Welcome back, everyone. Next, we have Citizens Inc., trades on the NYSE under the ticker CIA. It's a diversified financial services company providing life, living benefits, and final expense insurance and other financial products to individuals and small businesses in the U.S., Latin America, and Asia. Happy to welcome back President and CEO John Sternberg, and CFO Jeff Conklin. Welcome, gentlemen. Nice to have you back again.
Hi, Anna. Hope everyone's doing well.
Sure are. Excited for your presentation. The floor is yours. Call me back when you're ready for questions.
All right. Great. This is the part of the day everyone's been waiting for, the life insurance segment. I'm sure you're waiting with bated breath, so let's jump right into it. A couple of things I'd like for you to get out of the next half hour would be wanting to know about us, why we're unique, understand how our operations and understand some of our growth plan. Also, as an investor, I want you to understand that we think we're offering you the best of both worlds as an investor. The safety, the predictability of a United States-based life insurance company. Normally, you put that in the safe part of your portfolio, a little sleepy, a little safe, not real exciting, but predictable. That's good. You also want the growth that you normally don't get with that. We're wanting to provide you with both, the best of both worlds.
We are actually a high-growth life insurance company, which is rare since we're also 50 years old. Part of our company started in 1948, actually. If you look at a 50-year-old company, you're not going to expect us to be the fastest growing mature life insurance company in the United States in 2024. That's what you got with us. I'll explain a little bit about how that translates into revenue. First, let's talk a little bit about us. First of all, our stock ticker, CIA, easy to remember. Always a fun conversation starter, especially when I travel to South America, which I've done a couple of times this year. Remember that because I think it's a stock ticker you'll want to remember and invest in. We have about 250 employees.
That's expanding because our growth last year, of course, when you get that much growth, you have a lot of new customers. You have to service them. We're entering a couple of new markets, so you have to set up operations to service those markets. That's part of growing. Our employee base is very, very diverse. We have 28 different countries of birth represented in our 250 employees. We have policyholders in more than 75 countries. In many ways, we truly are a global company. We have over 3,000 producing agents. 8,000 agents that can sell us, but reliably producing agents over 3,000. That's up from just a few hundred just a few years ago. Let's take a quick look at the map, and then we'll get to the numbers. We have four dots on the world map there. We probably should add a fifth one here pretty shortly.
The dot in the United States is Austin, Texas. That's where we're talking to you. We're proud Texans, even though Jeff and I are both Michiganders by birth. We have a dot in Puerto Rico. That's where our Puerto Rico operations are. A lot of the money comes in from our international operations. We put a dot in South America, not because we have a brick and mortar there, but because the lion's share of our international revenue comes from South America. It's very, very important to us. We also have a dot in Taiwan. That's some of the best quality business we could ever hope for. Very, very good, very profitable. We certainly want more business from Asia, and that's a key part of our growth plan. We're also building out a resource center in the Philippines. Eventually, we'll probably put a dot there too. $1.7 billion in assets.
We now cover, if you add up all the face amount of all the policy we have, it adds up to over $5 billion of enforced policies covering families all over the world. That's resulted in $173 million of premium revenue in 2024. Okay. A little bit about where we do business. We get about a third of our revenue from the United States. Now, when you talk about life insurance, revenue is a combination of that year's sales and renewal premium from all the prior years of sales that you've been in business. When you take a look at all that, about 34% of our revenue is from the United States and two-thirds outside. What's really interesting there is that our sales in 2024, where did our growth come from? Our growth came from the United States.
Two-thirds of our sales came from the United States in 2024, and one-third of our sales came from overseas. It wasn't because we had a bad year in international. We had a great year in national. We're so proud of our partners and the great job they did. We had a knock-the-ball, out-of-the-park sales year in the United States, and we grew by leaps and bounds. That's because we entered some new markets. I'll talk about that in a moment. I think we've covered this. Okay, let's talk about our three kinds of business. I love to talk about things in three. It easily simplifies it. We have three different major sources of business. First is our international. Again, two-thirds of our enforced revenue comes from international. I talked about the countries there. Why are we doing so much business overseas? Why are we so successful in South America?
A couple of reasons. Most American life insurance companies, I think to their detriment, have avoided South America like the plague because of headlines they read. We've got over 50 years of understanding how to do business in difficult-to-do business places. We've had 50 years plus of really good experience in South America, profitable business, great partners, stable. Why would South Americans want to buy our product? Let's take a look at Colombia just as an example. Lately, it's been turning left, kind of, hopefully not towards, it's not going to end up where Venezuela is, but it's going left. Before it was right, and it kind of swings back, and you go back to the 1980s, and you get different challenges like narco-terrorism.
