Okay, good morning, everybody, and welcome to Sidoti's August MicroCap Conference. My name is Brendan McCarthy. I'm an analyst here at Sidoti, and presenting with us today we have Citizens, the life insurance company. Leading the discussions from the firm will be CEO Jon Stenberg and CFO Jeff Conklin. Before I pass it over, a quick reminder, the Q&A tab is located right at the bottom of your screen. Feel free to type in any questions throughout the presentation, and we can save time for Q&A towards the end. But with that said, Jon, take it away. Thank you, Brendan, well, and greetings from sunny and very hot Austin, Texas, where we're joining you here. We're glad to be in air-conditioned offices as we get going here. So let's start off with talking a little about Citizens and a quick overview. All right. So as you see on this page, we have an international presence, and you'll see four dots on the map here. We have two operations in domestically United States. We have an operation in Puerto Rico. We have a strong presence in South America, and then we have a strong presence in Taiwan. So across we have 232 employees, and we have policyholders in more than 80 countries, with 4,000 independent agents. As you can see, we've... We're, we're closing in on $2 billion assets at $1.7 billion right now, and we just this year crossed over $5 billion insurance in force. We're excited about that milestone. And we have very diverse premium revenues, and you can see in the graphic here, about 30% come from the United States, and the rest are international. The concentrations in Colombia, Taiwan, Venezuela, Ecuador, and Argentina. So you could break our operations up into two separate segments here. Our life insurance segment, which is both international and domestic, and our home service segment. Now, on the life insurance segment, our international market is dollar-denominated whole life and endowment policies. Very simple and straightforward, and the dollar denomination there is really key, and we operate in a lot of countries that have had histories of political or inflationary instability, and so it, it's an attractive offering to those who are looking to have a little bit more security and diversification in their life. We target the upper middle class in the international markets and those with significant net worth. Domestically, we're focused more on the final expense market, and these are often underserved markets, and it's a very interesting and profitable segment, and that is our fastest-growing market right now. When we get to talking later about our premium growth, it is coming mostly from this domestic market. We also have a home service segment, and they, those customers are similar to the domestic final expense, except those are neighborhood-embedded agents, and that's a regional, and we focus there in Louisiana, Mississippi, and Arkansas. Okay, so let's talk a little bit about how Citizens is positioned for growth in 2024. The instability in Argentina and Venezuela and other countries, it's ongoing, and it just depends on which country it's in. So that political instability actually continues to drive growth and interest in our products, and we're actually having a very strong year this year in our international market. And we'll talk a little bit more about that later. We have strong expertise in the Latin markets. We have... If you walked our halls here in Austin, we have not only a lot of Spanish-speaking employees, but they're Spanish-speaking from different countries. We've been in this market for over 50 years, and you learn the difference between culturally Argentina and Mexico are not the same, and Puerto Rico and Ecuador are not the same. You learn about the particular needs and cultural flavors of each of those countries, and that's important when you're working with these partners in these different countries. A lot of our growth this year, as I mentioned before, is in our domestic market, and we took an interesting approach to that by right from ground zero, designing that product to be white labeled. This allows a large or medium agency to partner with us and put their name on it, or whatever name they choose, and market to agents, their agents as a product unique to them, and that gives us a real edge versus our competition there. We're also developing a expertise in professional athletes. We have a lot of soccer players and from South America, and then we're currently now working on growing particularly our international brokers, and that's gonna give us presence in markets that we're not currently in. We've had a spurt of product development. We've probably developed more products in the last two years than we have in the last 20. And if you look at our international, our geographic expansion, we've gone from a handful of states to over 40 in just the last two years domestically... and we're starting to get penetration in some new markets through our international, international brokers. So we've done a lot of work to streamline our sales process that's getting—giving us a lot of eyes on from new agents, and you'll see later we'll talk about our growth in, contracted and active agents. So these are our expected milestones. They look, they look a little tame right now because we're actually having very, very strong, premium growth that Jeff will talk about, and we've, it already exceeded the, the percentage of producing agents that are—was our target. And we've also accomplished our new product. So we're having a really good year in a lot of our expected milestones. Okay, so let's talk a little bit more about some of the unique growth opportunities here in a more detailed way. I also often say our branding strategy in a lot of our markets internationally is the U.S. dollar, and our product is a very