Citizens (CIA) risk factors, FY2024 10-K

INTERNATIONAL BUSINESS RISKS

1. 01A SUBSTANTIAL PORTION OF OUR REVENUE IS GENERATED FROM INSURANCE PRODUCTS SOLD OUTSIDE OF THE UNITED STATES, WHICH SUBJECTS US TO SEVERAL RISKS
2. 02Our sales to residents of foreign countries expose us to unknown risks related to foreign regulation, foreign currency restrictions, and political instability. A significant loss of sales in these foreign markets would have a material adverse effect on our results of operations and financial condition
3. 03We face significant competition in our international markets. If we are unable to compete effectively for customers or distributors in these markets, our business, results of operations and profitability may be adversely affected
4. 04We face a greater risk of money laundering activity associated with sales derived from residents of certain foreign countries
5. 05Pricing accuracy depends upon our ability to project future losses based on historical loss experience, adjusted for known trends
6. 06The Company’s success depends on its ability to accurately underwrite risks in order to charge adequate premiums to policyholders
7. 07Policyholder claims is one of our largest expenses. Mismanagement of claims handling or increased fraudulent claims could negatively impact our costs and financial condition
8. 08Higher than expected policyholder claims related to unforeseen events may negatively impact our premium revenues and increase our benefits and expense costs, thus negatively affecting our financial condition
9. 09Lower than expected policyholder retention can negatively affect our business operations and liquidity
10. 10Reinsurance may not be available or affordable, or reinsurers may be unwilling or unable to meet their obligations under our reinsurance contracts, which may adversely affect our results of operations or financial condition
11. 11Sales of our insurance products could decline if we are unable to establish and maintain relationships with independent marketing agencies, independent consultants and agents
12. 12Because we sell our products through independent agents, we have less control over the manner in which they sell our products

REGULATORY RISKS

1. 13Our insurance subsidiaries are subject to minimum capital and surplus requirements, and any failure to meet these requirements could subject us to regulatory action or other restrictions, including ceasing business
2. 14In March of 2024, Citizens and the Colorado Division of Insurance entered into a capital maintenance agreement that specifies that Citizens will infuse capital as needed to ensure that CICA Domestic's RBC remains above 350%. Any required capital contribution could negatively impact our capital resources and liquidity

FINANCIAL RISKS

1. 15Changes in accounting standards may adversely affect our reported results of operations and financial condition
2. 16Unexpected losses in future reporting periods may require us to record a valuation allowance against our deferred tax assets
3. 17A ratings downgrade or other negative action by a rating agency could materially affect our business, financial condition, and results of operations
4. 18INVESTMENT INCOME IS A MATERIAL PORTION OF OUR TOTAL REVENUES. CHANGING FINANCIAL CONDITIONS SUCH AS MARKET VOLATILITY, CHANGES IN INTEREST RATES, OR INFLATION MAY ADVERSELY AFFECT OUR REVENUES, OUR RESULTS OF OPERATIONS AND OUR FINANCIAL CONDITION
5. 19increase in surrenders and lapses, which would cause a decline in our premium revenue or increase in benefit expenses paid out

CYBERSECURITY AND TECHNOLOGY RISKS

1. 20Our failure to maintain effective information systems could adversely affect our business
2. 21A cyber attack or other security breach could result in the unauthorized disclosure or loss of confidential data, damage our reputation or relationships, and expose us to significant financial and legal liability, which may adversely affect our business, results of operations, or financial condition
3. 22The failure of our business recovery and incident management processes to resume our business operations in the event of a catastrophe, an epidemic, a cyber attack, or other event could adversely affect our profitability, results of operations, or financial condition

RISKS RELATED TO HOLDING OUR SECURITIES

1. 23The number and location of our shareholders may make it difficult to obtain approval of certain corporate actions
2. 24Our Class A common stock is not registered in any foreign country
3. 25Applicable insurance laws in the jurisdictions where our insurance subsidiaries are domiciled may discourage takeovers and business combinations that our shareholders might consider to be in their best interests