With all this instability, if you're a successful business owner, maybe the one part of your life that you want to be safe and secure and dollar-denominated and predictable and not subject to confiscation might be your family's protection. That's where a policy from our company really fits the bill. We've served that market for many, many years successfully, and we will many decades into the future. Next is domestic life insurance. That's where our fastest growth is. Just a few years ago, we were in five states. We're now in 43, but in a few years, we'll be in 49, probably every market plus D.C., except New York. New York is a whole different ball of wax when it comes to life insurance. A lot of companies just don't do business there, and I don't think we will anytime soon.
What we did is we launched a new product there, an entirely fresh effort into the domestic final expense market. This market is for people that have worked their whole life. They have all their life insurance at work. Suddenly, they retire and they didn't realize that life insurance is not portable. They need a policy. That's a truly underserved market in the United States. We entered that market. It's a market largely served by small mom-and-pop companies. These companies tend not to be highly technical in terms of their capabilities, and they tend not to be highly innovative. We came into the market with a two-prong approach. One, how do you make life easier for your agents and your clients?
I won't go into it right now, but we have some pretty unique capabilities in what I call user ergonomics, agent ergonomics, and making the lives easier of your agents allows them to sell more. We don't pay the highest commissions, but they prefer often to do business with us because in an easier sale, you can get more sales each day, and that's what impacts your revenue as an agent. We also did something very unique, and we did a white-label strategy. If you are the owner of a large life insurance distribution in this market, you can come to us and say, "Hey, I want my own product.
Give me a product called John's Life Insurance so I can sell that to my clients, through my agents." Only I would have John's Life Insurance, and I can go recruit agents saying, "Hey, the only way you can get this product is through me." Now, it's essentially the same as the product we sell generically, but it really creates a lot of loyalty and love from the agency partner because they get their own life insurance name. Large companies don't do this, and quite frankly, I've been in large companies; they can't do it. It's too cumbersome in a bureaucratic and large company and with all the systems they have to deal with. 60% of our sales in domestic final expense have come through the white-label strategy. These two strategies are really paying dividends for us, and our sales were just through the roof.
Now we're focused on consolidating those gains to making sure our operations are efficient and compliant, and we continue to serve those agents and clients in the best way possible. Lastly, our home service operation that's largely in Louisiana, Mississippi, and Arkansas. That's the business that started in 1948. A soldier came back from World War II and started that business, and our company bought that a couple of decades ago, and we proudly serve those markets. That's also an underserved market there. We've been in the process in the last year of modernizing that without losing the very special culture they have. That business is unique in that those agents are truly neighborhood embedded. People that sell, they sell to their neighbors, and it's a very unique market and drives a lot of enforced premium for us. We're happy to serve that market. Those are our three businesses.
I covered some of this. I think what I'll do is I'll just make a couple more comments on this page. I'll let Jeff talk a little bit. Let's talk about expertise in the Latin markets. When you walk the halls here, and by the way, anyone that is in the Austin area, please let us know you're going to be in the area. We'd be happy to give you a tour of the operations and talk to you more about our company. You're going to hear different dialects, different accents of Spanish. We're a company that is deep, deep in these markets, and we understand the difference between the Argentinian culture and the Mexican culture, the Puerto Rican culture, and the Cuban or Colombian culture.
An untapped market for us is to really take that knowledge into the United States with the massive underserved Latin population we have in the United States. That's definitely an area of growth for our future. I think at this point, I'll let Jeff say a few words, and then I'll talk about some of our unique opportunities and growth.
I'm going to move quickly so we can get to Q&A because I know John enjoys the Q&A session part of this. Some of these slides are very similar to what you've seen in the past. They've been updated for our latest accomplishments, but this is more of a reading page. I want to point out a couple of things. As John basically alluded to, we have a record number of global producing agents, up 53% from last year. That is helping us drive first-year sales and A&H premium growth. We've beat prior quarters 11 consecutive times this year, sorry, over the last couple of years. In addition, we've been growing with no debt.
We do have access to a $20 million line of credit that we could leverage if need be, but we've been able to run our business using kind of managing our regulatory capital with the use of free insurance. This is a new slide we added this time. This shows our first-year direct sales growth year over year. Notice kind of from 2020 to 2023, basically flat. We started our strategic program to start growing again back in late 2022. You can see we started an uptick in 2023. That's when we started seeing our domestic life sales. In 2024, you can see the remarkable growth. You see the two blue graphs year over year. We are exceeding last year's first-year sales for the year. I think John mentioned this, but I want to hit this one. Sorry, this one again.
I think we've been licensed in multiple states, 32 plus states for a while, but we didn't have product to sell. Starting in 2021, 2022, we not only added more states to grow geographically, we got product approved in all the states that we do business in. Of course, signed up the agents to then sell our final expense product. The next thing I want to hit real quick is we've talked before about our business. We have a lot of maturing business in this year. It's the peak year, but it'll be elevated over the next few years. This is because we had really good sales back in the early 2000s. The business is maturing. As John said, we have business in South America. We are delivering on our promise to pay the policies out.