safe, simple whole life and endowment policies. But the fact that it's in the U.S. dollar, again, really gives it the attractiveness to a lot of citizens in countries where there's been a history of inflationary or political instability. And we've got those growth opportunities domestically here to go to the next box. We've expanded into 41 states now, and you'll see our premium growth and our agent growth is really taking off domestically. So I would say a strength of Citizens is our execution. Projects get done on time and on budget, and our goals get met. So we've expanded that sales force, as you saw earlier in our targets, and the first-year sales trends are really actually dramatic in 2024. So we've got clear geographic expansion plans and clear plans to continue to expand our producing agents, and our financial strength is very strong. We have a conservative balance sheet. We currently have no debt, and we've been positive cash flow from operations since 2004. So I want to cover some of what we've accomplished already this year, along with, you know, other opportunities for revenue growth. Kind of just Jon talked about some of the milestones. So we actually have a record number of global producing agents, on our, through second quarter of 2024, actually a 21% increase from first quarter. Our first-year sales, which is extremely important to our growth because it leads to renewal year premiums in the, in the following year, has, we've 7 consecutive quarters year-over-year, we have increased our first-year sales. We have a record amount of insurance issued, ever in a quarter, actually second quarter, in 3 consecutive quarters we've continued to beat our record. As Jon already mentioned, we've, we put in a new product into the first quarter. The, I think kind of what I want to say, add to what Jon said about our 41 under-penetrated states. So if you were to talk to us three years ago, we were in less than 30 states, and we didn't have product approved. So in the last three years, we've put products in the 41 states and increased the number of licenses in the states from 30 to above 40. Really important for growth. Another way of saying it, most companies can't grow in the U.S. We can because we didn't have a footprint until the last year. As far as kind of cash, he's already touched on cash flow. We have no debt. We actually have an access to $20 million line of credit if we needed to. Actually, last week, we got our AM Best rating reaffirmed from last year. Those who've talked to us before last year was our first, AM Best rating, and it was reaffirmed, last week. We believe all of these metrics on this page, I think hit them all, is leading to adjusted and growth in our book value, per share. Just a slide I think really shows the incredible, growth of, of adding new products, our successful, selling campaigns, and by the way, adding new distributors and agencies. As Jon said, we have over 4,000 agents, and this is showing that 73%, first half this year versus last year growth in insurance in force. The book value per share is a key metric for management to grow, continue to grow our book value per share. You can see it's been growing over the last four consecutive years at $6.02 as of second quarter. And then, of course, our shareholders' equity, excluding AOCI, has continued to increase as well. Hit a couple things on financials. You know, overall, we have a low profile, kind of low risk, we'll say, business model, conservative investment approach. You know, our investment portfolio is -- we have a mixture, it's very diverse. And I think actually one thing that's really important is we use actually large global known reinsurers to reinsure our business. I think that's very prudent for the organization. Most important thing on an insurance company's balance sheet, or one of the most important, is the quality investment portfolio. Ours is high quality, well-diversified. We keep it in most of our fixed assets, actually, almost 100%, are investment grade, or yields at 4.60%. It's been about 4.60% the last couple of quarters. We make sure that we diversify across asset class, sector, and borrower. The average credit rating of our portfolio is A by the S&P rating. Key metric for an insurance organization is its capital adequacy, its regulatory capital is another way of saying it. We're held to what's called risk-based capital by the domestic regulators, and in our Puerto Rico company, which we refer to as a Puerto Rico surplus ratio. Our target is 350 in RBC. As of year-end, we're at 488 in our domestic operations. Our Puerto Rico company is at 5.1. Kind of counterintuitive, but the goal is to keep it below 7. All of our plans anticipate, you know, staying below 7. The parent company, and so our holding company, which is the Citizens holding company, has cash and invested assets of over $26 million, which can be deployed for growth in our companies. We continue to show net positive growth from operating activities. I've already said that, but we have access to a $20 million line of credit. This is the last slide I plan on touching on. And I kinda really point out a couple things here. One is showing the revenue increases, quarter-over-quarter, really driven by our new business, and then our book value per share continues to grow. It was 8%, year-over-year. I think the last thing on this page is our adjusted income in the quarter. So our adjusted income in the quarter was up over $700,000 versus the second quarter last year, kind of showing the continued positive momentum we're seeing now that we're, you know, really growing the business, again, an increase in our in force. All of these, we believe will continue to add to our, you know, our book value per share. Brendan, anything you want to add, Jon, or? No. We wanted to leave