24090--3/12/2010--CITIZENS

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{operation, natural, condition}

{condition, economic, financial}

{tax, income, asset}

{stock, price, operating}

{financial, litigation, operation}

{personnel, key, retain}

{cost, regulation, environmental}

{system, service, information}

{regulation, change, law}

{provision, law, control}

{acquisition, growth, future}

{loss, insurance, financial}

{debt, indebtedness, cash}

{capital, credit, financial}

{product, liability, claim}

{cost, operation, labor}

{operation, international, foreign}

CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES The United States and global financial markets experienced extreme volatility and disruption in 2008 and 2009. We continue to be exposed to significant financial and capital markets risk, including changes in equity prices, which may have a material adverse effect on our results of operations, financial condition and liquidity. CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Changes in market interest rates may significantly affect our profitability. Gross unrealized losses on fixed maturity and equity securities may be realized or result in future impairments, resulting in a reduction in our net income. Our actual claims losses may exceed our reserves for claims and we may be required to establish additional reserves, which in turn may adversely impact our results of operations and financial condition. Unexpected losses in future reporting periods may require us to adjust the valuation allowance against our deferred tax assets. CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES We may be required to accelerate the amortization of deferred acquisition costs and the costs of customer relationships acquired, which would increase our expenses and adversely affect our results of operations and financial condition. We may be required to recognize an impairment on the value of our goodwill, which would increase our expenses and materially adversely affect our results of operations and financial condition. CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES We are a defendant in lawsuits, which may adversely affect our financial condition and detract from the time our management is able to devote to our business, and we are subject to risks related to litigation and regulatory matters. Reinsurers with which we do business could increase their premium rates and may not honor their obligations, leaving us liable for the reinsured coverage. CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES We may not be able to continue our past strategy of acquiring other U.S. life insurance companies, and we may not realize improvements to our financial results as a result of our past or any future acquisitions. Our international and domestic operations face significant competition. CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Sales of our products may be reduced if we are unable to (i) establish and maintain commercial relationships with independent marketing firms and independent consultants (ii) attract and retain employee agents or (iii) develop and maintain our distribution sources. Loss of the services of our senior management team would likely hinder development of our operating and marketing programs and our strategy for expanding our business. We are subject to extensive governmental regulation in the United States, which increases our costs of doing business and could restrict the conduct of our business. CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES Changes in U.S. regulation may adversely affect our results of operations and financial condition and limit our prospective growth. Our failure to maintain effective information systems could adversely affect our business. Our failure to protect confidential information and privacy could result in the loss of customers, subject us to fines and penalties and adversely affect our results of operations and financial condition. The insurance industry in which we operate may be subject to periodic negative publicity, which may negatively impact our financial results. CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES General economic, financial market and political conditions may materially, adversely affect our results of operations and financial condition. Our insurance subsidiaries are restricted by applicable laws and regulations in the amounts of fees, dividends and other distributions they may make to us. The inability of our subsidiaries to make payments to us in sufficient amounts for us to conduct our operations could adversely affect our ability to meet our obligations or expand our business. Adverse capital and credit market conditions may significantly affect our access to debt and equity capital and our cost of capital in seeking to expand our business. CITIZENS, INC. AND CONSOLIDATED SUBSIDIARIES There can be no assurance that actions of the U.S. Government, the Federal Reserve and other governmental and regulatory bodies for the purpose of stabilizing the financial markets will achieve the intended effect. Risks Relating to Our Class A Common Stock The price of our Class A common stock may be volatile and may be affected by market conditions beyond our control. Our Class A common shareholders will not control us for the foreseeable future, will have a limited ability to influence our business policies and corporate actions and will not by themselves be able to elect any directors. Our articles of incorporation and bylaws, as well as applicable state insurance laws, may discourage takeovers and business combinations that our shareholders might consider to be in their best interests.

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24090--3/12/2010--CITIZENS_INC