I'd also add this is we knew this was coming, and that's why we were so focused on growing our business as well as we created a product to help, in some cases, some of the folks who do not need their benefit. We have a product that they can buy into to continue their life insurance. Let's see. Let me hit this slide last, and then we can go to Q&A. We have over $1.7 billion of assets. We have a low-risk, I would call, profile balance sheet. Right now, our liabilities are very mortality-related liabilities on our books. We have a strong portfolio, good portfolio mix. We're prudent with our investments, managing capital as well, liquidity of our investments. We use very large reinsurers, global reinsurers in the world. Most recently, we partnered with RGA to help manage through our new final expense business.
I think I'll stop there, and I'll hand it over for Q&A now.
Yeah, I think I'll just mention one thing. We have a lot of growth plans. Our strategic growth plan, we envision being able to execute upon that using current cash flow, current income, and also our current capital structure. It's going to be internally funded. Let's see what questions are out there.
Let's jump into the questions. Okay, let's start with Nate's question. Is there a disconnect between the Latin America markets and the Latin U.S. markets? If so, how do you bridge it? Is it as simple as hiring more Latin, Spanish, Portuguese-speaking sales agents? Can you comment on that?
Oh, I love this question. First of all, doing business in the United States is extremely and very, very, very different than doing business internationally. The United States, unlike many other markets, is a state-regulated, very tightly regulated market. It's state by state, so you kind of have 50 different sets of rules you have to deal with. Where our international business, we can kind of set one rule and the client, one product, and the client sells that. It's just a matter of getting, finding agents and clients in the markets you want to do business in. In the United States, you have to have properly filed in every state you want to do it. The Spanish version of the forms, you have to have all of the way that state wants you to do business set up properly. We have that in 43 states. The rest require seasoning.
If you haven't applied in that state, they want you to wait three years to make sure you're still around. We're in that waiting period. Now it's a matter of finding agents that are embedded in both, they understand both life insurance because state life insurance license is not easy to get. It's a matter of finding those agents that are native Spanish speakers and have a cultural understanding of those markets who can successfully, in a trusted way, get access to those markets. The key is to find the right agents. We have great partners, and we're helping them build out. We don't have our own distribution force in the United States. We have partners that do that, and we're supporting them as they build out their Spanish strategy. We'll be their lead company as they do that. Great question.
Thank you for answering that. What steps are you taking to maximize agent productivity?
The first thing to maximizing agent productivity is you have to get the agent. Having the number of agents is the first challenge before you can worry about the luxury of worrying about their productivity. We've, by probably tenfold, increased the number of agents that can sell our policies in the last few years. Now you get to focus on productivity. That's a simple formula that's hard to execute on. Make them love you. If you think about that, there's a lot that goes into that. Easy is very hard, and they love easy. Humans love easy. Our clients love easy. As a company, it's hard to make things easy for your client, especially in a super regulated market like life insurance. You can't ask this question like this. You have to answer like this in this state.
You have to figure out within the game, the 50 different states and rule sets, how do you make your agents' life easy and how do you make your client's sales process easy and how do you make it easy to own you and keep your product. That's really what our focus is on for both persistency, for client retention, and for agent productivity. If you're easy to do business with, they will reach up off the shelf and grab your product more often than they will your competitors.
Perfect. Thank you for that. Graham wants to know, what is the status of your employees? Are they 1099? If so, what %?
All of our U.S. employees are full W-2. We've got a beautiful office here in Austin, and people come in and drive into work. We're pretty traditional and pretty old-fashioned in a lot of ways like that because we feel that's the way to be modern, because people collaborating together in person is really a key to productivity and innovation, we believe. Our overseas employees, for example, in the Philippines, are our contract employees, but we pay them slightly above average market rates to get the level of employee retention we want. We treat them exactly like the W-2 employees. From a treatment and working standpoint, they're just like the employee you have in the cubicle next door. It's turning out to be a very, very successful recipe for productivity and cost effectiveness.
Sam wants you to talk about the final expense product. Do you package it with the life insurance? If you can explain that, and what do you see the average premiums and benefits on that to be?
Okay, great question. Final expense is what you call, it is life insurance. It is just what you call that genre of life insurance, if you will. The average face amount, you're going to find face amounts like $10,000, $12,000, $14,000, enough so the family's not burdened and they don't have to make tough choices and feel the guilt of making tough choices to bury their loved one. It's enough so that you have peace of mind in your later years, but it's affordable. These premiums are less than $1,000 a year, and it's affordable for those clients. The key is affordability and ease of purchase, ease of owning. I'll answer it that way because the final expense is life insurance. It's just the market you're serving. We call it, in our vernacular, final expense.