plenty of room for Q&A. So, Brendan, we'll turn it over to you for questions you may have gotten. Great. Great. Thanks, Jon. Thanks, Jeff, for the overview. We can now get into Q&A, and it looks like we have a few questions here from the attendees. It looks like we have a question, you know, dating back to the history of the company. Looks like, you know, unprofitable prior to 2021. Can you talk about the changes that occurred in 2021 and maybe how the firm was operating, under the change in control, and then just how that differs to how it's currently operating? You want to hit that? I'll let you handle that since you were here. So there's a couple things that happened prior to 2021. Let's first state that beginning in 2021, there was a brand new accounting literature that was announced that affected, of course, every insurer in the U.S. that called long-term LDTI is what we refer to it as, but it's basically a revamping of all the accounting, so that went live in 2021. The change in control has impacted us. Trying to think how to express it. We were a controlled company. Our board could be managed by our Class B shareholders, and in 2021, they basically attempted a hostile takeover of the organization. We got through that in 2022, 2021, and that has helped us regain momentum, focus on a growth strategy, as you can see in our results. So maybe another way of saying it, a long story, is we were held back a bit, because of- Mm ... of the change of the ownership in our organization. We bought out the Class B shareholders, and from that point forward, under the leadership of Gerald and now Jon, we've changed to be a growth-focused organization in growing our business. Great. Thanks, Jeff. And then let's talk about first-year premiums. I know you mentioned several straight quarters of first-year premium or record first-year premium growth. What's really been driving that growth, and I guess both from a product and a pricing perspective? Yeah. Well, two things. We've updated the products in a lot of our markets, so and our new markets, so that's been helping. The current growth is coming from two sources. The first, and we're really excited about this, is in the international, our growth is coming from our current partners that we've been partnered with for decades. And they're responding to our new processes, new products, and really driving more growth in their current markets. And the reason we're very excited about that is because we have efforts underway to actually grow geographically into markets that we're not currently strong in. So it's really great to do that from a base of growth in the markets that you're already, you already have a good presence in. We're only penetrated about 1% in those markets that we're strong in. So we do have. We feel a lot of growth runway left in those markets, and then only upside in the new markets, of course, where we're not currently strong in. Most of the growth, though, is coming from our domestic operation. As we've mentioned, we were licensed in 30 states, but we didn't have products in most of those states, and so now we're licensed and have product approved in 41 states, and we're really driving that domestic growth in the final expense market through our new partnerships with agencies and independent agents within those agencies, and they really like our offering. So that's where the growth, premium growth is, and, well, you know, we like that because in the life insurance world, there's a saying, "Today's sales are tomorrow's revenue." So, you know, a sale today is a commitment for potentially decades of future, premium paying. ... Great, great. Turning to distribution, can you talk about the recruitment process for agents and how you, you know, look to partner with agencies, I guess both domestically and internationally? Well, most of that heavy lifting, with the exception of Home Service, most of the heavy lifting is done by our agency partners. So we have a few agency partners, and they have recruiting machines and operations, and they have training and onboarding, and they handle a lot of that for us. So they'll bring the agents on, they'll have us contract them. They'll do a lot of training. We'll help them train them on Citizens-specific products and procedures. And so a lot of that's taken care of by our partners, both internationally and domestically, with the exception of Home Service, where we have a management team there that will recruit agents and train them and onboard them. And so we're making a lot of investments right now in talent upgrades there and process upgrades there, after a few years of, I would say, structural reorganization to reduce fixed expense. So that's the process for getting new agents on board. Got it. Got it. And I know we talked about first-year premiums. Maybe we could talk about renewal premiums a little bit. It looks like they've been challenged as of late, although there was an improvement in, you know, the most recent Q2. Can you talk about what's been pressuring renewal premiums and your outlook there? Well, we've been in the international business for decades, and a lot of the policies and products we sell there have been 15- or 20-year endowments. So, a lot of those products sold 20 years ago, 15 years ago, are coming to maturity. And we're really excited to fulfill our promise there and make sure we fulfill the promise and pay those endowments as planned. But that has put some pressure on renewals. That'll be overcome in 2 ways. Increasing first-year sales will lead to increasing renewal premiums, and we're developing and soon launching a new product that will actually capture those assets and maturing dollars from those endowments and put it into a new product. That's a product we're working on, and we're very excited to launch that