the same period in 1999 due to the cancellation of a large block of individual major medical and group dental insurance which offset increases in the sale of new ordinary life premiums. Management cancelled these books of business during the third quarter of 1999 as a result of adverse claims experience.

Sales of the Company's U.S. dollar denominated whole life insurance internationally increased by more than 10% during the first half of 2000. Additionally, Citizens introduced a new portfolio of whole life products in the U.S. late in the second quarter, marking the Company's first concerted domestic life insurance marketing effort in more than a decade. Management believes this niche-marketing program, which targets rural areas of the United States, will provide a compliment to the Company's established international business.

Premium income decreased 11.6% during the quarter to $13.1 million, compared to $14.9 million in 1999 due to cancelled health premiums. Claims and surrenders declined to $7.1 million for the three months ended June 30, 2000 from $8.4 million for the same period in 1999. Expenses decreased from $3.0 million for the second quarter of 1999 to $2.8 for the comparable period in 2000. Further reduction of expenses and benefits are anticipated as the health business continues to expire. Investment income grew 5.6% to $3.1 million from $2.9 million, through more aggressive management of cash reserves.

Revenues during the first six months of 2000 declined to $32.0 million, compared to $35.0 million for the same period in 1999 as a result of the cancellation of the major medical and dental blocks of business. Premium income decreased 10.1% during the first six months to $25.5 million, compared to $28.4 million in 1999. Management expects the cancellation of the two lines of accident and health insurance to reduce premium income by approximately $3.8 million in 2000, however increases in the sale of international and domestic whole life products will offset some of the loss of A&H premium. Claims and surrenders for the six months ended June 30, 2000 dropped to $15.3 million from $16.6 million as a result of the cancellation.

Total assets increased to $257.1 million at June 30, 2000 from $253.0 million at June 30, 1999. Stockholders' equity increased to $72.4 million compared to $70.1 million at the close of the first quarter 2000. The income earned in the second quarter and increases in the market value of the Company's available-for-sale bond portfolio since March 31, 2000 were the reasons for the increase in equity.

Citizens Inc. is a Colorado-domiciled life insurance holding company with headquarters in Austin, Texas. The Company was incorporated in 1977 and is listed on the American Stock Exchange under the symbol CIA. Citizens' strategy is for it to reach $1 billion in assets, $250 million in revenues and $10 billion of life insurance in-force through its three-pronged growth plan targeting the sale of ordinary life insurance in the United States, expansion of its U.S. dollar-denominated whole life international marketing and the acquisition of other life insurance companies.

Additional information is available at the Company's Web site: 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 for the Fiscal Year Ended Dec. 31, 1999, for the meaningful cautionary language disclosing why actual results may vary materially from those anticipated by management.

                             CITIZENS INC.
             COMPARATIVE CONSOLIDATED FINANCIAL HIGHLIGHTS

                         OPERATING STATEMENTS
                         --------------------

                                      (Unaudited)
                                    Six-Months Ended
                                        June 30,
                                       ---------
                                  2000            1999
                                  ----            ----
Premiums and Other Revenues
 Premium income               $  25,510,875   $  28,392,142
 Net investment income            6,053,136       5,917,231
 Other                              482,679         737,864
                              -------------   -------------
  Total revenues              $  32,046,690   $  35,047,237

Benefits and Expenses

 Increase in future policy
  benefit reserves            $   2,470,677   $   3,099,810
 Claims and surrenders           15,340,830      16,572,827
 Policyholder dividends           1,293,358       1,238,361
 Commissions                      5,604,479       5,694,633
 Underwriting and insurance
  expenses                        5,286,924       5,386,318
 Net change in deferred
  policy acquisition costs           95,421       1,514,361
 Other                            1,205,884       1,431,296
                              -------------   -------------
  Total benefits and expenses    31,297,573      34,937,606
                              -------------   -------------
 Income (loss) before federal
  income tax
                              $     749,117   $     109,631
Federal income tax expense
 (benefit)                    $     100,675   $     (57,000)
                              -------------   -------------

 Net income (loss)            $     648,442   $     166,631
                              =============   =============

                                       (Unaudited)
                                    Three-Months Ended
                                         June 30,
                                         --------
                                  2000            1999
                                  ----            ----
Premiums and Other Revenues
 Premium income               $  13,134,274   $  14,857,197
 Net investment income            3,076,425       2,912,273
 Other                              257,551         459,697
                              -------------   -------------
  Total revenues              $  16,468,250   $  18,229,167

Benefits and Expenses

 Increase in future policy
  benefit reserves            $   1,351,673   $   1,926,161
 Claims and surrenders            7,102,472       8,365,566
 Policyholder dividends             742,687         736,727
 Commissions                      2,740,645       2,827,955
 Underwriting and insurance
  expenses                        2,783,711       3,038,598
 Net change in deferred
  policy acquisition costs         (101,000)        615,479
 Other                              678,436         945,285
                              -------------   -------------
  Total benefits and expenses    15,298,624      18,455,771
                              -------------   -------------
 Income (loss) before federal
  income tax
                              $   1,169,626   $    (226,604)
Federal income tax expense
 (benefit)                    $     220,512   $    (115,484)
                              -------------   -------------

 Net income (loss)            $     949,114   $    (111,120)
                              =============   =============

                           INCOME PER SHARE
                              (UNAUDITED)
                              ----------
Net income (loss)
 per share                $0.03       $0.01       $0.04       $(0.01)
                          =====       =====       =====       =======
Average shares
 outstanding           23,465,048  23,445,041  23,465,048  23,445,041

                           BALANCE SHEETS
                           --------------

                           (Unaudited)       (Unaudited)
                             June 30,          March 31,
                              2000              2000
                              ----              ----
Total assets            $   257,095,007     $  254,242,493
Total invested assets   $   179,897,155     $  174,331,762
Stockholders' equity    $    72,391,383     $   70,111,314

                                              (Unaudited)
                            Dec. 31,           Sept. 30,
                             1999                 1999
                             ----                 ----
Total assets            $   255,484,786     $  252,728,467
Total invested assets   $   174,338,561     $  174,928,897
Stockholders' equity    $    72,266,969     $   73,774,290

                          (Unaudited)
                            June 30,
                             1999
                             ----
Total assets            $   252,974,823
Total invested assets   $   177,240,791
Stockholders' equity    $    74,066,445