Domestically, who is the target market for the life insurance and final expense products?
Domestically, it is that worker or spouse, generally newly retired or retired in the last 10 years, who had life insurance either through their spouse or from their work, and they lost that at retirement. Most life insurance you get at workplaces is group. It's not portable. A lot of people don't have financial planners to sit them down and say, "Hey, you need something forever." They find themselves without life insurance in their 60s or 70s. That's our target market for final expense.
Adam wants you to explain what additional regions abroad are attractive to you and why.
Good question, Adam. Really, the way we do business internationally without the need for traditional brick and mortar, it's got some pros and cons. The cons is you can't enter all markets like that. There are some markets that are just too difficult to do business like that, and you would have to enter with a little bit of brick and mortar. There are many, many, many countries that you don't. It really helps you to scale internationally with our current model. With our current model, I think we see opportunity in countries like Indonesia. I think there are opportunities, Laos, Cambodia, Myanmar, as soon as it opens up. We're looking at a lot of Asian countries, perhaps the Philippines. A lot of the Asian countries, we think we can get in in a more, I would call it light brick and mortar way, in a very cost-effective way.
We see opportunity potentially in Thailand, in particular, Hong Kong. An office in Hong Kong with a branch office license gets you to hold in China property, and they have a greater economic prosperity region going on there. The South Coast region, we think we can, with a branch office in Hong Kong, get access to that market without spending a lot of money. We're looking for cost-effective ways to enter new markets and largely leverage the products we have. Great question, Adam.
Kaylee wants to know a little bit more about the white-label product. Is there an extra fee for that? How does that work financially for you and your reps?
If you're the agency head, there's no additional fee. There's additional work on our end. We put the burden on our end. What we have is a lot of our forms and systems; you have to think about this before you ever build your systems because if you try to retrofit it, it's a nightmare. As we're building this product offer, as we're building our processes, as we're coding the technology, you leave a number of areas where it's fill in the blank. The name of the product would be fill in the blank. The name of the titles would be fill in the blank. Then your partner gets to say, "Okay, what do you want this to be called? What tagline do you want? What do you want for this?" You go back and now you have the capability to do that.
It's a little extra work on our end, but most of that extra work has already been done. It was done before we got into the market because we wanted to enter the market with this strategy. It is a very unique strategy in the United States.
Sounds like it. Talk about your outlook once you get over the matured endowment benefit payments, strongest headwind period in 2025.
I think with that, as I think I said this a bit earlier, this is the peak year of maturities from really good sales release in the early 2000s. We were prepared for it. We created a product to address that, the maturity endowments that actually is helping us with first-year sales in 2025 as well. We've been focused so much on growth initiatives, growing our sales domestically and, of course, internationally, and as John just mentioned, expanding to markets. We do have some peak maturities come. We still have some more higher elevated maturities over the next several years, but we're overcoming that by growing our other businesses, growing our domestic arm, and expanding internationally to cover and to improve long-term profitability.
Perfect. Talk about what do you think the street is underappreciating or overlooking at this point about Citizens and why is now a good time to look at the stock?
This is a perfect bookend if this is the last question because I'll go right back to the very beginning. It's difficult for casual investors to understand where to put us in the portfolio. It's difficult. People like categories. Oh, life insurance. Boom. Safe, secure. I'm going to put them over here in the slow growth and safe area of my portfolio. Like I said at the very beginning, we're trying to bring the best of both worlds. We're the fastest growing life insurance company in the United States last year. Those are now going to translate into renewals, where our sales are not going down. They're continuing to go up. That'll compound over the years. What we're doing now is setting the stage because this is kind of like a subscription service almost, life insurance is, like Netflix.
If you think about Netflix back in the day as they're growing their subscriber base, that's what investors cared about. What's going on with your new subscriber? How many new subscribers? They knew that was going to turn into years and years of additional revenue in the future that would just compound. We're a lot like that. What we're doing is setting the stage for years and years of additional total revenue growth as you get the second renewal and the third renewal, and that's added to the second renewal from the last year and the sales from this year. It builds on itself like a steam engine getting up to speed. Once it gets up to speed, it's a really, really powerful model.
That's, I think, what's overlooked by us is because our amazing sales will result in amazing future growth, but you're not going to see it in the first year.
Absolutely. John and Jeff, thank you so much for joining us and going through this thorough presentation and taking some questions from our viewers. We appreciate it.
Great. A lot of fun. Thanks, Anna. Thanks, everyone.
Yeah, thank you.
All right. We'll see you guys again real soon. Stay with us, everyone. We'll be right back.