in the coming months. Got it. And I know you mentioned, you know, debt-free balance sheet, you know, really strong, you know, strong capital positioning. How can investors think about your capital allocation framework? And, you know, do you think about, you know, potential M&A possibilities in the future, or returning capital to shareholders via dividend or, or buybacks? Well, I'll... Of course, we're gonna entertain conversations if somebody's investors are wanting to talk to us in terms of potential M&A. That's a kind of forever process for us. But specific to capital allocation, do you want to take a crack at that, and... Oh. Right now we're in a growth stage. Mm. - and, right now we want to make sure we're prudent with our capital and how we use it, across the board. We do have a buyback program of our stock, shares that we have used. We do have some left. We still have money to use there. Right now, we're just really focused on the domestic growth and- Mm-hmm ... it is important. Regulatory capital is really important to hold to maintain that growth. Because first-year sales are quite substantial when you have substantial first-year sales, you do have a lot of acquisition costs in that first year. Mm-hmm. So we actually talk about that stuff on a regular basis, think about that, Stock. Just a point, the company has never paid a dividend, and it would be something that would be looked at in the future, as we get this growth engine continue to move up and gain more regulatory capital. Yeah, we like the markets we're in, and they're profitable markets, and we think we have a great future there. So but of course, as you grow as fast as we are in life insurance, growth requires capital. So, that's why we're not currently using our stock buyback program because we're deploying our capital to make sure that we create those future revenue streams through growth of today's sales. Great, great. That's helpful. And maybe we could talk about the surrenders, as well as some of the endowment maturities that we talked about that are... or, you know, we're pressuring some of the renewal premiums. Can you talk about some of the retention efforts that Citizens has put into place that have ultimately led to some of the improvements there? So domestically, in our home service business, we've worked really hard for four years to put a lot of structural changes there, to not only reduce fixed expense, but we also reduced the number of agents strictly based on quality of business they've been giving us. So that has had a significant positive impact on retention within that business. So we've had seven straight months of persistency improvements in our home service business. So we're really excited about the quality improvements we're getting because, you know, it's all about quality in life insurance, particularly in the markets we're in. Internationally, I already spoke about a key one, which is developing a product to potentially capture some of those maturing policies. So that, that's been in our roadmap and plan, so we're excited about that. The other thing we offer internationally is, you know, basically a policy loan opportunity, or other types of loans. So rather than a policyholder taking their whole cash value, maybe they take, you know, 10% of it or 25% of them to get through maybe an economic situation they may have. But that, of course, saves premiums and saves, you know, cash flow as well. Great. Great, and maybe looking at the international market and the domestic market, can you talk about your target markets there? How you plan to, like, you know, further penetrate markets there internationally and domestically? Internationally, we are currently working on and have been launching our international broker program. So if you look at our current partners, there are cities and countries in which they are not strong in. And so what we're looking to do is finding potential new partners that are strong geographically in the areas that we don't have a presence in, and develop relationships with new international brokers there, to geographically expand. And domestically, we're focused on, through our partners, just adding new quality agents and driving growth that way. Got it. Got it. Thanks, Jon. And I'll ask one more question on valuation. I know you had a slide up there in the presentation deck, but with your, you know, strong growth in book value, how can you think about, or I guess, how can investors think about your current valuation as it relates to price to book and, you know, maybe where that's been trading at relative to... or peers? Well, yeah, so the discount to book is quite significant, and I think a lot of it is visibility. And we're growing fast for a life insurance company in particular, but we're still relatively unknown. So it's through opportunities like this that we're trying to get investors to see the opportunity they have to buy at a significant discount off book. We're also, you know, we're close to getting back into Russell, and I think that'll have some value, if we are able to do that. Great. Great. Well, Jeff and Jon, it looks like we've kind of hit every question in the queue there. I'll, I'll pass it back to you for any closing remarks. No, I think we are super excited about our current strategy, and we're super excited about our growth, and we see a lot of blue sky, you know, above us and a lot of growth road to growth in front of us. Perfect. Perfect. Well, Jon, Jeff, thank you very much for the overview and your time. We appreciate it, and I know if there were any questions we missed out there, feel free to reach out to Citizens directly, or you can contact myself. My email is bmccarthy@sidoti.com. Jeff and Jon, thanks again for your time. Thank you, Brendan. Okay. Thanks, everyone. Thanks. Take care.